Venezuela Seen Getting Off 'Lightly' In $908 Million Exxon Payment
Author: Vyas, Kejal; Gonzalez, Angel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]01 Jan 2012: n/a.
ProQuest document link
Abstract:
The verdict comes four years after Exxon, the world's largest publicly traded oil company, left Venezuela in a spat with the country's government, which decreed that the state oil monopoly would have the majority stake in joint ventures with foreign partners.
Full text: CARACAS -- An international arbitration panel awarded U.S. oil major Exxon Mobil Corp. about $908 million in a verdict over oil assets nationalized by Venezuelan President Hugo Chavez in 2007, the company said late Saturday.
The payout is substantially lower than the $7 billion that Exxon was seeking in restitution and is likely to be a boon for Venezuela's defiant leftist government, which in recent years has embarked on a widespread nationalization campaign to centralize control over key economic sectors.
"It's a nice Christmas present for Chavez and Venezuela," said Russ Dallen, an analyst and bond trader at local investment bank Caracas Capital Markets. "The verdict is a lot less than people were probably thinking. It certainly means that [state oil company Petroleos de Venezuela SA or PdVSA] got off lightly," Dallen added.
Exxon spokesman Patrick McGinn said the decision by an arbitration court at the International Chamber of Commerce, "confirms that PdVSA does have a contractual liability to Exxon Mobil."
A PdVSA spokesman declined comment when reached by telephone on Sunday.
Both parties are still awaiting a decision on the suit filed by Exxon's local subsidiary, Mobil Cerro Negro Ltd., against Venezuela in front of the World Bank's International Centre for Settlement of Investment Disputes, or ICSID, where the Chavez administration is facing around 20 pending cases. With billions in potential payouts looming, the number of cases has been the source of constant concern for holders of Venezuelan sovereign bonds.
The verdict comes four years after Exxon, the world's largest publicly traded oil company, left Venezuela in a spat with the country's government, which decreed that the state oil monopoly would have the majority stake in joint ventures with foreign partners. By law, PdVSA now holds at least 60% of all oil projects.
Exxon has said that it invested around $750 million into the Cerro Negro facility. The company reduced its claim to $7 billion from an initial claim of $12 billion.
Despite the smaller-than-expected compensation for Exxon, the money is still a substantial chunk of change for PdVSA, which posted a net profit of $4 billion during the first six months of 2011. The Venezuelan oil monopoly has faced declining oil production and cash flow problems in recent years as Chavez diverts large portions of revenue toward social projects, which critics say has resulted in insufficient investments into maintenance.
Earlier this year, Venezuelan Oil Minister Rafael Ramirez said his government planned to pay no more than a total of $2.5 billion between its arbitration cases with Exxon and ConocoPhillips. Fellow oil major Chevron Corp., the second-largest U.S. oil company, decided to accept PdVSA's majority stake and remained in Venezuela.
In September, Mr. Ramirez also threw out the possibility of settling with Exxon outside of courts, shortly after the country's prosecutor general told reporters that the $6 billion settlement was being negotiated.
The Cerro Negro project had an estimated value of around $2 billion and is located in Venezuela's massive and still mostly untapped Orinoco heavy oil belt. It is a legacy of Venezuela's temporary bid to open up its oil industry to foreign players in the 1990's, at a time when oil was cheap and large investments were needed for the first wave of heavy oil projects. The facility has since had its name changed to Petromonagas and currently processes some 120,000 barrels of heavy crude oil a day. PdVSA is the majority owner, while Anglo-Russian oil joint venture TNK-BP holds a 16.7% stake and has said that it is interested in purchasing Exxon's former share from PdVSA.
Credit: By Kejal Vyas And Angel Gonzalez
Subject: Petroleum industry; Petroleum production; Nationalization; Equity stake
Location: United States--US
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 1, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913195903
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913195903?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The W all Street Journal
Venezuela Seen Getting Off 'Lightly' In $908 Million Exxon Payment
Author: Vyas, Kejal; Gonzalez, Angel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 Jan 2012: n/a.
ProQuest document link
Abstract:
CARACAS, Venezuela--An international arbitration panel awarded Exxon Mobil Corp. about $908 million in a verdict over oil assets nationalized by Venezuelan President Hugo Chavez in 2007, the company said late Saturday.
Full text: CARACAS, Venezuela--An international arbitration panel awarded Exxon Mobil Corp. about $908 million in a verdict over oil assets nationalized by Venezuelan President Hugo Chavez in 2007, the company said late Saturday.
The payout was substantially lower than the $7 billion that Exxon was seeking in restitution and is likely to be a boon for Venezuela's defiant leftist government, which in recent years has embarked on a widespread nationalization campaign to centralize control over key economic sectors.
State oil company Petroleos de Venezuela SA "got off lightly," said Russ Dallen, an analyst and bond trader at Caracas Capital Markets.
An Exxon spokesman said the decision, by an arbitration court at the International Chamber of Commerce, "confirms that PdVSA does have a contractual liability to Exxon Mobil."
A PdVSA spokesman declined to comment.
Both parties are awaiting a decision on the suit filed by Exxon's local subsidiary, Mobil Cerro Negro Ltd., against Venezuela in front of the World Bank's International Centre for Settlement of Investment Disputes, where the Chavez administration is facing around 20 cases. With billions of dollars in potential payouts looming, the number of cases has been a source of concern for holders of Venezuelan sovereign bonds.
Four years ago, Exxon, the world's largest publicly traded oil company, left Venezuela in a spat with the government, which decreed that the state oil monopoly would have the majority stake in joint ventures with foreign partners. PdVSA now holds at least 60% of all oil projects.
Exxon has said it invested around $750 million into the Cerro Negro facility. The company reduced its claim to $7 billion from an initial claim of $12 billion.
Despite the smaller-than-expected compensation for Exxon, the money is still a substantial chunk of change for PdVSA, which posted a net profit of $4 billion during the first half of last year. The monopoly has faced declining oil production and cash-flow problems in recent years as Mr. Chavez has diverted large portions of revenue toward social projects. Critics have said that caused insufficient investment in maintenance.
Venezuelan Oil Minister Rafael Ramirez has said the government planned to pay no more than a total of $2.5 billion between its arbitration cases with Exxon and ConocoPhillips. Chevron Corp., the second-largest U.S. oil company, decided to accept PdVSA's majority stake and remained in Venezuela.
Mr. Ramirez in September threw out the possibility of settling with Exxon out of court, shortly after the country's prosecutor general told reporters that the $6 billion settlement was being negotiated.
Credit: By Kejal Vyas And Angel Gonzalez
Subject: Petroleum industry; Arbitration
Location: United States--US
People: Chavez, Hugo
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 2, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913266661
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913266661?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Rallies, Retreats and Round Figures; Copper, Cotton Log Records Before Pullback. Gold Hits $1,900, Then Falls. Oil Treads Around $100. Blame Growth Worry
Author: Pleven, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 Jan 2012: n/a.
ProQuest document link
Abstract:
Before European dithering over a rescue for the continent's most financially stressed economies spooked investors, before China's ability to manage slower growth drew wide concern and before America's recovery from recession stalled, prices were soaring. [...] one by one, prices fell, and the commodity markets quickly went from being the source of inflationary fears to a barometer of a faltering global economy.
Full text: It may seem difficult to believe, given how rapidly commodity prices tumbled as 2011 drew to a close, but it was a year of record prices for some of the world's most ardently sought raw materials.
Before European dithering over a rescue for the continent's most financially stressed economies spooked investors, before China's ability to manage slower growth drew wide concern and before America's recovery from recession stalled, prices were soaring.
Copper, cotton and corn hit all-time highs in the first half of the year. Crude oil, wheat and nickel were up double digits in percentage terms even before some people got used to writing 2011 in the date line of their personal checks.
Then, one by one, prices fell, and the commodity markets quickly went from being the source of inflationary fears to a barometer of a faltering global economy.
Those concerns even sparked a record of their own, as gold skyrocketed to settle just below $1,900 per troy ounce after Standard & Poor's cut the U.S. government's credit rating in August, although bullion then pulled back, too.
Between its April peak and year-end, the Dow Jones-UBS commodity index, which tracks 19 commodities from aluminum to zinc, fell 20%. For the full year, it logged a 13% decline. That is the first annual decline in the overall index since 2008.
In the case of some materials, buying frenzies had pushed prices to what analysts said were unsustainable levels. But prices had also risen on expectations of continued economic growth, making the increases vulnerable to changes in that outlook.
The roller-coaster ride of 2011 has highlighted two possible paths for commodity markets in months to come. One is that the world's woes could wane, focusing attention on the relative scarcity that has some investors betting that China and other rapidly growing nations will keep prices high for years.
The other scenario is that the global economy could wobble again, leaving prices exposed to further falls. Despite pulling back sharply as 2011 wore on, prices for many basic commodities are still up significantly from their 2010 lows.
As the past year showed, those possibilities aren't mutually exclusive.
Emerging-market demand "may be the long-term, 30-year cycle for commodities," said Nathan Rowader, portfolio manager for Forward Funds' Commodity Long/Short Strategy Fund, which bets on both rising and falling prices. "But that doesn't mean it will be the three-month cycle."
ENERGY
Crude oil's swings reflected both the economic and political forces that defined 2011. Prices, already on the rise coming into the year, shot up as street protests in the Arab world sparked civil war in Libya, one of the world's major exporters.
The price of U.S. crude hit a 2011 settlement high in late April, at $113.93 a barrel, putting it up 25% for the year. The European benchmark, Brent, soared to $126.65 the same month, as sellers demanded a premium to supply markets particularly dependent on Libya's light, sweet crude, which was interrupted.
But prices pulled back midyear and, in the U.S., the price of oil fell below $100 per barrel, as investors grew worried about signs that the appetite for energy to power their economies was waning in both developed and developing markets. Also, the end of the Libyan conflict heralded the return of its crude to the market.
Still, U.S. benchmark futures edged back up toward $100 in the fourth quarter, and ended the year at $98.83, up $7.45, or 8.2% for the year, and up 45% from the 2010 low price of $68.01. Brent rose $12.63, or 13.3%, to $107.38. That suggests that signs of economic growth could spark a costly scramble to secure supplies.
"We believe that much like in [the first half of 2008], extremely tight physical markets may send oil prices sharply higher first, with the potential damage to world oil demand from the threatened global economic recession realized only afterward," analysts at Goldman Sachs wrote in a recent research note. They forecast U.S. oil prices at $112.50 in 2012.
By contrast, plentiful natural-gas supplies pushed down prices of that fuel to settle at a 27-month low of $2.9890 per million British thermal units on the last trading day of 2011, as demand to burn the fuel for heating remained tepid amid a mild early winter. Prices slid 15.8% in December alone, and ended the year down 31%.
BASE METALS
Copper, which is widely used in manufacturing and infrastructure projects, also was boosted by emerging-market demand, then slammed by concerns that global economic growth would falter. Prices shot to a record $4.6230 per pound in mid-February, a 68% gain in just over eight months.
But by year-end, copper futures had fallen nearly 26% from that peak. The front-month contract ended the year down $1.0080, or 23%, at $3.4315 per pound, including a fall of 3.7% in December. Other industrial metals rose and fell in similar ways; nickel, which is used to make stainless steel, climbed 17% by February, then plummeted 37% from that high.
China's efforts to cool its economy weighed heavily on those markets, particularly as it became clear that Beijing's moves to curb lending were having an impact.
But China also still has the power to push metals markets higher. Iron ore saw a "slight rally" heading into the end of the year, according to Macquarie Group, which said in a recent research note that prices were "boosted by interest from Chinese traders ahead of an expected steel production push into Chinese New Year."
Iron ore isn't traded on public exchanges, but Macquarie said the annual average spot price for iron ore in 2011 would likely end up about 14% above the 2010 record.
PRECIOUS METALS
Gold and silver also were tarnished by the ups and downs of 2011, but for different reasons than other major commodities.
While prices for industrial materials were climbing early in the year, gold futures hit their 2011 low on Jan. 27, when prices settled at $1,318.40 a troy ounce. Ten consecutive years of rising prices had left gold vulnerable, according to some analysts, to signs that the global economy was growing stronger and more stable. But by midsummer, that prospect seemed distant, and gold prices were rallying again.
After a prolonged political battle in Washington over debt and spending plans, S&P in August cut America's credit rating from triple-A, and the rally accelerated. The front-month gold contract settled at a record $1,888.70 an ounce on Aug. 22.
Later in the year, however, the back-and-forth in European capitals over solving the euro-zone's debt woes didn't provide the same boost, in part because it made the dollar stronger and therefore gold futures, which are priced in dollars, more expensive. In December, gold fell 10.3%, though it still ended 2011 up $144.70, or 10%, at $1,565.80, marking the 11th straight year of rising prices.
Silver prices, which tend to be more volatile, lived up to that reputation. After soaring 81% between late January and late April, and nearly breaking the record set in 1980, prices plummeted. The front-month futures contract lost $3.0350, or 9.8%, for the year, settling at $27.8750 an ounce.
AGRICULTURE
The list of agricultural commodities that fell by double digits in percentage terms in 2011 includes cotton, sugar, wheat, and soybeans, all of which play major roles in food prices, particularly in countries that must heavily import those goods.
But that doesn't mean inflationary pressures have gone away. Those four goods cost from 33% to 70% more than they did at their lowest point in 2010, as growers world-wide struggle to ramp up production fast enough to meet rising demand.
And the price of corn, the largest crop in the U.S., had barely changed at all by the end of 2011, finishing the year up 3% at $6.465 per bushel, 18% below the all-time high of $7.87 per bushel hit in June but still roughly twice as high as prices during the first half of 2010.
Farmers have responded to high prices by trying to grow more corn. But the number of bushels per acre came in well below the peaks of recent years, limiting the boost to supplies. And stockpiles remain tight.
Hot, dry weather in South America now threatens the South American crop, which boosted corn prices in late 2011. And analysts are also keeping an eye on weather in the U.S., after hot summers and spring flooding hampered farmers in recent years.
"It's still a bit early, but the lack of snow cover in Iowa and Minnesota worries me a bit due to drought conditions there," Peter Meyer, editor of Opening Print, an agriculture markets newsletter, said in an email. "If this continues through, say, early February, we're looking at some yield loss potential."
Write to Liam Pleven at liam.pleven@wsj.com
Credit: By Liam Pleven
Subject: Recessions; Commodity prices; Economic growth; Energy economics
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 2, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913281192
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913281192?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Oil and Gas Bubble Up All Over
Author: Gold, Russell
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 Jan 2012: n/a.
ProQuest document link
Abstract:
Crude-oil imports are falling, balance-of-trade payments are improving and thousands of oil-field jobs are being created from Texas to Ohio, from West Virginia to Wyoming. [...] the U.S. is beginning to export a significant amount of diesel and gasoline refined from crude and could begin exporting chilled natural gas next year.
Full text: You'll know the U.S. energy industry is really on the rebound when North Dakota's newfangled Bakken oil field starts pumping more crude than Alaska's stalwart Prudhoe Bay. Energy experts expect it to happen in 2012.
Dwindling production from the once-mighty Alaskan field has been a symbol of what was once seen as the slow, inexorable decline of U.S. oil. But new technologies have turned that overall decline into an increase, led by the Bakken shale, which in July produced 424,000 barrels a day, to Alaska's 453,000.
Rising oil production from the Bakken and other nontraditional fields is expected to add 250,000 barrels of oil a day to U.S. production, according to the International Energy Agency, even as conventional oil production falls. If overall trends continue, daily U.S. oil output could be up by 1 million barrels a day by 2016, to 6.6 million.
"I didn't see it, and I don't know anyone else who saw it coming," said James L. Williams of WTRG Economics, an energy consultancy in London, Ark.
Crude-oil imports are falling, balance-of-trade payments are improving and thousands of oil-field jobs are being created from Texas to Ohio, from West Virginia to Wyoming. Moreover, the U.S. is beginning to export a significant amount of diesel and gasoline refined from crude and could begin exporting chilled natural gas next year.
The Bakken wasn't discovered so much as unlocked. The energy industry figured out that a combination of technologies--hydraulic fracturing and vertical wells that turn underground to run horizontally through oil-rich rock--could free petroleum and natural gas trapped in dense rock formations.
The vast majority of this new oil and gas is coming from shale, which must be cracked open using hydraulic fracturing, or fracking. The new year should see an increase in government regulation of the fracking industry, covering air emissions, water disposal and well construction. Early in 2012, New York State is expected to issue new rules for fracking operations that could set the tone for a year of regulatory scrutiny. Around March, the federal government is expected to issue rules for fracking on federal lands.
New technologies are now being applied to the Eagle Ford oil field in South Texas. In August, the field produced about 109,000 barrels a day, according to state records, compared with 3,100 barrels two years earlier. Output is expected to quadruple over the next five years.
Next up: The Utica oil field in eastern Ohio and Pennsylvania. Its existence was disclosed last July, and activity is just starting to ramp up. Chesapeake Energy Corp.'s chief executive, Aubrey McClendon, said last summer that "pound for pound, foot for foot, the Utica rock is going to be better than the Eagle Ford." As more wells are drilled in 2012, this boast will be tested.
Activity is also expected to pick up slightly in the Gulf of Mexico, where drilling has returned after an extended lull following the Deepwater Horizon disaster. Meanwhile, BP PLC,Halliburton Corp., Transocean Ltd. and federal prosecutors will meet in a federal courtroom in New Orleans in February to begin the lengthy process of divvying up blame for the 2010 accident that killed 11 and unleashed the worst offshore oil spill in U.S. history.
President Barack Obama has indicated that he wants to see shale development move forward, but in a "safe, environmentally sound way." This year, the industry will get its first peek at what he means, and how much it might cost.
Credit: By Russell Gold
Subject: Hydraulic fracturing; Petroleum industry; Natural gas
Location: United States--US North Dakota
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 2, 2012
Section: US
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913285782
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913285782?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Rallies, Retreats and Round Figures; Copper, Cotton Log Records Before Pullback. Gold Hits $1,900, Then Falls. Oil Treads Around $100. Blame Growth Worry
Author: Pleven, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 Jan 2012: n/a.
ProQuest document link
Abstract:
Before European dithering over a rescue for the continent's most financially stressed economies spooked investors, before China's ability to manage slower growth drew wide concern and before America's recovery from recession stalled, prices were soaring. [...] one by one, prices fell, and the commodity markets quickly went from being the source of inflationary fears to a barometer of a faltering global economy.
Full text: It may seem difficult to believe, given how rapidly commodity prices tumbled as 2011 drew to a close, but it was a year of record prices for some of the world's most ardently sought raw materials.
Before European dithering over a rescue for the continent's most financially stressed economies spooked investors, before China's ability to manage slower growth drew wide concern and before America's recovery from recession stalled, prices were soaring.
Copper, cotton and corn hit all-time highs in the first half of the year. Crude oil, wheat and nickel were up double digits in percentage terms even before some people got used to writing 2011 in the date line of their personal checks.
Then, one by one, prices fell, and the commodity markets quickly went from being the source of inflationary fears to a barometer of a faltering global economy.
Those concerns even sparked a record of their own, as gold skyrocketed to settle just below $1,900 per troy ounce after Standard & Poor's cut the U.S. government's credit rating in August, although bullion then pulled back, too.
Between its April peak and year-end, the Dow Jones-UBS commodity index, which tracks 19 commodities from aluminum to zinc, fell 20%. For the full year, it logged a 13% decline. That is the first annual decline in the overall index since 2008.
In the case of some materials, buying frenzies had pushed prices to what analysts said were unsustainable levels. But prices had also risen on expectations of continued economic growth, making the increases vulnerable to changes in that outlook.
The roller-coaster ride of 2011 has highlighted two possible paths for commodity markets in months to come. One is that the world's woes could wane, focusing attention on the relative scarcity that has some investors betting that China and other rapidly growing nations will keep prices high for years.
The other scenario is that the global economy could wobble again, leaving prices exposed to further falls. Despite pulling back sharply as 2011 wore on, prices for many basic commodities are still up significantly from their 2010 lows.
As the past year showed, those possibilities aren't mutually exclusive.
Emerging-market demand "may be the long-term, 30-year cycle for commodities," said Nathan Rowader, portfolio manager for Forward Funds' Commodity Long/Short Strategy Fund, which bets on both rising and falling prices. "But that doesn't mean it will be the three-month cycle."
ENERGY
Crude oil's swings reflected both the economic and political forces that defined 2011. Prices, already on the rise coming into the year, shot up as street protests in the Arab world sparked civil war in Libya, one of the world's major exporters.
The price of U.S. crude hit a 2011 settlement high in late April, at $113.93 a barrel, putting it up 25% for the year. The European benchmark, Brent, soared to $126.65 the same month, as sellers demanded a premium to supply markets particularly dependent on Libya's light, sweet crude, which was interrupted.
But prices pulled back midyear and, in the U.S., the price of oil fell below $100 per barrel, as investors grew worried about signs that the appetite for energy to power their economies was waning in both developed and developing markets. Also, the end of the Libyan conflict heralded the return of its crude to the market.
Still, U.S. benchmark futures edged back up toward $100 in the fourth quarter, and ended the year at $98.83, up $7.45, or 8.2% for the year, and up 45% from the 2010 low price of $68.01. Brent rose $12.63, or 13.3%, to $107.38. That suggests that signs of economic growth could spark a costly scramble to secure supplies.
"We believe that much like in [the first half of 2008], extremely tight physical markets may send oil prices sharply higher first, with the potential damage to world oil demand from the threatened global economic recession realized only afterward," analysts at Goldman Sachs wrote in a recent research note. They forecast U.S. oil prices at $112.50 in 2012.
By contrast, plentiful natural-gas supplies pushed down prices of that fuel to settle at a 27-month low of $2.9890 per million British thermal units on the last trading day of 2011, as demand to burn the fuel for heating remained tepid amid a mild early winter. Prices slid 15.8% in December alone, and ended the year down 31%.
BASE METALS
Copper, which is widely used in manufacturing and infrastructure projects, also was boosted by emerging-market demand, then slammed by concerns that global economic growth would falter. Prices shot to a record $4.6230 per pound in mid-February, a 68% gain in just over eight months.
But by year-end, copper futures had fallen nearly 26% from that peak. The front-month contract ended the year down $1.0080, or 23%, at $3.4315 per pound, including a fall of 3.7% in December. Other industrial metals rose and fell in similar ways; nickel, which is used to make stainless steel, climbed 17% by February, then plummeted 37% from that high.
China's efforts to cool its economy weighed heavily on those markets, particularly as it became clear that Beijing's moves to curb lending were having an impact.
But China also still has the power to push metals markets higher. Iron ore saw a "slight rally" heading into the end of the year, according to Macquarie Group, which said in a recent research note that prices were "boosted by interest from Chinese traders ahead of an expected steel production push into Chinese New Year."
Iron ore isn't traded on public exchanges, but Macquarie said the annual average spot price for iron ore in 2011 would likely end up about 14% above the 2010 record.
PRECIOUS METALS
Gold and silver also were tarnished by the ups and downs of 2011, but for different reasons than other major commodities.
While prices for industrial materials were climbing early in the year, gold futures hit their 2011 low on Jan. 27, when prices settled at $1,318.40 a troy ounce. Ten consecutive years of rising prices had left gold vulnerable, according to some analysts, to signs that the global economy was growing stronger and more stable. But by midsummer, that prospect seemed distant, and gold prices were rallying again.
After a prolonged political battle in Washington over debt and spending plans, S&P in August cut America's credit rating from triple-A, and the rally accelerated. The front-month gold contract settled at a record $1,888.70 an ounce on Aug. 22.
Later in the year, however, the back-and-forth in European capitals over solving the euro-zone's debt woes didn't provide the same boost, in part because it made the dollar stronger and therefore gold futures, which are priced in dollars, more expensive. In December, gold fell 10.3%, though it still ended 2011 up $144.70, or 10%, at $1,565.80, marking the 11th straight year of rising prices.
Silver prices, which tend to be more volatile, lived up to that reputation. After soaring 81% between late January and late April, and nearly breaking the record set in 1980, prices plummeted. The front-month futures contract lost $3.0350, or 9.8%, for the year, settling at $27.8750 an ounce.
AGRICULTURE
The list of agricultural commodities that fell by double digits in percentage terms in 2011 includes cotton, sugar, wheat, and soybeans, all of which play major roles in food prices, particularly in countries that must heavily import those goods.
But that doesn't mean inflationary pressures have gone away. Those four goods cost from 33% to 70% more than they did at their lowest point in 2010, as growers world-wide struggle to ramp up production fast enough to meet rising demand.
And the price of corn, the largest crop in the U.S., had barely changed at all by the end of 2011, finishing the year up 3% at $6.465 per bushel, 18% below the all-time high of $7.87 per bushel hit in June but still roughly twice as high as prices during the first half of 2010.
Farmers have responded to high prices by trying to grow more corn. But the number of bushels per acre came in well below the peaks of recent years, limiting the boost to supplies. And stockpiles remain tight.
Hot, dry weather in South America now threatens the South American crop, which boosted corn prices in late 2011. And analysts are also keeping an eye on weather in the U.S., after hot summers and spring flooding hampered farmers in recent years.
"It's still a bit early, but the lack of snow cover in Iowa and Minnesota worries me a bit due to drought conditions there," Peter Meyer, editor of Opening Print, an agriculture markets newsletter, said in an email. "If this continues through, say, early February, we're looking at some yield loss potential."
Write to Liam Pleven at liam.pleven@wsj.com
Credit: By Liam Pleven
Subject: Recessions; Commodity prices; Economic growth; Energy economics
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 3, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913283202
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Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Oil and Gas Bubble Up All Over
Author: Gold, Russell
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 Jan 2012: n/a.
ProQuest document link
Abstract:
Crude-oil imports are falling, balance-of-trade payments are improving and thousands of oil-field jobs are being created from Texas to Ohio, from West Virginia to Wyoming. [...] the U.S. is beginning to export a significant amount of diesel and gasoline refined from crude and could begin exporting chilled natural gas next year.
Full text: You'll know the U.S. energy industry is really on the rebound when North Dakota's newfangled Bakken oil field starts pumping more crude than Alaska's stalwart Prudhoe Bay. Energy experts expect it to happen in 2012.
Dwindling production from the once-mighty Alaskan field has been a symbol of what was once seen as the slow, inexorable decline of U.S. oil. But new technologies have turned that overall decline into an increase, led by the Bakken shale, which in July produced 424,000 barrels a day, to Alaska's 453,000.
Rising oil production from the Bakken and other nontraditional fields is expected to add 250,000 barrels of oil a day to U.S. production, according to the International Energy Agency, even as conventional oil production falls. If overall trends continue, daily U.S. oil output could be up by 1 million barrels a day by 2016, to 6.6 million.
"I didn't see it, and I don't know anyone else who saw it coming," said James L. Williams of WTRG Economics, an energy consultancy in London, Ark.
Crude-oil imports are falling, balance-of-trade payments are improving and thousands of oil-field jobs are being created from Texas to Ohio, from West Virginia to Wyoming. Moreover, the U.S. is beginning to export a significant amount of diesel and gasoline refined from crude and could begin exporting chilled natural gas next year.
The Bakken wasn't discovered so much as unlocked. The energy industry figured out that a combination of technologies--hydraulic fracturing and vertical wells that turn underground to run horizontally through oil-rich rock--could free petroleum and natural gas trapped in dense rock formations.
The vast majority of this new oil and gas is coming from shale, which must be cracked open using hydraulic fracturing, or fracking. The new year should see an increase in government regulation of the fracking industry, covering air emissions, water disposal and well construction. Early in 2012, New York State is expected to issue new rules for fracking operations that could set the tone for a year of regulatory scrutiny. Around March, the federal government is expected to issue rules for fracking on federal lands.
New technologies are now being applied to the Eagle Ford oil field in South Texas. In August, the field produced about 109,000 barrels a day, according to state records, compared with 3,100 barrels two years earlier. Output is expected to quadruple over the next five years.
Next up: The Utica oil field in eastern Ohio and Pennsylvania. Its existence was disclosed last July, and activity is just starting to ramp up. Chesapeake Energy Corp.'s chief executive, Aubrey McClendon, said last summer that "pound for pound, foot for foot, the Utica rock is going to be better than the Eagle Ford." As more wells are drilled in 2012, this boast will be tested.
Activity is also expected to pick up slightly in the Gulf of Mexico, where drilling has returned after an extended lull following the Deepwater Horizon disaster. Meanwhile, BP PLC,Halliburton Corp., Transocean Ltd. and federal prosecutors will meet in a federal courtroom in New Orleans in February to begin the lengthy process of divvying up blame for the 2010 accident that killed 11 and unleashed the worst offshore oil spill in U.S. history.
President Barack Obama has indicated that he wants to see shale development move forward, but in a "safe, environmentally sound way." This year, the industry will get its first peek at what he means, and how much it might cost.
Write to Russell Gold at russell.gold@wsj.com
Credit: By Russell Gold
Subject: Hydraulic fracturing; Petroleum industry; Natural gas
Location: United States--US North Dakota
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 3, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913285800
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913285800?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Panel Deals a Setback to Exxon in Venezuela
Author: Vyas, Kejal; Gonzalez, Angel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 Jan 2012: n/a.
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Abstract:
CARACAS, Venezuela--An international arbitration panel awarded Exxon Mobil Corp. about $908 million in a verdict over oil assets nationalized by Venezuelan President Hugo Chavez in 2007, the company said late Saturday.
Full text: CARACAS, Venezuela--An international arbitration panel awarded Exxon Mobil Corp. about $908 million in a verdict over oil assets nationalized by Venezuelan President Hugo Chávez in 2007, the company said late Saturday.
The payout was substantially lower than the $7 billion that Exxon was seeking in restitution and is likely to be a boon for Venezuela's leftist government, which in recent years has embarked on a nationalization campaign to centralize control over key economic sectors.
State oil company Petróleos de Venezuela SA said Monday it will pay Exxon a total of $255 million--after subtracting existing debt--over the next 60 days.
Analysts said the panel's verdict appears to be a victory for Mr. Chávez, who in 2007 seized the U.S. oil giant's Cerro Negro project as part of a wide-scale expropriation campaign.
Exxon spokesman Patrick McGinn said in a statement that the $908 million award by the arbitration panel at the International Chamber of Commerce "represents recovery on a limited, contractual liability of PdVSA that was provided for in the Cerro Negro project agreement."
Of that amount, however, $160 million has already been credited and the remaining $747 million can be paid in cash or by canceling debt.
In a statement Monday, PdVSA said it will subtract from the verdict a series of debts owed by Exxon, including $191 million for purchasing bonds tied to the financing of the Cerro Negro project.
The company, which called the verdict a "successful defense," will also deduct around $300 million for its New York bank accounts that Exxon had successfully managed to have frozen during the early phases of legal actions in 2007. It said the remaining $160 million was awarded by the ICC in counterclaims.
PdVSA called Exxon's claims "exaggerated" and said they "defied logic." The Venezuelan state oil monopoly also pledged to defend itself should Exxon continue to pursue the case.
PdVSA is "netting out other credits, as allowed by the ICC; they are not repudiating the award," said Nomura analyst Boris Segura. He added that in the end the decision is favorable for the Venezuelan government.
To be sure, the South American government may eventually have to pay more to Exxon as both parties await a verdict on a separate suit filed by Exxon's local subsidiary, Mobil Cerro Negro Ltd., against Venezuela before the World Bank's International Centre for Settlement of Investment Disputes, or ICSID.
Exxon's Mr. McGinn said the "larger" ICSID case "is ongoing and is expected to be argued in February."
The Chávez administration currently faces around 20 pending cases at the ICSID. With billions in potential payouts looming, the number of cases has been a concern for holders of Venezuelan sovereign bonds.
The court decision came four years after Exxon left Venezuela in a dispute with the government, which decreed that the state oil monopoly would have the majority stake in joint ventures with foreign partners. By law, PdVSA now holds at least 60% of all oil projects.
Exxon has said it invested around $750 million into the Cerro Negro facility. The company reduced its claim to $7 billion from an initial claim of $12 billion.
Despite the smaller-than-expected ICC panel's compensation for Exxon, the money is still a substantial chunk of change for PdVSA, which posted a net profit of $4 billion during the first half of last year. The monopoly has faced declining oil production and cash-flow problems in recent years as Mr. Chavez has diverted large portions of revenue toward social projects. Critics have said that caused insufficient investment in maintenance.
Venezuelan Oil Minister Rafael Ramirez has said the government planned to pay no more than a total of $2.5 billion between its arbitration cases with Exxon and ConocoPhillips. Chevron Corp., the second-largest U.S. oil company, decided to accept PdVSA's majority stake and remained in Venezuela.
Mr. Ramirez in September threw out the possibility of settling with Exxon out of court, shortly after the country's prosecutor general told reporters that the $6 billion settlement was being negotiated.
Write to Kejal Vyas at kejal.vyas@dowjones.com and Angel Gonzalez at angel.gonzalez@dowjones.com
Credit: By Kejal Vyas And Angel Gonzalez
Subject: Petroleum industry; Arbitration
People: Chavez, Hugo
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 3, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913285802
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913285802?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Chinese Court Accepts Offshore-Oil Lawsuit Against ConocoPhillips
Author: Areddy, James T
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 Jan 2012: n/a.
ProQuest document link
Abstract:
The company didn't explain the reasons for the fund plan. Since October, two offshore facilities operated by Cnooc have suffered spills, including undersea leakage of natural gas in the country's south that required a dramatic burn off of fuel from pipelines that extend more than 200 kilometers, or about 125 miles, from shore storage points.
Full text: SHANGHAI--A Chinese court accepted a lawsuit that claims leaks from offshore oil-production facilities operated by ConocoPhillips caused $78 million in damages to local fishermen, state-run media reported.
Acceptance of the suit indicates forward momentum in a legal process that could result in additional costs for the U.S. company. The leaks at oil platforms operated by ConocoPhillips in China's Bohai Bay have left the company with a damaged image and led to the closure of one of the country's largest offshore oil production bases.
The suit was filed in north China's Tianjin Maritime Court on behalf of clam and sea-cucumber producers, the state-run Xinhua news agency said Friday. The court couldn't immediately be reached for confirmation.
In two June incidents, 3,343 barrels of oil and mud used in drilling leaked through the Bohai Bay seafloor near platforms operated by Conoco, according to company data. Trace amounts of oil continued to seep into the sea over the following months but was mostly captured, it said. Conoco data show most of the contamination was drilling mud, which was fully recovered along with most of the oil.
In September, Chinese maritime authorities faulted the company's production strategy and ordered a halt in production at the fields that some analysts say could last well into 2012.
The offshore fields, known as Peng Lai 19-3, are 51% owned by China National Offshore Oil Corp. but operated by Conoco, the minority partner. Conoco in September established funding mechanisms to deal with claims, though it hasn't said how much it expects to pay.
"We understand that the events have caused concern among the people who make their living in and around Bohai Bay," Conoco spokesman John Roper said Friday, adding that the compensation fund the company set up is intended to be an alternative to litigation. "We deeply regret these accidents," he said.
In reiterating the company's acceptance of blame for the two spills in a Dec. 21 statement, Conoco Chairman and Chief Executive Jim Mulva said the funds "can help address the challenges of those who have been affected and promote the environmental sustainability of Bohai Bay." The statement said the company expected to pay "reasonable compensation."
The Xinhua report said more than 6,200 square kilometers, or about 2,400 square miles, were polluted. Conoco executives repeatedly have said they believe damage was minimal, citing independent scientific findings that, for instance, indicated that oily substances in the bay were from other sources.
The Peng Lai fields produced about 114,500 barrels of oil a day in 2010, Conoco data suggest. That is a small percentage of China's total production that exceeded 4.1 million barrels a day, according to IHS World Markets Energy.
Separately, Cnooc said last week that it intends to capitalize a marine-environmental fund with an initial 500 million yuan, or about $79 million. The company didn't explain the reasons for the fund plan.
Since October, two offshore facilities operated by Cnooc have suffered spills, including undersea leakage of natural gas in the country's south that required a dramatic burn off of fuel from pipelines that extend more than 200 kilometers, or about 125 miles, from shore storage points.
Daniel Gilbert contributed to this article.
Write to James T. Areddy at james.areddy@wsj.com
Credit: By James T. Areddy
Subject: Petroleum industry; Petroleum production
Location: Bohai Bay
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 3, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913285831
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913285831?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
ONGC Videsh to Invest in Oil Sands, Shale Gas Assets
Author: Sharma, Rakesh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 Jan 2012: n/a.
ProQuest document link
Abstract:
Oil and gas majors like Exxon Mobil and Royal Dutch Shell PLC are exploiting shale gas and oil sands, which were once considered too difficult and expensive to extract, on an unprecedented scale from Australia to Canada helped by technological advances and as big fields in the world's most prolific hydrocarbon regions are becoming off-limits and increasingly becoming the preserve of national oil companies.
Full text: NEW DELHI -- ONGC Videsh Ltd. will pursue acquisitions of unconventional energy assets like oil sands and shale gas to spread its portfolio, its director of exploration said.
"We see that the profitability of unconventional hydrocarbon resources is increasing as the prices are driven up by intensifying competition for acquisition of conventional oil and gas assets," Narendra Verma said on the company's website.
Mr. Verma replaced Joeman Thomas as OVL's exploration head Monday after Thomas retired last month.
Oil and gas majors like Exxon Mobil and Royal Dutch Shell PLC are exploiting shale gas and oil sands, which were once considered too difficult and expensive to extract, on an unprecedented scale from Australia to Canada helped by technological advances and as big fields in the world's most prolific hydrocarbon regions are becoming off-limits and increasingly becoming the preserve of national oil companies.
OVL, a unit of state-run Oil & Natural Gas Corp., holds stakes in 34 projects in 15 countries. Some of its projects are in countries such as Sudan, Libya and Syria, where there are unresolved unrests and issues of governance and ethnic divisions, leading to increased business risks.
Working in the rich world that has unconventional sources and more predictable taxes as well as investor-friendly policies will remove some of the risks that worry OVL's investors and also make it less vulnerable to resource nationalism by countries like Russia and Venezuela.
OVL, which produced 9.43 million tons oil and oil-equivalent gas in the year through March 2011, has a target of producing 20 million tons of oil equivalent by March 2018 and 35 million tons by March 2030, Mr. Verma said.
Write to Rakesh Sharma at rakesh.sharma@dowjones.com
Credit: By Rakesh Sharma
Subject: Petroleum industry; Natural gas; Oil sands
Company / organization: Name: ONGC Videsh Ltd; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 3, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913305277
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913305277?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Year-End Review of Markets & Finance 2011 --- Commodities: Rallies, Retreats and Round Figures --- Copper, Cotton Log Records Before Pullback; Gold Hits $1,900, Then Falls; Oil Treads Around $100; Blame Growth Worry
Author: Pleven, Liam
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]03 Jan 2012: R.7.
ProQuest document link
Abstract:
Before European dithering over a rescue for the continent's most financially stressed economies spooked investors, before China's ability to manage slower growth drew wide concern and before America's recovery from recession stalled, prices were soaring. [...] one by one, prices fell, and the commodity markets quickly went from being the source of inflationary fears to a barometer of a faltering global economy.
Full text: It may seem difficult to believe, given how rapidly commodity prices tumbled as 2011 drew to a close, but it was a year of record prices for some of the world's most ardently sought raw materials.
Before European dithering over a rescue for the continent's most financially stressed economies spooked investors, before China's ability to manage slower growth drew wide concern and before America's recovery from recession stalled, prices were soaring.
Copper, cotton and corn hit all-time highs in the first half of the year. Crude oil, wheat and nickel were up double digits in percentage terms even before some people got used to writing 2011 in the date line of their personal checks.
Then, one by one, prices fell, and the commodity markets quickly went from being the source of inflationary fears to a barometer of a faltering global economy.
Those concerns even sparked a record of their own, as gold skyrocketed to settle just below $1,900 per troy ounce after Standard & Poor's cut the U.S. government's credit rating in August, although bullion then pulled back, too.
Between its April peak and year-end, the Dow Jones-UBS commodity index, which tracks 19 commodities from aluminum to zinc, fell 20%. For the full year, it logged a 13% decline. That is the first annual decline in the overall index since 2008.
In the case of some materials, buying frenzies had pushed prices to what analysts said were unsustainable levels. But prices had also risen on expectations of continued growth, making the increases vulnerable to changes in that outlook.
The roller-coaster ride of 2011 has highlighted two possible paths for commodity markets in months to come. One is that the world's woes could wane, focusing attention on the relative scarcity that has some investors betting that China and other rapidly growing nations will keep prices high for years.
The other scenario is that the global economy could wobble again, leaving prices exposed to further falls. Despite pulling back sharply as 2011 wore on, prices for many basic commodities are still up significantly from their 2010 lows.
As the past year showed, those possibilities aren't mutually exclusive.
Emerging-market demand "may be the long-term, 30-year cycle for commodities," said Nathan Rowader, portfolio manager for Forward Funds' Commodity Long/Short Strategy Fund, which bets on both rising and falling prices. "But that doesn't mean it will be the three-month cycle."
Energy
Crude oil's swings reflected both the economic and political forces that defined 2011. Prices, already on the rise coming into the year, shot up as street protests in the Arab world sparked civil war in Libya, one of the world's major exporters.
The price of U.S. crude hit a 2011 settlement high in late April, at $113.93 a barrel, putting it up 25% for the year. The European benchmark, Brent, soared to $126.65 the same month, as sellers demanded a premium to supply markets particularly dependent on Libya's light, sweet crude, which was interrupted.
But prices pulled back midyear and, in the U.S., the price of oil fell below $100 per barrel, as investors grew worried about signs that the appetite for energy to power their economies was waning in both developed and developing markets. Also, the end of the Libyan conflict heralded the return of its crude to the market.
Still, U.S. benchmark futures edged back up toward $100 in the fourth quarter, and ended the year at $98.83, up $7.45, or 8.2% for the year, and up 45% from the 2010 low price of $68.01. Brent rose $12.63, or 13.3%, to $107.38. That suggests that signs of economic growth could spark a costly scramble to secure supplies.
"We believe that much like in [the first half of 2008], extremely tight physical markets may send oil prices sharply higher first, with the potential damage to world oil demand from the threatened global economic recession realized only afterward," analysts at Goldman Sachs wrote in a recent research note. They forecast U.S. oil prices at $112.50 in 2012.
By contrast, plentiful natural-gas supplies pushed down prices of that fuel to settle at a 27-month low of $2.9890 per million British thermal units on the last trading day of 2011, as demand to burn the fuel for heating remained tepid amid a mild early winter. Prices slid 15.8% in December alone, and ended the year down 31%.
Base Metals
Copper, which is widely used in manufacturing and infrastructure projects, also was boosted by emerging-market demand, then slammed by concerns that global economic growth would falter. Prices shot to a record $4.6230 per pound in mid-February, a 68% gain in just over eight months.
But by year-end, copper futures had fallen nearly 26% from that peak. The front-month contract ended the year down $1.0080, or 23%, at $3.4315 per pound, including a fall of 3.7% in December. Other industrial metals rose and fell in similar ways; nickel, which is used to make stainless steel, climbed 17% by February, then plummeted 37% from that high.
China's efforts to cool its economy weighed heavily on those markets, particularly as it became clear that Beijing's moves to curb lending were having an impact.
But China also still has the power to push metals markets higher. Iron ore saw a "slight rally" heading into the end of the year, according to Macquarie Group, which said in a recent research note that prices were "boosted by interest from Chinese traders ahead of an expected steel production push into Chinese New Year."
Iron ore isn't traded on public exchanges, but Macquarie said the annual average spot price for iron ore in 2011 would likely end up about 14% above the 2010 record.
Precious Metals
Gold and silver also were tarnished by the ups and downs of 2011, but for different reasons than other major commodities.
While prices for industrial materials were climbing early in the year, gold futures hit their 2011 low on Jan. 27, when prices settled at $1,318.40 a troy ounce. Ten consecutive years of rising prices had left gold vulnerable, according to some analysts, to signs that the global economy was growing stronger and more stable. But by midsummer, that prospect seemed distant, and gold prices were rallying again.
After a prolonged political battle in Washington over debt and spending plans, S&P in August cut America's credit rating from triple-A, and the rally accelerated. The front-month gold contract settled at a record $1,888.70 an ounce on Aug. 22.
Later in the year, however, the back-and-forth in European capitals over solving the euro-zone's debt woes didn't provide the same boost, in part because it made the dollar stronger and therefore gold futures, which are priced in dollars, more expensive. In December, gold fell 10.3%, though it still ended 2011 up $144.70, or 10%, at $1,565.80, marking the 11th straight year of rising prices.
Silver prices, which tend to be more volatile, lived up to that reputation. After soaring 81% between late January and late April, and nearly breaking the record set in 1980, prices plummeted. The front-month futures contract lost $3.0350, or 9.8%, for the year, settling at $27.8750 an ounce.
Agriculture
The list of agricultural commodities that fell by double digits in percentage terms in 2011 includes cotton, sugar, wheat, and soybeans, all of which play major roles in food prices, particularly in countries that must heavily import those goods.
But that doesn't mean inflationary pressures have gone away. Those four goods cost from 33% to 70% more than they did at their lowest point in 2010, as growers world-wide struggle to ramp up production fast enough to meet increasing demand.
And the price of corn, the largest crop in the U.S., had barely changed at all by the end of 2011, finishing the year up 3% at $6.465 per bushel, 18% below the all-time high of $7.87 per bushel hit in June but still roughly twice as high as prices during the first half of 2010.
Farmers have responded to high prices by trying to grow more corn. But the number of bushels per acre came in well below the peaks of recent years, limiting the boost to supplies. And stockpiles remain tight.
Hot, dry weather in South America now threatens the South American crop, which boosted corn prices in late 2011. And analysts are also keeping an eye on weather in the U.S., after hot summers and spring flooding hampered farmers in recent years.
"It's still a bit early, but the lack of snow cover in Iowa and Minnesota worries me a bit due to drought conditions there," Peter Meyer, editor of Opening Print, an agriculture markets newsletter, said in an email. "If this continues through, say, early February, we're looking at some yield loss potential."
Credit: By Liam Pleven
Subject: Year in review; Commodity prices; Series & special reports
Location: United States--US
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: R.7
Publication year: 2012
Publication date: Jan 3, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913312544
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913312544?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Corporate News: Chinese Court Accepts Offshore-Oil Lawsuit Against ConocoPhillips
Author: Areddy, James T
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]03 Jan 2012: B.5. [Duplicate]
ProQuest document link
Abstract:
The company didn't explain the reasons for the fund plan. Since October, two offshore facilities operated by Cnooc have suffered spills, including undersea leakage of natural gas in the country's south that required a dramatic burn off of fuel from pipelines that extend more than 200 kilometers, or about 125 miles, from shore storage points. ---
Full text: SHANGHAI -- A Chinese court accepted a lawsuit that claims leaks from offshore oil-production facilities operated by ConocoPhillips caused $78 million in damages to local fishermen, state-run media reported.
Acceptance of the suit indicates forward momentum in a legal process that could result in additional costs for the U.S. company. The leaks at oil platforms operated by ConocoPhillips in China's Bohai Bay have left the company with a damaged image and led to the closure of one of the country's largest offshore oil production bases.
The suit was filed in north China's Tianjin Maritime Court on behalf of clam and sea-cucumber producers, the state-run Xinhua news agency said Friday. The court couldn't immediately be reached for confirmation.
In two June incidents, 3,343 barrels of oil and mud used in drilling leaked through the Bohai Bay seafloor near platforms operated by Conoco, according to company data. Trace amounts of oil continued to seep into the sea over the following months but was mostly captured, it said. Conoco data show most of the contamination was drilling mud, which was fully recovered along with most of the oil.
In September, Chinese maritime authorities faulted the company's production strategy and ordered a halt in production at the fields that some analysts say could last well into 2012.
The offshore fields, known as Peng Lai 19-3, are 51% owned by China National Offshore Oil Corp. but operated by Conoco, the minority partner. Conoco in September established funding mechanisms to deal with claims, though it hasn't said how much it expects to pay.
"We understand that the events have caused concern among the people who make their living in and around Bohai Bay," Conoco spokesman John Roper said Friday, adding that the compensation fund the company set up is intended to be an alternative to litigation. "We deeply regret these accidents," he said.
In reiterating the company's acceptance of blame for the two spills in a Dec. 21 statement, Conoco Chairman and Chief Executive Jim Mulva said the funds "can help address the challenges of those who have been affected and promote the environmental sustainability of Bohai Bay." The statement said the company expected to pay "reasonable compensation."
The Xinhua report said more than 6,200 square kilometers, or about 2,400 square miles, were polluted. Conoco executives repeatedly have said they believe damage was minimal, citing independent scientific findings that, for instance, indicated that oily substances in the bay were from other sources.
The Peng Lai fields produced about 114,500 barrels of oil a day in 2010, Conoco data suggest. That is a small percentage of China's total production that exceeded 4.1 million barrels a day, according to IHS World Markets Energy.
Separately, Cnooc said last week that it intends to capitalize a marine-environmental fund with an initial 500 million yuan, or about $79 million. The company didn't explain the reasons for the fund plan.
Since October, two offshore facilities operated by Cnooc have suffered spills, including undersea leakage of natural gas in the country's south that required a dramatic burn off of fuel from pipelines that extend more than 200 kilometers, or about 125 miles, from shore storage points.
---
Daniel Gilbert contributed to this article.
Credit: By James T. Areddy
Subject: Petroleum industry; Petroleum production; Offshore drilling; Oil spills; Environmental cleanup
Location: Bohai Bay China
Company / organization: Name: ConocoPhillips Co; NAICS: 211111
Classification: 9179: Asia & the Pacific; 9110: Company specific; 8510: Petroleum industry; 4330: Litigation; 1540: Pollution control
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.5
Publication year: 2012
Publication date: Jan 3, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913312622
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Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Agenda 2012: U.S.: Oil and Gas Bubble Up All Over
Author: Gold, Russell
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]03 Jan 2012: A.7.
ProQuest document link
Abstract:
Crude-oil imports are falling, balance-of-trade payments are improving and thousands of oil-field jobs are being created from Texas to Ohio, from West Virginia to Wyoming. [...] the U.S. is beginning to export a significant amount of diesel and gasoline refined from crude and could begin exporting chilled natural gas next year.
Full text: You'll know the U.S. energy industry is really on the rebound when North Dakota's newfangled Bakken oil field starts pumping more crude than Alaska's stalwart Prudhoe Bay. Energy experts expect it to happen in 2012.
Dwindling production from the once-mighty Alaskan field has been a symbol of what was once seen as the slow, inexorable decline of U.S. oil. But new technologies have turned that overall decline into an increase, led by the Bakken shale, which in July produced 424,000 barrels a day, to Alaska's 453,000.
Rising oil production from the Bakken and other nontraditional fields is expected to add 250,000 barrels of oil a day to U.S. production, according to the International Energy Agency, even as conventional oil production falls. If overall trends continue, daily U.S. oil output could be up by 1 million barrels a day by 2016, to 6.6 million.
"I didn't see it, and I don't know anyone else who saw it coming," said James L. Williams of WTRG Economics, an energy consultancy in London, Ark.
Crude-oil imports are falling, balance-of-trade payments are improving and thousands of oil-field jobs are being created from Texas to Ohio, from West Virginia to Wyoming. Moreover, the U.S. is beginning to export a significant amount of diesel and gasoline refined from crude and could begin exporting chilled natural gas next year.
The Bakken wasn't discovered so much as unlocked. The energy industry figured out that a combination of technologies -- hydraulic fracturing and vertical wells that turn underground to run horizontally through oil-rich rock -- could free petroleum and natural gas trapped in dense rock formations.
The vast majority of this new oil and gas is coming from shale, which must be cracked open using hydraulic fracturing, or fracking. The new year should see an increase in government regulation of the fracking industry, covering air emissions, water disposal and well construction. Early in 2012, New York State is expected to issue new rules for fracking operations that could set the tone for a year of regulatory scrutiny. Around March, the federal government is expected to issue rules for fracking on federal lands.
New technologies are now being applied to the Eagle Ford oil field in South Texas. In August, the field produced about 109,000 barrels a day, according to state records, compared with 3,100 barrels two years earlier. Output is expected to quadruple over the next five years.
Next up: The Utica oil field in eastern Ohio and Pennsylvania. Its existence was disclosed last July, and activity is just starting to ramp up. Chesapeake Energy Corp.'s chief executive, Aubrey McClendon, said last summer that "pound for pound, foot for foot, the Utica rock is going to be better than the Eagle Ford." As more wells are drilled in 2012, this boast will be tested.
Activity is also expected to pick up slightly in the Gulf of Mexico, where drilling has returned after an extended lull following the Deepwater Horizon disaster.
President Barack Obama has indicated that he wants to see shale development move forward, but in a "safe, environmentally sound way." This year, the industry will get its first peek at what he means, and how much it might cost.
Credit: By Russell Gold
Subject: Natural gas; Financial performance; Oil fields; Petroleum production; Hydraulic fracturing; Petroleum industry
Location: United States--US North Dakota
Classification: 9190: United States; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.7
Publication year: 2012
Publication date: Jan 3, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913312925
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913312925?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Corporate News: Panel Deals A Setback To Exxon In Venezuela
Author: Vyas, Kejal; Gonzalez, Angel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]03 Jan 2012: B.5. [Duplicate]
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Abstract:
Exxon spokesman Patrick McGinn said in a statement that the $908 million award by the arbitration panel at the International Chamber of Commerce "represents recovery on a limited, contractual liability of PdVSA that was provided for in the Cerro Negro project agreement."
Full text: CARACAS, Venezuela -- An international arbitration panel awarded Exxon Mobil Corp. about $908 million in a verdict over oil assets nationalized by Venezuelan President Hugo Chavez in 2007, the company said late Saturday.
The payout was substantially lower than the $7 billion that Exxon was seeking in restitution and is likely to be a boon for Venezuela's leftist government, which in recent years has embarked on a nationalization campaign to centralize control over key economic sectors.
State oil company Petroleos de Venezuela SA said Monday it will pay Exxon a total of $255 million -- after subtracting existing debt -- over the next 60 days.
Analysts said the panel's verdict appears to be a victory for Mr. Chavez, who in 2007 seized the U.S. oil giant's Cerro Negro project as part of a wide-scale expropriation campaign.
Exxon spokesman Patrick McGinn said in a statement that the $908 million award by the arbitration panel at the International Chamber of Commerce "represents recovery on a limited, contractual liability of PdVSA that was provided for in the Cerro Negro project agreement."
Of that amount, however, $160 million has already been credited and the remaining $747 million can be paid in cash or by canceling debt.
In a statement, PdVSA said it will subtract from the verdict a series of debts owed by Exxon, including $191 million for purchasing bonds tied to the financing of the Cerro Negro project.
To be sure, Venezuela may eventually have to pay more to Exxon as both parties await a verdict on a separate suit filed by Exxon's local subsidiary against Venezuela before the World Bank's International Centre for Settlement of Investment Disputes.
Exxon has said it invested around $750 million into the Cerro Negro facility.
Credit: By Kejal Vyas and Angel Gonzalez
Subject: Petroleum industry; Settlements & damages; Arbitration; Nationalization
Location: Venezuela
People: Chavez, Hugo
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Classification: 9180: International; 4330: Litigation; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.5
Publication year: 2012
Publication date: Jan 3, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913313270
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913313270?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Oil Hits 8-Month High as Iran Worry Takes Focus
Author: Strumpf, Dan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 Jan 2012: n/a.
ProQuest document link
Abstract:
NEW YORK--Oil futures finished at their highest level in eight months Tuesday, jumping 4.2% to top $100, as heightening tensions between Iran and the West raised fears of supply disruptions.
Full text: NEW YORK--Oil futures finished at their highest level in eight months Tuesday, jumping 4.2% to top $100, as heightening tensions between Iran and the West raised fears of supply disruptions.
Iran's army chief warned an American aircraft carrier not to return to the Persian Gulf following a visit to a port in Dubai. The warning came as 10 days of war games near the Strait of Hormuz were coming to a close and fed expectations that additional sanctions against the world's third-largest oil exporter could be coming.
"You know darn well the U.S. is bringing their aircraft carrier back, so I think that puts Iran up against the wall," said Dominick Chirichella, analyst at the Energy Management Institute in New York. "I think that's what the market is looking at now--that this could escalate more."
Light, sweet crude for February delivery settled $4.13, or 4.2%, higher at $102.96 a barrel on the New York Mercantile Exchange. The jump marks the contract's highest finish since May 10. Brent crude on the ICE futures exchange recently traded up $4.75, or 4.4%, to $112.13 a barrel.
The comments from Iran appeared aimed at projecting the country's control over the Strait of Hormuz, the conduit through which a third of the world's waterborne crude oil passes. However, there seemed little way for Iran to enforce the warning without military action, an outcome Mr. Chirichella said is unlikely.
"My own personal view is nothing is going to happen," he said. "It's strictly Iran negotiating with bluster, much like Saddam Hussein used to do in his day."
The comments marked the latest confrontation between Iran and the West, with tensions on the rise ever since the International Atomic Energy Agency asserted in a report late last year that the country was taking steps toward developing a nuclear weapon. Iran maintains its nuclear program is for peaceful purposes only.
On Saturday, President Obama signed into law sanctions against Iran's central bank, which processes most of the country's oil-export payments. On Jan. 30, European Union foreign ministers are set to gather in Brussels to discuss a formal oil-export ban on Iran.
Oil prices were also supported by a handful of reports showing a pickup in manufacturing activity in several countries. In China, the official Purchasing Managers Index rose to 50.3 in December, up from 49 in November, easing concerns about a slowdown in the world's second-biggest oil consumer.
In the U.S., the ISM manufacturing index came in at 53.9 in December. A reading above 50 for both reports indicates expansion.
"Around the block, the manufacturing data is getting a little stronger, and that bodes well for [oil] demand," said Phil Flynn, analyst at PFG Best in Chicago. "I think everybody's missing the boat if they just blame this on Iran."
Front-month February reformulated gasoline blendstock, or RBOB, settled up 9.12 cents, or 3.4%, to $2.7486 a gallon. February heating oil settled up 12.4 cents, or 4.3%, to $3.0382 a gallon.
Credit: By Dan Strumpf
Subject: Petroleum industry; Federal legislation; Manufacturing; Purchasing managers index; Energy management
Location: New York Strait of Hormuz United States--US
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 3, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913334853
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913334853?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Athabasca Oil Sands to Sell Project to PetroChina
Author: Welsch, Edward
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 Jan 2012: n/a.
ProQuest document link
Abstract:
Does PetroChina have the capacity to develop the project by itself? UBS AG analyst Chad Friess said Athabasca's decision to opt out of MacKay may endanger the success of the project because PetroChina will have to hire outside expertise in an already-tight labor market in Western Canada's oil patch.
Full text: CALGARY--Athabasca Oil Sands Corp. said it was exercising an option to sell a 40% stake in one of its oil-sands prospects to PetroChina Co., a move that for the first time will give full ownership of such a project to a Chinese company.
Athabasca Tuesday said it would sell the 40% interest in the MacKay River project in northern Alberta to PetroChina for 680 million Canadian dollars, or US$666 million. In 2010, Athabasca sold 60% stakes in MacKay and a separate development, Dover, to PetroChina for C$1.9 billion.
Chinese oil companies PetroChina, China Petroleum & Chemical Corp., known as Sinopec, and Cnooc Ltd. have all invested heavily in Canada's oil patch. Chinese firms have typically sought to buy into minority stakes in projects or companies. But last year, interest in buying whole companies ratcheted up significantly.
Last year, Sinopec paid C$2.2 billion for Daylight Energy Ltd., a Canadian conventional-oil and natural-gas company. In 2010, it paid $4.65 billion for a stake in the massive Syncrude oil-sands project in Alberta. Also last year, Cnooc bought the bankrupt oil-sands producer OPTI Canada Inc.
Canada holds the world's third-largest reserves of oil. Most of those are oil-sands--essentially a mix of bitumen and quartz sand--located in the western Canadian province of Alberta. Oil-sands output has grown quickly, and Alberta and Canadian officials have sought out new markets.
That has particularly been the case after the U.S. State Department late last year delayed a decision on a pipeline proposed to carry oil from Alberta to the U.S. Gulf Coast. The government of Prime Minister Stephen Harper has said it would actively market its oil to Asian buyers, including China. The federal government has said it backs the construction of another pipeline running from Alberta to the Pacific, where oil could be loaded onto tankers bound for Asia.
The MacKay sale comes less than a week after Alberta regulators approved the planned 150,000-barrel-a-day project. It is scheduled to start out at 35,000 barrels a day in 2014.
The sale raises one big question: Does PetroChina have the capacity to develop the project by itself? UBS AG analyst Chad Friess said Athabasca's decision to opt out of MacKay may endanger the success of the project because PetroChina will have to hire outside expertise in an already-tight labor market in Western Canada's oil patch.
PetroChina "doesn't have much knowledge about how to develop an oil-sands lease," Mr. Friess said. "It may have a negative read-through to the success of the project, because there is some skill to developing these things." A spokesman for PetroChina wasn't available to comment.
Athabasca said it sold out of McKay because it had too many other oil-sands and light-oil projects to develop, including its Dover joint venture with PetroChina and several other leases it wholly owns. As a result of the sale, Athabasca said its 2012 capital budget will be reduced by about C$190 million.
"We can grow production much faster than with what we gave up" in MacKay, Athabasca Chief Executive Sveinung Svarte said in an interview. Mr. Svarte said that PetroChina has the resources to develop MacKay on its own without a Canadian partner.
Credit: By Edward Welsch
Subject: Oil sands; Petroleum industry
Company / organization: Name: CNOOC Ltd; NAICS: 211111; Name: Athabasca Oil Sands Corp; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 3, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913376597
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913376597?a ccountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
PetroChina Buys Oil-Sands Project
Author: Welsch, Edw ard
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]04 Jan 2012: n/a.
ProQuest document link
Abstract:
Does PetroChina have the capacity to develop the project by itself? UBS AG analyst Chad Friess said Athabasca's decision to opt out of MacKay may endanger the success of the project because PetroChina will have to hire outside expertise in an already-tight labor market in Western Canada's oil patch.
Full text: CALGARY--Athabasca Oil Sands Corp. said it was selling a 40% stake in one of its oil-sands prospects to PetroChina Co., a move that for the first time will give full ownership of such a project to a Chinese company.
Athabasca is selling its remaining interest in the MacKay River project in northern Alberta to PetroChina for 680 million Canadian dollars, or US$666 million. In 2010, Athabasca sold 60% stakes in MacKay and a separate development, Dover, to PetroChina for C$1.9 billion.
Chinese oil companies PetroChina, China Petroleum & Chemical Corp., known as Sinopec, and Cnooc Ltd. have all invested heavily in Canada's oil patch. Chinese firms have typically sought to buy into minority stakes in projects or companies. But last year, interest in buying whole companies ratcheted up.
Sinopec last year paid C$2.2 billion for Daylight Energy Ltd., a Canadian conventional-oil and natural-gas company. In 2010, it paid $4.65 billion for a stake in the massive Syncrude oil-sands project in Alberta. Also last year, Cnooc bought the bankrupt oil-sands producer OPTI Canada Inc.
Canada holds the world's third-largest reserves of oil. Most of those are oil-sands--essentially a mix of bitumen and quartz sand--located in the western Canadian province of Alberta. Oil-sands output has grown quickly, and Alberta and Canadian officials have sought out new markets.
That has particularly been the case after the U.S. State Department late last year delayed a decision on a pipeline proposed to carry oil from Alberta to the U.S. Gulf Coast.
The government of Prime Minister Stephen Harper has said it would actively market its oil to Asian buyers, including China. The Canadian government has said it backs the construction of another pipeline running from Alberta to the Pacific, where oil could be loaded onto tankers bound for Asia.
The MacKay sale comes less than a week after Alberta regulators approved the planned 150,000-barrel-a-day project. It is scheduled to start out at 35,000 barrels a day in 2014.
The sale raises one big question: Does PetroChina have the capacity to develop the project by itself? UBS AG analyst Chad Friess said Athabasca's decision to opt out of MacKay may endanger the success of the project because PetroChina will have to hire outside expertise in an already-tight labor market in Western Canada's oil patch.
PetroChina "doesn't have much knowledge about how to develop an oil-sands lease," Mr. Friess said. "There is some skill to developing these things." A spokesman for PetroChina wasn't available to comment.
Athabasca said it sold out of McKay because it had too many other oil-sands and light-oil projects to develop, including its Dover joint venture with PetroChina and several other leases it wholly owns. As a result of the sale, Athabasca said its 2012 capital budget will be reduced by about C$190 million.
"We can grow production much faster than with what we gave up" in MacKay, Athabasca Chief Executive Sveinung Svarte said in an interview. Mr. Svarte said that PetroChina has the resources to develop MacKay without a Canadian partner.
Credit: By Edward Welsch
Subject: Oil sands; Petroleum industry
Company / organization: Name: CNOOC Ltd; NAICS: 211111; Name: Athabasca Oil Sands Corp; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 4, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913401226
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913401226?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Jumps Above $100 on Unease Over Iran
Author: Strumpf, Dan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]04 Jan 2012: n/a.
ProQuest document link
Abstract:
NEW YORK--Oil futures finished at their highest level in eight months Tuesday, jumping 4.2% to top $100, as heightening tensions between Iran and the West raised fears of supply disruptions.
Full text: NEW YORK--Oil futures finished at their highest level in eight months Tuesday, jumping 4.2% to top $100, as heightening tensions between Iran and the West raised fears of supply disruptions.
Iran's army chief warned an American aircraft carrier not to return to the Persian Gulf following a visit to a port in Dubai. The warning came as 10 days of war games near the Strait of Hormuz were coming to a close and fed expectations that additional sanctions against the world's third-largest oil exporter could be coming.
"You know darn well the U.S. is bringing their aircraft carrier back, so I think that puts Iran up against the wall," said Dominick Chirichella, analyst at the Energy Management Institute in New York. "I think that's what the market is looking at now--that this could escalate more."
Light, sweet crude for February delivery settled $4.13, or 4.2%, higher at $102.96 a barrel on the New York Mercantile Exchange. The jump marks the contract's highest finish since May 10. Brent crude on the ICE futures exchange recently traded up $4.75, or 4.4%, to $112.13 a barrel.
The comments from Iran appeared aimed at projecting the country's control over the Strait of Hormuz, the conduit through which a third of the world's waterborne crude oil passes. However, there seemed little way for Iran to enforce the warning without military action, an outcome Mr. Chirichella said is unlikely.
"My own personal view is nothing is going to happen," he said. "It's strictly Iran negotiating with bluster, much like Saddam Hussein used to do in his day."
The comments marked the latest confrontation between Iran and the West, with tensions on the rise ever since the International Atomic Energy Agency asserted in a report late last year that the country was taking steps toward developing a nuclear weapon. Iran maintains its nuclear program is for peaceful purposes only.
On Saturday, President Obama signed into law sanctions against Iran's central bank, which processes most of the country's oil-export payments. On Jan. 30, European Union foreign ministers are set to gather in Brussels to discuss a formal oil-export ban on Iran.
Oil prices were also supported by a handful of reports showing a pickup in manufacturing activity in several countries. In China, the official Purchasing Managers Index rose to 50.3 in December, up from 49 in November, easing concerns about a slowdown in the world's second-biggest oil consumer.
In the U.S., the ISM manufacturing index came in at 53.9 in December. A reading above 50 for both reports indicates expansion.
"Around the block, the manufacturing data is getting a little stronger, and that bodes well for [oil] demand," said Phil Flynn, analyst at PFG Best in Chicago. "I think everybody's missing the boat if they just blame this on Iran."
Front-month February reformulated gasoline blendstock, or RBOB, settled up 9.12 cents, or 3.4%, to $2.7486 a gallon. February heating oil settled up 12.4 cents, or 4.3%, to $3.0382 a gallon.
Credit: By Dan Strumpf
Subject: Petroleum industry; Federal legislation; Manufacturing; Purchasing managers index; Energy management
Location: New York Strait of Hormuz United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 4, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913413226
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913413226?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Jumps Above $100 On Unease Over Iran
Author: Strumpf, Dan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]04 Jan 2012: C.4. [Duplicate]
ProQuest document link
Abstract:
Oil prices finished at their highest level in eight months, jumping 4.2% to top $100 a barrel, as tensions between Iran and the West raised fears of supply disruptions.
Full text: Oil prices finished at their highest level in eight months, jumping 4.2% to top $100 a barrel, as tensions between Iran and the West raised fears of supply disruptions.
Iran's army chief warned an American aircraft carrier not to return to the Persian Gulf following a visit to a port in Dubai. The warning came as 10 days of war games near the Strait of Hormuz were coming to a close and fed expectations that additional sanctions against the world's third-largest oil exporter could be coming.
"You know darn well the U.S. is bringing their aircraft carrier back, so I think that puts Iran up against the wall," said Dominick Chirichella, analyst at the Energy Management Institute in New York. "I think that's what the market is looking at now -- that this could escalate more."
Light, sweet crude for February delivery rose $4.13, to $102.96 a barrel on the New York Mercantile Exchange. The jump marks the contract's highest finish since May 10. Brent crude on the ICE futures exchange gained $4.79, or 4.5%, to $112.17 a barrel.
The comments from Iran appeared aimed at projecting the country's control over the Strait of Hormuz, the conduit through which a third of the world's waterborne crude oil passes.
The comments marked the latest confrontation between Iran and the West, with tensions on the rise ever since the International Atomic Energy Agency asserted in a report late last year that the country was taking steps toward developing a nuclear weapon. Iran maintains its nuclear program is for peaceful purposes only.
Oil prices also were supported by a handful of reports showing a pickup in manufacturing activity in several countries.
Front-month February reformulated gasoline blendstock, or RBOB, settled up 9.12 cents, or 3.4%, to $2.7486 a gallon. February heating oil settled up 12.4 cents, or 4.3%, to $3.0382 a gallon.
Credit: By Dan Strumpf
Subject: Futures trading; Crude oil prices; Commodity prices
Location: United States--US
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Jan 4, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913425788
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913425788?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Corporate News: PetroChina Buys Oil-Sands Project
Author: Welsch, Edward
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]04 Jan 2012: B.3. [Duplicate]
ProQuest document link
Abstract:
Does PetroChina have the capacity to develop the project by itself? UBS AG analyst Chad Friess said Athabasca's decision to opt out of MacKay may endanger the success of the project because PetroChina will have to hire outside expertise in an already-tight labor market in Western Canada's oil patch.
Full text: CALGARY -- Athabasca Oil Sands Corp. said it was selling a 40% stake in one of its oil-sands prospects to PetroChina Co., a move that for the first time will give full ownership of such a project to a Chinese company.
Athabasca is selling its remaining interest in the MacKay River project in northern Alberta to PetroChina for 680 million Canadian dollars, or US$666 million. In 2010, Athabasca sold 60% stakes in MacKay and a separate development, Dover, to PetroChina for C$1.9 billion.
Chinese oil companies PetroChina, China Petroleum & Chemical Corp., known as Sinopec, and Cnooc Ltd. have all invested heavily in Canada's oil patch. Chinese firms have typically sought to buy into minority stakes in projects or companies. But last year, interest in buying whole companies ratcheted up.
Sinopec last year paid C$2.2 billion for Daylight Energy Ltd., a Canadian conventional-oil and natural-gas company. Also last year, Cnooc bought the bankrupt oil-sands producer OPTI Canada Inc.
Canada holds the world's third-largest reserves of oil. Most of those are oil-sands -- essentially a mix of bitumen and quartz sand -- located in the western Canadian province of Alberta. Oil-sands output has grown quickly, and Alberta and Canadian officials have sought out new markets.
That has particularly been the case after the U.S. State Department late last year delayed a decision on a pipeline proposed to carry oil from Alberta to the U.S. Gulf Coast.
The government of Prime Minister Stephen Harper has said it would actively market its oil to Asian buyers, including China. The Canadian government has said it backs the construction of another pipeline running from Alberta to the Pacific, where oil could be loaded onto tankers bound for Asia.
The MacKay sale comes less than a week after Alberta regulators approved the planned 150,000-barrel-a-day project. It is scheduled to start out at 35,000 barrels a day in 2014.
The sale raises one big question: Does PetroChina have the capacity to develop the project by itself? UBS AG analyst Chad Friess said Athabasca's decision to opt out of MacKay may endanger the success of the project because PetroChina will have to hire outside expertise in an already-tight labor market in Western Canada's oil patch.
PetroChina "doesn't have much knowledge about how to develop an oil-sands lease," Mr. Friess said. "There is some skill to developing these things." A spokesman for PetroChina wasn't available to comment.
Athabasca said it sold out of McKay because it had too many other oil-sands and light-oil projects to develop. As a result of the sale, Athabasca said its 2012 capital budget will be reduced by about C$190 million.
"We can grow production much faster than with what we gave up" in MacKay, Athabasca Chief Executive Sveinung Svarte said in an interview. Mr. Svarte said that PetroChina has the resources to develop MacKay without a Canadian partner.
Credit: By Edward Welsch
Subject: Divestiture; Oil sands; Equity stake
Location: China Canada
Company / organization: Name: PetroChina Co Ltd; NAICS: 424720; Name: Athabasca Oil Sands Corp; NAICS: 211111
Classification: 9180: International; 8510: Petroleum industry; 2330: Acquisitions & mergers
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.3
Publication year: 2012
Publication date: Jan 4, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: Eng lish
Document type: News
ProQuest document ID: 913425834
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913425834?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Mobil Reviews Japan Operations
Author: Sposato, William; Maxwell, Kenneth
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]04 Jan 2012: n/a.
ProQuest document link
Abstract:
While the U.S. giant said it has "no plans to exit the Japanese market," the talks come as Western oil majors put existing operations under the microscope, redrawing the map to adapt to the changing topography of future energy sources and demand.
Full text: TOKYO--Exxon Mobil Corp. said it is in talks with its majority-controlled Japanese unit, TonenGeneral Sekiyu KK, regarding the possibility of restructuring its nearly $3 billion stake in the oil refiner.
While U.S.-based Exxon said it has "no plans to exit the Japanese market," the talks come as major Western oil companies scrutinize their existing operations in efforts to adapt to the changing topography of future energy sources and demand. Meanwhile, Japan's own refiners are trying to adjust to a long-term slide in gasoline demand as the sluggish domestic economy drives consolidation pressures in the industry.
Exxon, which owns a 50.2% stake in TonenGeneral, Japan's second-biggest refiner by capacity, said in a written statement that it is in discussions with TonenGeneral "about the potential restructuring of its holdings in Japan but no decisions have been made."
Earlier, Reuters reported that Exxon was looking to sell most of its stake in the Japanese refiner and sell other assets in Japan in a deal valued at roughly $5 billion. The report spooked investors in the Japanese company, in which Exxon Mobil has been an investor since 2000, sending the shares as much as 7.5% lower at one stage Wednesday.
TonenGeneral shares closed off 5.8% at ¥792 ($10.32) in Tokyo, while the benchmark Nikkei 225 Stock Average rose 1.2%.
The U.S. oil company said in its statement that reports suggesting it would retreat from Japan are "not based on statements by Exxon Mobil. We have made no announcements and, as a matter of practice, we do not comment on market rumors or speculation." In a separate written statement, TonenGeneral echoed Exxon Mobil's comments.
Japan's refiners cranked up output to meet a temporary spike in demand after the March 11 earthquake and tsunami, but the industry has been contracting for years amid the country's sluggish economy and as energy-efficient machinery--including gasoline-electric hybrid autos--becomes more prevalent.
That has saddled the refining industry with a significant overcapacity problem, triggering costly plant closures in recent years. In November, Idemitsu Kosan Co. said it would permanently close a 120,000-barrel-a-day crude-distillation unit at its Tokuyama refinery in western Japan in March 2014.
The trend has also triggered industry consolidation. In April 2010 JX Holdings Co. was created by integrating Nippon Oil Corp., the country's largest refiner by capacity, and Nippon Mining Holdings Inc., the country's largest copper smelter, which also had oil refining operations.
Meanwhile, Exxon has been gradually distancing itself from refining and marketing globally. The shift comes as Western energy companies adapt to a boom in exploration for hydrocarbons such as shale gas and oil sands once considered too difficult and expensive to extract, but that are now being exploited from Australia to Canada.
Write to William Sposato at william.sposato@dowjones.com and Kenneth Maxwell at kenneth.maxwell@dowjones.com
Credit: By William Sposato And Kenneth Maxwell
Subject: Petroleum industry; Equity stake; Consolidation
Location: United States--US
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: TonenGeneral Sekiyu KK; NAICS: 324110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 4, 2012
column: Heard on the Street
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913426099
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913426099?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
EU Agrees in Principle on Iran Oil Embargo
Author: Norman, Laurence
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]04 Jan 2012: n/a.
ProQuest document link
Abstract:
BRUSSELS--European Union member states are agreed in principle to press ahead with an oil embargo on Iran but there are significant differences still over details of the plan, including the timing of its implementation, EU diplomats said Wednesday.
Full text: BRUSSELS--European Union member states are agreed in principle to press ahead with an oil embargo on Iran but there are significant differences still over details of the plan, including the timing of its implementation, EU diplomats said Wednesday.
"There is a converging consensus in principle on an oil embargo," said one diplomat. "I don't see any fundamental opposition."
Earlier Wednesday, a Greek government source told Dow Jones Newswires that Greece wouldn't stand in the way of an oil embargo. Greece had led the opposition to an embargo, although other countries were concerned about moving too fast, diplomats have said in recent weeks.
However, the diplomats said there was still disagreement over when the embargo would enter into force and what to do about existing contracts.
One person said that to win the backing of those who were opposed, the EU would likely agree that all existing contracts would be allowed to run to maturity. However, others said that was still to be decided, with some countries hesitant about agreeing to such a broad exception.
France proposed an oil embargo and central bank sanctions early last month as a response to Iran's nuclear ambitions. It was backed in principle by other powerful member states such as the U.K. and Germany.
However, some of Europe's most vulnerable economies import significant amounts of crude oil from Iran, including Greece, Spain and Italy. Higher oil prices could be a significant additional burden for them at a time of economic hardship.
Meanwhile, the diplomats said that member states haven't yet agreed in principle on whether to push ahead with sanctions on Iran's central bank.
One diplomat said an options paper from the EU's foreign service unit lays out three basic approaches: a complete asset freeze on the bank, further sanctions on non-central bank financial institutions, and a third option that would hit additional Iranian financial firms with sanctions and ban certain transactions with Iran's central bank.
"There is still not yet a decision taken on the central bank," a diplomat said.
Write to Laurence Norman at laurence.norman@dowjones.com
Credit: By Laurence Norman
Subject: Diplomatic & consular services; Sanctions; Central banks
Location: United States--US
Company / organization: Name: European Union; NAICS: 926110, 928120; Name: Dow Jones Newswires; NAICS: 519110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 4, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913494877
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913494877?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Reviews Japan Operations; Oil Company Weighs Changes to Stake in Refiner, but Plans to Stay in Market
Author: Sposato, William; Maxwell, Kenneth
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 Jan 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: TOKYO--Exxon Mobil Corp. said it is in talks with its majority-controlled Japanese unit, TonenGeneral Sekiyu KK, regarding the possibility of restructuring its nearly $3 billion stake in the oil refiner.
While U.S.-based Exxon said it has "no plans to exit the Japanese market," the talks come as major Western oil companies scrutinize their existing operations in efforts to adapt to the changing topography of future energy sources and demand. Meanwhile, Japan's own refiners are trying to adjust to a long-term slide in gasoline demand as the sluggish domestic economy drives consolidation pressures in the industry.
Exxon, which owns a 50.2% stake in TonenGeneral, Japan's second-biggest refiner by capacity, said in a written statement that it is in discussions with TonenGeneral "about the potential restructuring of its holdings in Japan but no decisions have been made."
Earlier, Reuters reported that Exxon was looking to sell most of its stake in the Japanese refiner and sell other assets in Japan in a deal valued at roughly $5 billion. The report spooked investors in the Japanese company, in which Exxon Mobil has been an investor since 2000, sending the shares as much as 7.5% lower at one stage Wednesday.
TonenGeneral shares closed off 5.8% at ¥792 ($10.32) in Tokyo, while the benchmark Nikkei 225 Stock Average rose 1.2%.
The U.S. oil company said in its statement that reports suggesting it would retreat from Japan are "not based on statements by Exxon Mobil. We have made no announcements and, as a matter of practice, we do not comment on market rumors or speculation." In a separate written statement, TonenGeneral echoed Exxon Mobil's comments.
Japan's refiners cranked up output to meet a temporary spike in demand after the March 11 earthquake and tsunami, but the industry has been contracting for years amid the country's sluggish economy and as energy-efficient machinery--including gasoline-electric hybrid autos--becomes more prevalent.
That has saddled the refining industry with a significant overcapacity problem, triggering costly plant closures in recent years. In November, Idemitsu Kosan Co. said it would permanently close a 120,000-barrel-a-day crude-distillation unit at its Tokuyama refinery in western Japan in March 2014.
The trend has also triggered industry consolidation. In April 2010 JX Holdings Co. was created by integrating Nippon Oil Corp., the country's largest refiner by capacity, and Nippon Mining Holdings Inc., the country's largest copper smelter, which also had oil refining operations.
Meanwhile, Exxon has been gradually distancing itself from refining and marketing globally. The shift comes as Western energy companies adapt to a boom in exploration for hydrocarbons such as shale gas and oil sands once considered too difficult and expensive to extract, but that are now being exploited from Australia to Canada.
Write to William Sposato at william.sposato@dowjones.com and Kenneth Maxwell at kenneth.maxwell@dowjones.com
Credit: By William Sposato and Kenneth Maxwell
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 5, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913637 997
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913637997?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Oil Market's Iran Fears Might Be Overdone
Author: Faucon, Benoit
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 Jan 2012: n/a.
ProQuest document link
Abstract:
The move follows U.S. President Barack Obama's signing on Dec. 31 of a law imposing sanctions against banks that trade with the Iran's central bank, through which much of Iranian oil sales are cleared. Since tensions escalated on Dec. 27, Brent crude, Europe's oil benchmark, has risen 5.3% to settle Wednesday at $113.70 a barrel, while U.S. crude is up 3.6%, shooting well past the symbolic $100 threshold to $103.22 a barrel.
Full text: After turning the page on Libya's oil-supply shutdown last year, markets now have a new drama to worry about: the rising tensions between Iran and the West.
In recent days, Iran has threatened to block the Strait of Hormuz, the channel through which about a third of global seaborne oil exports pass. The saber-rattling from Tehran has come in response to moves toward new sanctions by Western nations aimed at Iran's nuclear program. The tough talk has spurred fears of supply shortages, driving prices higher.
But experts say abrupt disruptions of crude from the Gulf region appear unlikely.
"While the heightened tensions are sufficient to add a modest risk premium at this stage ... we believe that Iran's exports will continue to reach the global oil market," Standard Chartered said in a report Tuesday.
On Wednesday, European Union officials said the bloc had reached an agreement in principle on plans for an embargo on Iranian oil, though the timing and other details have yet to be determined. The move follows U.S. President Barack Obama's signing on Dec. 31 of a law imposing sanctions against banks that trade with the Iran's central bank, through which much of Iranian oil sales are cleared.
Since tensions escalated on Dec. 27, Brent crude, Europe's oil benchmark, has risen 5.3% to settle Wednesday at $113.70 a barrel, while U.S. crude is up 3.6%, shooting well past the symbolic $100 threshold to $103.22 a barrel.
The diplomatic spat between Iran and the West has returned the oil markets to the sort of uncertainty not seen since the Libyan civil war last February. That war shut down most oil output in the country, but much of the missing supply has since come back online.
The oil supply at stake in the current drama dwarfs Libya's 1.6 million barrels a day. Some 17 million barrels a day go through the strait, and Iran's output amounts to 3.6 million barrels a day.
But unlike Libya's abrupt disruption, the new sanctions are expected to affect oil markets only gradually.
European officials say an embargo would either contain a grace period to leave time for refiners to find replacements for Iranian oil or make exceptions for existing long-term supply deals.
As for the U.S. ban on banks that continue to settle oil trades with Iran's central bank, that won't kick in until late June and could be mitigated by exemptions ensuring markets can cope with the changes.
"This new sanction at best represents a halfway house between the U.S. hawks and those in the U.S. who consider the stability of global markets should take precedence over punishing Iran and those who do business with it," says Nigel Kushner, chief executive of Whale Rock Legal, a London law firm specializing in international trade and sanctions.
Partly due to the possibility of exemptions, "we expect Japanese and Korean refineries to reduce their purchases of Iranian crude by between 10% and 40% over the course of 2012," Trevor Houser, a partner at New York-based economic research firm Rhodium Group, said in a note Wednesday.
To be sure, the embargo "may cause upward pressure on oil prices in Europe in the short term as Iran's oil is diverted, but lower prices elsewhere," Standard Chartered said, as China would likely take advantage by negotiating discounts.
Likewise, Iran is unlikely to block the strait for long because it is no match for the U.S. Navy and its allies patrolling the Persian Gulf.
"Although Iran seeks to show that it is able and willing to take to drastic means to respond to foreign pressure, it is unlikely that it has the ability to close Hormuz," said risk consultancy IHS Global Insight in a report Tuesday.
Laurence Norman contributed to this report.
Write to Benoit Faucon at benoit.faucon@dowjones.com
Credit: By Benoit Faucon
Subject: Sanctions; Petroleum industry; Shutdowns; Banking
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 5, 2012
column: Market Focus
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913638153
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913638153?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Exxon Reviews Japan Operations
Author: Sposato, William; Maxwell, Kenneth
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]05 Jan 2012: B.8.
ProQuest document link
Abstract:
While U.S.-based Exxon said it has "no plans to exit the Japanese market," the talks come as major Western oil companies scrutinize their existing operations in efforts to adapt to the changing topography of future energy sources and demand.
Full text: TOKYO -- Exxon Mobil Corp. said it is in talks with its majority-controlled Japanese unit, TonenGeneral Sekiyu KK, regarding the possibility of restructuring its nearly $3 billion stake in the oil refiner.
While U.S.-based Exxon said it has "no plans to exit the Japanese market," the talks come as major Western oil companies scrutinize their existing operations in efforts to adapt to the changing topography of future energy sources and demand. Meanwhile, Japan's own refiners are trying to adjust to a long-term slide in gasoline demand as the sluggish domestic economy drives consolidation pressures in the industry.
Exxon, which owns a 50.2% stake in TonenGeneral, Japan's second-biggest refiner by capacity, said in a written statement that it is in discussions with TonenGeneral "about the potential restructuring of its holdings in Japan but no decisions have been made."
Earlier, Reuters reported that Exxon was looking to sell most of its stake in the Japanese refiner and sell other assets in Japan in a deal valued at roughly $5 billion.
The report spooked investors in the Japanese company, in which Exxon has been an investor since 2000.
TonenGeneral shares closed off 5.8% at 792 yen ($10.32) in Tokyo on Wednesday.
The Irving, Texas-based energy company said in its statement that reports suggesting it would retreat from Japan are "not based on statements by Exxon Mobil. We have made no announcements and, as a matter of practice, we do not comment on market rumors or speculation."
In a separate written statement, TonenGeneral echoed Exxon's comments.
Japan's refiners cranked up output to meet a temporary spike in demand after the March 11 earthquake and tsunami, but the industry has been contracting for years amid the country's sluggish economy and as energy-efficient machinery -- including gasoline-electric hybrid autos -- becomes more prevalent.
That has saddled the refining industry with a significant overcapacity problem, triggering costly plant closures in recent years. In November, Idemitsu Kosan Co. said it would permanently close a 120,000-barrel-a-day crude-distillation unit at its Tokuyama refinery in western Japan in March 2014.
The trend has also led to industry consolidation. In April 2010 JX Holdings Co. was created by integrating Nippon Oil Corp., Japan's largest refiner by capacity, and Nippon Mining Holdings Inc., the country's largest copper smelter, which also had oil-refining operations.
Meanwhile, Exxon has been gradually distancing itself from refining and marketing globally. The shift comes as Western energy companies adapt to a boom in exploration for hydrocarbons such as shale gas and oil sands.
Credit: By William Sposato and Kenneth Maxwell
Subject: Petroleum industry; Equity stake
Location: Japan
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: TonenGeneral Sekiyu KK; NAICS: 324110
Classification: 9179: Asia & the Pacific; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.8
Publication year: 2012
Publication date: Jan 5, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913688435
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913688435?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
World News: Europeans Plan Oil Embargo on Iran --- EU Deal to Ban Imports Adds Pressure As U.S. Addresses Persian Gulf Tensions
Author: Solomon, Jay; Norman, Laurence
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]05 Jan 2012: A.8.
ProQuest document link
Abstract:
The Obama administration and some European governments have expressed concerns that such an action, coupled with the sanctioning of Iran's central bank, could lead to a jump in global energy prices and undercut economic growth in Western countries.
Full text: The European Union agreed in principle to enact an embargo on all purchases of Iranian oil, significantly increasing the West's financial war on Tehran at a time of heightened tensions in the Persian Gulf.
The decision followed U.S. measures against Iran's central bank, and the value of the Iranian rial plunged in recent days -- forcing Tehran's central bank to consider measures to support the currency -- in what U.S. and European officials said was proof that the West's financial campaign was succeeding in draining Tehran's coffers.
Iranian defense officials have intensified threats this week to retaliate against sanctions efforts by targeting Western ships operating in the Strait of Hormuz, a major route for oil shipments. Iran's parliament introduced a bill on Wednesday that would require all foreign ships to gain Tehran's permission to enter the strategic waterway.
U.S. and European officials said they were undeterred by Tehran's threats. The White House, moving to address tensions with Iran, convened a meeting that included Defense Secretary Leon Panetta, as well as Gen. James Mattis, the head of the U.S. Central Command, and Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff.
The administration is increasing preparations to protect the flow of commercial traffic through the Persian Gulf while guarding against any military miscalculations that could lead to a direct conflict with Iran, U.S. officials said.
"We believe that the United States needs to continue to play the global role that we have played for a long time in terms of ensuring and promoting freedom of navigation in international waters, and our policy will continue to reflect that," State Department spokeswoman Victoria Nuland said. "We consider [the Persian Gulf] international territory."
The EU agreement to enact an embargo on Tehran's oil sales followed years of deliberations in Washington and Brussels about the merits of taking the step. Diplomats said differences in Europe remained over details of the plan, including when it would take effect.
The Obama administration and some European governments have expressed concerns that such an action, coupled with the sanctioning of Iran's central bank, could lead to a jump in global energy prices and undercut economic growth in Western countries. They also have said Iran might make good on its threats to disrupt shipping in the Persian Gulf.
Sentiment in Washington and Brussels, though, has shifted significantly in recent months, in part because of a United Nations report that alleged Iran has conducted significant work on creating the technologies used in building nuclear weapons.
The U.S. in November also publicly accused Iran of plotting to assassinate a senior Saudi diplomat in Washington, and a mob ransacked the British Embassy in Tehran in November.
Iran has denied it is seeking nuclear weapons or that the government has played a role in terrorist attacks or overrunning the British compound.
On Wednesday, European benchmark Brent crude oil jumped to a two-month high of $113.97 a barrel after the announcement of EU steps toward an oil embargo. In New York trading, prices rose but later retreated over uncertainty about when the measures would take effect.
Greece, Italy and Spain have been major buyers of Iranian oil in recent years, complicating the EU's sanctions strategy. Under the tentative deal, Athens and Madrid would be granted a grace period through which they can unwind contracts with Tehran and seek alternate supplies of oil, said European diplomats.
Italy has said it will support an embargo if its companies can continue receiving Iranian oil shipments as payment for 1 billion euros ($1.3 billion) in debts owed to Italian oil company Eni SpA.
European officials said they expected the embargo plan to be formally approved by the EU's foreign ministers in a meeting later in the month.
U.S. officials are urging other major importers of Iranian oil to significantly cut their purchases.
The EU also continues to debate whether to follow President Barack Obama's move on Saturday to ban all financial transactions with Iran's central bank. Most revenue for Tehran's oil sales flows through the central bank, Bank Markazi.
The specter of growing sanctions on Iran helped trigger a massive selloff of the Iranian currency this week, driving it to a low of nearly 18,000 rial to the dollar on Monday. The currency recovered to around 15,500 on Wednesday.
Iranian officials initially denied that fear of U.S. and EU sanctions were the cause of the selloff. But central bank governor Mahmoud Bahmani, wrote in Iranian newspapers on Wednesday that Iran was the victim of the "psychological effects" of the Western financial war.
Mr. Bahmani said Bank Markazi was considering increasing interest rates in rial-based deposits as a means to strengthen the Iranian currency, and "controlling the currency market." Controls would limit the ability to trade the currency in the open market.
U.S. and European officials said they viewed the weakness of the rial as a sign that Western sanctions are working and that financial pressure will only increase on Tehran until it makes concessions on the nuclear issue.
International economists have long believed Iran's currency to be greatly overvalued. Iran's central bank has managed to maintain a roughly 9% appreciation of the dollar against the rial annually by paying out high interest rates on rial-denominated debt and by intermittently intervening in currency markets.
"They have to spend money to get it under control," said a European official. "But they can't do this forever."
---
Julian E. Barnes, Ian Talley and Benoit Faucon contributed to this article.
Credit: Jay Solomon; Laurence Norman
Subject: Petroleum industry; Embargoes & blockades
Location: Iran
Company / organization: Name: European Union; NAICS: 926110, 928120
Classification: 9175: Western Europe; 8510: Petroleum industry; 1210: Politics & political behavior
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.8
Publication year: 2012
Publication date: Jan 5, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913689278
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913689278?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reprodu ction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Europeans Plan Oil Embargo on Iran; EU Deal to Ban Imports Adds Pressure as U.S. Addresses Persian Gulf Tensions
Author: Solomon, Jay; Norman, Laurence
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 Jan 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: The European Union agreed in principle to enact an embargo on all purchases of Iranian oil, significantly increasing the West's financial war on Tehran at a time of heightened tensions in the Persian Gulf.
The decision followed U.S. measures against Iran's central bank, and the value of the Iranian rial plunged in recent days--forcing Tehran's central bank to consider measures to support the currency--in what U.S. and European officials said was proof that the West's financial campaign was succeeding in draining Tehran's coffers.
Iranian defense officials have intensified threats this week to retaliate against sanctions efforts by targeting Western ships operating in the Strait of Hormuz, a major route for oil shipments. Iran's parliament introduced a bill on Wednesday that would require all foreign ships to gain Tehran's permission to enter the strategic waterway.
U.S. and European officials said they were undeterred by Tehran's threats. The White House, moving to address tensions with Iran, convened a meeting that included Defense Secretary Leon Panetta, as well as Gen. James Mattis, the head of the U.S. Central Command, and Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff.
The administration is increasing preparations to protect the flow of commercial traffic through the Persian Gulf while guarding against any military miscalculations that could lead to a direct conflict with Iran, U.S. officials said.
"We believe that the United States needs to continue to play the global role that we have played for a long time in terms of ensuring and promoting freedom of navigation in international waters, and our policy will continue to reflect that," State Department spokeswoman Victoria Nuland said. "We consider [the Persian Gulf] international territory."
The EU agreement to enact an embargo on Tehran's oil sales followed years of deliberations in Washington and Brussels about the merits of taking the step. Diplomats said differences in Europe remained over details of the plan, including when it would take effect.
The Obama administration and some European governments have expressed concerns that such an action, coupled with the sanctioning of Iran's central bank, could lead to a jump in global energy prices and undercut economic growth in Western countries. They also have said Iran might make good on its threats to disrupt shipping in the Persian Gulf.
Sentiment in Washington and Brussels, though, has shifted significantly in recent months, in part because of a United Nations report that alleged Iran has conducted significant work on creating the technologies used in building nuclear weapons.
The U.S. in November also publicly accused Iran of plotting to assassinate a senior Saudi diplomat in Washington, and a mob ransacked the British Embassy in Tehran in November.
Iran has denied it is seeking nuclear weapons or that the government has played a role in terrorist attacks or overrunning the British compound.
On Wednesday, European benchmark Brent crude oil jumped to a two-month high of $113.97 a barrel after the announcement of EU steps toward an oil embargo. In New York trading, prices rose but later retreated over uncertainty about when the measures would take effect.
Greece, Italy and Spain have been major buyers of Iranian oil in recent years, complicating the EU's sanctions strategy. Under the tentative deal, Athens and Madrid would be granted a grace period through which they can unwind contracts with Tehran and seek alternate supplies of oil, said European diplomats.
Italy has said it will support an embargo if its companies can continue receiving Iranian oil shipments as payment for [euro]1 billion ($1.3 billion) in debts owed to Italian oil company Eni SpA.
European officials said they expected the embargo plan to be formally approved by the EU's foreign ministers in a meeting later in the month.
U.S. officials are urging other major importers of Iranian oil to significantly cut their purchases, but may give a number of countries exceptions for a time, according to government officials and people familiar with the matter.
The EU also continues to debate whether to follow President Barack Obama's move on Saturday to ban all financial transactions with Iran's central bank. Most revenue for Tehran's oil sales flows through the central bank, Bank Markazi.
The specter of growing sanctions on Iran helped trigger a massive selloff of the Iranian currency this week, driving it to a low of nearly 18,000 rial to the dollar on Monday. The currency recovered to around 15,500 on Wednesday.
Iranian officials initially denied that fear of U.S. and EU sanctions were the cause of the selloff. But central bank governor Mahmoud Bahmani, wrote in Iranian newspapers on Wednesday that Iran was the victim of the "psychological effects" of the Western financial war.
"I say this with great certainty that sanctions don't create problems for the country's economy," Mr. Bahmani wrote. "While knowing this, the enemy is depending on creating psychological tensions. If we are intimidated, we will be playing into the enemy's hands."
Mr. Bahmani said Bank Markazi was considering increasing interest rates in rial-based deposits as a means to strengthen the Iranian currency, and "controlling the currency market." Controls would limit the ability to trade the currency in the open market.
U.S. and European officials said they viewed the weakness of the rial as a sign that Western sanctions are working and that financial pressure will only increase on Tehran until it makes concessions on the nuclear issue.
International economists have long believed Iran's currency to be greatly overvalued. Iran's central bank has managed to maintain a roughly 9% appreciation of the dollar against the rial annually by paying out high interest rates on rial-denominated debt and by intermittently intervening in currency markets.
U.S. and European officials said this week that Iran will have to spend considerably more to keep the rial stable as international pressure mounts. The rial fell by as much by 30% against the dollar this week alone.
"They have to spend money to get it under control," said a European official. "But they can't do this forever."
Julian E. Barnes, Ian Talley and Benoît Faucon contributed to this article.
Write to Jay Solomon at jay.solomon@wsj.com and Laurence Norman at laurence.norman@dowjones.com
Credit: Jay Solomon; Laurence Norman
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 5, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 913 734957
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/913734957?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
New Sanctions Target Iran Oil Sales
Author: Faucon, Benoit
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 Jan 2012: n/a.
ProQuest document link
Abstract:
[...] existing sanctions against Iran's controversial nuclear program have capped its oil-and-gas production but were offset by buoyant crude prices.
Full text: LONDON -- U.S. sanctions against Iran's central bank, if combined with an increasingly likely European oil embargo, are likely to significantly dent Tehran's oil revenue.
But though experts say the sanctions' impact probably will sink in only gradually, they already have started to drive Iran's currency down.
"We could see anywhere between a 5% and 30% decrease in Iranian oil revenue this year, depending on whether the EU enacts an embargo and how aggressively U.S. sanctions are applied," said Trevor Houser, a partner at New York-based economic-research company Rhodium Group.
Until now, existing sanctions against Iran's controversial nuclear program have capped its oil-and-gas production but were offset by buoyant crude prices. But the new measures are directly targeting Iran's oil sales, increasing its transaction costs while potentially forcing the country to sell oil at discounted prices, experts said.
The views come as tensions between Iran and the West have escalated in recent days. The Islamic Republic has threatened to block the Strait of Hormuz -- through which about a third of global seaborne oil exports transit.
That hasn't stopped U.S. President Barack Obama from signing Saturday new legislation sanctioning banks settling oil trades with the Central Bank of Iran. And it emerged Wednesday that the European Union has agreed in principle on an embargo against Iranian oil.
The impact of the measures would be felt only progressively.
The U.S. sanctions against the central bank come with a wide range of exemptions and a grace period of six months. The EU is also debating about how many months it would wait to implement the sanctions and if long-term supply deals should be allowed to be completed.
Yet existing sanctions against Iran already have increased the transaction cost and complexity of buying Iranian goods.
Mohammad Nahavandian, president of Iran's Chamber of Commerce, recently admitted that "sanctions [have been] raising the transaction costs" of buying oil.
Nigel Kushner, chief executive of Whale Rock Legal, a London law firm specializing in international trade and sanctions, said buyers of Iranian products -- for instance petrochemicals -- now routinely use barters against non-oil commodities instead of payments.
But the accumulation of sanctions will make its most-critical impact only once a European oil embargo is finalized.
In a report, Mark Dubowitz, executive director at the Foundation for Defense of Democracies -- which is pushing for more Iran sanctions -- said the narrowing of Iranian oil-crude buyers would cut Iran's oil revenue by 7.8% to 8.5% if only Europe stops buying Iranian crude, while there would be a reduction of 37.7% to 41.5% if China is left as the only buyer.
Still, Iran has much leeway to survive tightening pressure. Its external debt stands at 5.4% of its gross domestic product for its 2010/2011 annual budget, according to the International Monetary Fund.
Yet Iran, neighboring Middle-East countries, has also increased its spending to assuage social tensions. Its budget for 2011/2012 is based on an oil price of $81.50 a barrel, compared to $75 a barrel the previous year.
Though officials have shrugged off the impact of new sanctions, the local currency -- the rial -- lost 12% early this week.
Rhodium's Houser said the ability for Iran's Central Bank to intervene will only weaken as sanctions bite.
"That leaves Tehran with two undesirable options for curbing inflation that could, if it gets out of hand, lead to political unrest--significantly raise domestic interest rates or make deep cuts in government spending," he said.
Write to Benoit Faucon at benoit.faucon@dowjones.com
Credit: By Benoit Faucon
Subject: Embargoes & blockades; Government spending; Central banks; Petroleum industry
Location: United States--US
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 5, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914146894
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914146894?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Japan Braces for Loss of Iranian Oil
Author: Inagaki, Kana; Obe, Mitsuru
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 Jan 2012: n/a.
ProQuest document link
Abstract:
Japanese Foreign Minister Koichiro Gemba has told U.S. Secretary of State Hillary Clinton the sanctions "could have negative effects on the global economy, including private consumption in the U.S." A complete ban on Iranian oil would likely have serious implications not only for Japan, experts say, but for other countries that depend on imported energy, such as South Korea.
Full text: TOKYO--Japan, under intensifying pressure to join sanctions proposed by the U.S. and Europe, is bracing for the possibility of curbing its imports of Iranian oil, with some refiners seeking other sources.
A Japanese government official said Thursday the country will likely have to reduce imports from Iran substantially, though it hopes to avoid an embargo that would completely cut off the country that provided 8.8% of Japan's crude-oil imports over the first 11 months of 2011.
Meanwhile, an executive of Japan's petroleum association said refiners are already looking for oil to replace some of what the country now buys from Iran.
"We may utilize oil inventories from Saudi Arabia or Abu Dhabi," Yasushi Kimura, vice president of the Petroleum Association of Japan, told reporters at an annual New Year's reception in Tokyo. "We are considering various scenarios."
In addition to forcing Japan to find other sources of oil, analysts say, the loss of the Iranian supply will likely drive up prices--a chilling prospect for Japan, already grappling with rising fuel costs.
The comments by Mr. Kimura--who also is president of Japan's top oil refiner, JX Holdings Inc.'s unit JX Nippon Oil & Energy Corp.--highlight Japan's dilemma, as the U.S. ratchets up pressure on its allies to join what is effectively a ban on purchases of oil from Iran. A new U.S. law, signed Dec. 31, applies sanctions more broadly than before: Rather than targeting businesses that do oil deals with Iran, it targets banks that trade with Iran's central bank, through which much of Iranian oil sales are cleared. The Japanese banks that could be hit also handle transactions for many Japanese companies doing business in the U.S.
On Wednesday, the Europe Union followed the U.S.'s lead by agreeing in principle to an embargo on Iranian oil, and the U.S. is now turning its attention to Asian allies Japan and South Korea, both heavily dependent on imported oil. U.S. Treasury Secretary Timothy Geithner is expected to discuss the matter during a visit to Tokyo next week.
The pressure comes at a tough time for Japan, which suffered a major energy shock in the past year, as the March 11 earthquake and tsunami spurred the shutdown of most of the country's nuclear-power plants. The development has left the country even more reliant on fossil fuels, mostly imported. Iran ranks fourth among Japan's suppliers, behind Saudi Arabia at about 30%, the United Arab Emirates at about 20% and Qatar at about 10%, according to Finance Ministry figures.
Japan historically has tried to protect its relationship with--and oil from--Iran. In 2004, U.S. lobbying failed to dissuade Japan from signing a roughly $3 billion deal to develop Iran's massive Azadegan oil field. Japan brushed aside U.S. concerns about Iran's alleged nuclear-weapons program, citing its heavy reliance on energy imports--though two years later, under continuing strong pressure, it cut its stake to 10% from 75%, and last year it withdrew entirely.
Japanese officials say the country hopes to avoid a full embargo and be granted a waiver from the U.S. bank sanctions if it reduces its imports from Iran over time. U.S. government officials and people familiar with the matter earlier have said that while the U.S. will urge major importers of Iranian oil to significantly cut their purchases, it may make exceptions for a number of countries for a time.
"There is no change to our position that the 10% oil supply from Iran remains vital to Japan, and that we will continue to make efforts to protect this supply," said a Japanese government official involved in the discussions on sanctions against Iran.
Though "current discussions suggest that Japan will have to reduce oil imports from Iran to a certain extent," he added, a complete and immediate cutoff isn't an option. With lower-level discussions with the U.S. already under way, the official said Japan will likely launch formal high-level talks by the end of the month.
Japanese Foreign Minister Koichiro Gemba has told U.S. Secretary of State Hillary Clinton the sanctions "could have negative effects on the global economy, including private consumption in the U.S."
A complete ban on Iranian oil would likely have serious implications not only for Japan, experts say, but for other countries that depend on imported energy, such as South Korea. They say the hurdle may, in fact, be lower for Japan, where overall oil demand and imports from Iran have been falling in recent years.
For the first 11 months of 2011, Japan's overall crude-oil imports were down 2.7% from a year earlier, and imports from Iran were down 13%. New York-based economic-research company Rhodium Group forecasts that by the end of 2012, Japanese and Korean imports from Iran may be down a further 10% to 40%.
Write to Kana Inagaki at kana.inagaki@dowjones.com and Mitsuru Obe at mitsuru.obe@dowjones.com
Credit: By Kana Inagaki And Mitsuru Obe
Subject: Petroleum industry; Sanctions; Banking
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 5, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914170008
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914170008?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Beware Strait Talking on Oil
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 Jan 2012: n/a.
ProQuest document link
Abstract:
[...] if Saudi Arabia raised output to supply countries no longer taking Iran's oil, the net effect could be to actually push more barrels into the market in the near term, pressuring prices.
Full text: A military truism is that no plan survives contact with the enemy. Oil bulls focused on the Strait of Hormuz should remember that.
Brent-crude prices have jumped in recent days, ostensibly over concern that Iran will close the Strait, a choke point for a fifth of the world's oil supply. But this remains an unlikely event given the potentially devastating military and economic repercussions for Iran.
The bigger force at work: tightening sanctions. The European Union has agreed to ban imports of Iranian oil, following the lead of tougher U.S. measures. If these actually force part of Iran's exports off the market, they would support prices. But in practice, it isn't likely to be so simple.
Rather than exclude Iranian crude altogether, tighter sanctions will narrow the range of potential buyers, forcing Iran to sell at a discount. Meanwhile, if Saudi Arabia raised output to supply countries no longer taking Iran's oil, the net effect could be to actually push more barrels into the market in the near term, pressuring prices.
The ultimate arbiter of this tug-of-war, though, may be the impact on the global economy, and Europe in particular. Just as sanctions limit Iran's range of buyers, so they also limit Europe's range of suppliers, raising the price it pays. Countries particularly exposed include Greece, Spain and Italy, which collectively take 14% of Iran's oil exports, according to Deutsche Bank, and hardly need any more pressure.
The weakening euro adds to the problem: On a 12-month average basis, Brent costs 14% more today than it did at the last peak in 2008. In contrast, prices are just 4% higher in U.S. dollar terms, and the U.S. is benefiting from falling net imports of crude along with rock-bottom domestic natural-gas prices.
Globally, high oil prices are putting pressure on a fragile economic recovery. If Brent were to average $120 a barrel this year, energy costs would consume 9% of global gross domestic product. That is on a par with previous spikes that coincided with severe recessions, according to Citigroup.
Geopolitical threats--be they in Iran, Iraq, Nigeria or elsewhere--will lend support to oil prices. But even the fog of war can't obscure the economic forces acting to cap any spikes.
Write to Liam Denning at liam.denning@wsj.com
Credit: By Liam Denning
Subject: Recessions; Crude oil prices; Sanctions; Gross Domestic Product--GDP
Location: United States--US Strait of Hormuz
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 5, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914230078
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914230078?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Japan Prepares for Cuts to Iranian Oil Imports
Author: Inagaki, Kana; Obe, Mitsuru
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 Jan 2012: n/a.
ProQuest document link
Abstract:
Japanese Foreign Minister Koichiro Gemba has told U.S. Secretary of State Hillary Clinton the sanctions "could have negative effects on the global economy, including private consumption in the U.S." A complete ban on Iranian oil would likely have serious implications not only for Japan, experts say, but also for other countries dependent on imported energy, such as South Korea.
Full text: TOKYO--Japan, under intensifying pressure to join sanctions proposed by the U.S. and Europe, is bracing for the possibility of curbing its imports of Iranian oil, with some refiners seeking other sources.
A Japanese government official said Thursday the country will likely have to reduce imports from Iran substantially, though it hopes to avoid an embargo that would completely cut off the country that provided 8.8% of Japan's crude-oil imports over the first 11 months of 2011.
Meanwhile, an executive of Japan's petroleum association said refiners are already looking for oil to replace some of what the country now buys from Iran.
"We may utilize oil inventories from Saudi Arabia or Abu Dhabi," Yasushi Kimura, vice president of the Petroleum Association of Japan, told reporters at an annual New Year's reception in Tokyo. "We are considering various scenarios."
In addition to forcing Japan to find other sources of oil, analysts say, the loss of the Iranian supply will likely drive up prices--a chilling prospect for Japan, already grappling with rising fuel costs.
The comments by Mr. Kimura--who also is the president of Japan's top oil refiner, JX Holdings Inc.'s JX Nippon Oil & Energy Corp. unit--highlight Japan's dilemma, as the U.S. ratchets up pressure on its allies to join what is effectively a ban on purchases of oil from Iran. A new U.S. law, signed Dec. 31, applies sanctions more broadly than before: Rather than targeting businesses that do oil deals with Iran, it targets banks that trade with Iran's central bank, through which much of Iranian oil sales is cleared. The Japanese banks that could be hit also handle transactions for many Japanese companies doing business in the U.S.
On Wednesday, the European Union followed the U.S.'s lead by agreeing in principle to an embargo on Iranian oil, and the U.S. is now turning its attention to Asian allies Japan and South Korea, both heavily dependent on imported oil. U.S. Treasury Secretary Timothy Geithner is expected to discuss the matter during a visit to Tokyo next week.
The pressure comes at a tough time for Japan, which suffered an energy shock in the past year, as the March 11 earthquake and tsunami spurred the shutdown of most of the country's nuclear-power plants. The development has left the country even more reliant on fossil fuels, mostly imported. Iran ranks fourth among Japan's suppliers, behind Saudi Arabia at about 30%, the United Arab Emirates at about 20% and Qatar at about 10%, according to Finance Ministry figures.
Japan historically has tried to protect its relationship with--and oil from--Iran. In 2004, U.S. lobbying failed to dissuade Japan from signing a roughly $3 billion deal to develop Iran's massive Azadegan oil field. Japan brushed aside U.S. concerns about Iran's alleged nuclear-weapons program, citing its heavy reliance on energy imports--though two years later, under continuing strong pressure, it cut its stake to 10% from 75%, and last year it withdrew entirely.
Japanese officials say the country hopes to avoid a full embargo and be granted a waiver from the U.S. bank sanctions if it reduces its imports from Iran over time. U.S. government officials and people familiar with the matter earlier have said that while the U.S. will urge major importers of Iranian oil to significantly cut their purchases, it may make exceptions for a number of countries for a time.
"There is no change to our position that the 10% oil supply from Iran remains vital to Japan, and that we will continue to make efforts to protect this supply," said a Japanese government official involved in the discussions on sanctions against Iran.
Though "current discussions suggest that Japan will have to reduce oil imports from Iran to a certain extent," he added, a complete and immediate cutoff isn't an option. With lower-level discussions with the U.S. already under way, the official said Japan will likely launch formal high-level talks by the end of the month.
Japanese Foreign Minister Koichiro Gemba has told U.S. Secretary of State Hillary Clinton the sanctions "could have negative effects on the global economy, including private consumption in the U.S."
A complete ban on Iranian oil would likely have serious implications not only for Japan, experts say, but also for other countries dependent on imported energy, such as South Korea. They say the hurdle may, in fact, be lower for Japan, where overall oil demand and imports from Iran have been falling in recent years.
For the first 11 months of 2011, Japan's overall crude-oil imports were down 2.7% from a year earlier, and imports from Iran were down 13%. New York-based economic-research company Rhodium Group forecasts that by the end of 2012, Japanese and Korean imports from Iran may be down a further 10% to 40%.
Write to Kana Inagaki at kana.inagaki@dowjones.com and Mitsuru Obe at mitsuru.obe@dowjones.com
Credit: By Kana Inagaki and Mitsuru Obe
Subject: Petroleum industry; Sanctions; Banking
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 6, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914271210
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914271210?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Beware Strait Talking on Oil
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 Jan 2012: n/a.
ProQuest document link
Abstract:
[...] if Saudi Arabia raised output to supply countries no longer taking Iran's oil, the net effect could be to actually push more barrels into the market in the near term, pressuring prices.
Full text: A military truism is that no plan survives contact with the enemy. Oil bulls focused on the Strait of Hormuz should remember that.
Brent-crude prices have jumped in recent days, ostensibly over concern that Iran will close the Strait, a choke point for a fifth of the world's oil supply. But this remains an unlikely event given the potentially devastating military and economic repercussions for Iran.
The bigger force at work: tightening sanctions. The European Union has agreed to ban imports of Iranian oil, following the lead of tougher U.S. measures. If these actually force part of Iran's exports off the market, they would support prices. But in practice, it isn't likely to be so simple.
Rather than exclude Iranian crude altogether, tighter sanctions will narrow the range of potential buyers, forcing Iran to sell at a discount. Meanwhile, if Saudi Arabia raised output to supply countries no longer taking Iran's oil, the net effect could be to actually push more barrels into the market in the near term, pressuring prices.
The ultimate arbiter of this tug-of-war, though, may be the impact on the global economy, and Europe in particular. Just as sanctions limit Iran's range of buyers, so they also limit Europe's range of suppliers, raising the price it pays. Countries particularly exposed include Greece, Spain and Italy, which collectively take 14% of Iran's oil exports, according to Deutsche Bank, and hardly need any more pressure.
The weakening euro adds to the problem: On a 12-month average basis, Brent costs 14% more today than it did at the last peak in 2008. In contrast, prices are just 4% higher in U.S. dollar terms, and the U.S. is benefiting from falling net imports of crude along with rock-bottom domestic natural-gas prices.
Globally, high oil prices are putting pressure on a fragile economic recovery. If Brent were to average $120 a barrel this year, energy costs would consume 9% of global gross domestic product. That is on a par with previous spikes that coincided with severe recessions, according to Citigroup.
Geopolitical threats--be they in Iran, Iraq, Nigeria or elsewhere--will lend support to oil prices. But even the fog of war can't obscure the economic forces acting to cap any spikes.
Write to Liam Denning at liam.denning@wsj.com
Credit: By Liam Denning
Subject: Recessions; Crude oil prices; Sanctions; Gross Domestic Product--GDP
Location: United States--US Strait of Hormuz
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 6, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914272695
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914272695?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
World News: Japan Prepares for Cuts to Iranian Oil Imports
Author: Inagaki, Kana; Obe, Mitsuru
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]06 Jan 2012: A.8. [Duplicate]
ProQuest document link
Abstract:
The Japanese banks that could be hit also handle transactions for many Japanese companies doing business in the U.S. On Wednesday, the European Union followed the U.S.'s lead by agreeing in principle to an embargo on Iranian oil, and the U.S. is now turning its attention to Asian allies Japan and South Korea.
Full text: TOKYO -- Japan, under intensifying pressure to join sanctions proposed by the U.S. and Europe, is bracing for the possibility of curbing its imports of Iranian oil, with some refiners seeking other sources.
A Japanese government official said Thursday the country will likely have to reduce imports from Iran substantially, though it hopes to avoid an embargo that would completely cut off the country that provided 8.8% of Japan's crude-oil imports over the first 11 months of 2011.
Meanwhile, an executive of Japan's petroleum association said refiners are already looking for oil to replace some of what the country now buys from Iran.
"We may utilize oil inventories from Saudi Arabia or Abu Dhabi," Yasushi Kimura, vice president of the Petroleum Association of Japan, told reporters.
In addition to forcing Japan to find other sources of oil, analysts say, the loss of Iranian supply will likely drive up prices -- a chilling prospect for Japan, grappling with rising fuel costs.
The comments by Mr. Kimura -- also the president of Japan's top oil refiner, JX Holdings Inc.'s JX Nippon Oil & Energy Corp. unit -- highlight Japan's dilemma, as the U.S. ratchets up pressure on its allies to join what is effectively a ban on purchases of oil from Iran. A new U.S. law applies sanctions more broadly than before: Rather than targeting businesses that do oil deals with Iran, it targets banks that trade with Iran's central bank, through which much of Iranian oil sales is cleared. The Japanese banks that could be hit also handle transactions for many Japanese companies doing business in the U.S.
On Wednesday, the European Union followed the U.S.'s lead by agreeing in principle to an embargo on Iranian oil, and the U.S. is now turning its attention to Asian allies Japan and South Korea. Treasury Secretary Timothy Geithner is expected to discuss the matter during a visit to Tokyo next week.
The pressure comes at a tough time for Japan, which suffered an energy shock in the past year, as the March 11 earthquake and tsunami spurred the shutdown of most of the country's nuclear-power plants. The development has left the country even more reliant on fossil fuels.
Japanese officials say the country hopes to be granted a waiver from the U.S. bank sanctions if it reduces its imports.
Credit: By Kana Inagaki and Mitsuru Obe
Subject: Sanctions; Imports; Crude oil
Location: United States--US Iran Japan
Classification: 1300: International trade & foreign investment; 8510: Petroleum industry; 9178: Middle East; 9179: Asia & the Pacific
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.8
Publication year: 2012
Publication date: Jan 6, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914282767
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914282767?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Beware Strait Talking on Crude Oil and Iran
Author: Denning, Liam
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]06 Jan 2012: C.8.
ProQuest document link
Abstract:
If Saudi Arabia raised output to supply countries no longer taking Iran's oil, the net effect could be more barrels on the market near term, pressuring prices.
Full text: [Financial Analysis and Commentary]
A military truism is that no plan survives contact with the enemy. Oil bulls focused on the Strait of Hormuz: Take heed.
Brent-crude prices are up 4% since year end amid concern Iran will close the strait, a vital oil choke point. But this remains an unlikely event given the potentially devastating repercussions for Iran.
The bigger force at work: sanctions. The European Union has agreed to an Iranian oil embargo, following toughened U.S. measures. If Iran's oil exports were forced off the market, it would support prices.
In practice, it wouldn't be so simple. Rather than exclude Iran's oil completely, harsher sanctions will reduce the range of potential buyers, forcing Iran to offer discounts. If Saudi Arabia raised output to supply countries no longer taking Iran's oil, the net effect could be more barrels on the market near term, pressuring prices.
Europe is another bearish factor. Just as sanctions limit Iran's buyers, so they also limit Europe's suppliers, raising the price it pays. Countries particularly exposed include Greece, Spain and Italy, which take 14% of Iran's oil exports, according to Deutsche Bank, and hardly need any more pressure.
The weakening euro adds to the problem: On a 12-month average basis, Brent costs 14% more today than it did at the last peak in 2008. In contrast, prices are just 4% higher in U.S. dollar terms.
Globally, high oil prices hurt a fragile economic recovery. If Brent averages $120 a barrel this year, energy costs would consume 9% of global gross domestic product, according to Citigroup. That is on a par with previous spikes coinciding with severe recessions.
Geopolitical threats support oil prices. But even the fog of war can't obscure the economic forces acting to cap any spikes.
Credit: By Liam Denning
Subject: Crude oil prices; Sanctions; Gross Domestic Product--GDP; Petroleum industry
Location: United States--US Strait of Hormuz
Company / organization: Name: European Union; NAICS: 926110, 928120
Classification: 1300: International trade & foreign investment; 8510: Petroleum industry; 9178: Middle East
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.8
Publication year: 2012
Publication date: Jan 6, 2012
column: Heard on the Street
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914283622
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914283622?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
India Could Face Problems on Iran Crude Oil Payments
Author: Sharma, Rakesh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 Jan 2012: n/a.
ProQuest document link
Abstract:
Indian refiners started settling crude oil payments with Iran through Turkey's state-owned Halkbank after an earlier settlement mechanism, which the U.S. said was opaque and could be used by Tehran to finance its alleged nuclear weapons program, was disbanded by the South Asian nation's central bank in December 2010.
Full text: NEW DELHI - India may face problems in making payments to Iran for crude supplies because of recent moves by the U.S. and the European Union to curb Tehran's nuclear program, a senior Indian official said Friday.
He didn't say what the problems might be, but he added that "we don't see any disruption in supply unless the Strait of Hormuz is closed."
Iran, the world's fourth-largest oil producer, has threatened to block oil deliveries through the Strait of Hormuz if global powers impose sanctions on the country's oil industry over its nuclear activities.
China, the EU, India, Japan, South Korea and Turkey are the main customers for Iran's oil exports.
India gets about three-quarters of its crude needs through imports, and Iran is its second-largest supplier after Saudi Arabia.
U.S. President Barack Obama signed a bill into law late last month, empowering U.S. authorities to impose penalties on foreign banks dealing with the Central Bank of Iran to settle oil import payments. The European Union has also agreed in principle to ban imports of Iranian crude oil to the EU.
The Indian Express newspaper Friday reported that India held an emergency meeting Thursday to consider ways to ensure uninterrupted crude oil supplies from Iran after indications from Turkey's state-owned Halkbank that it would have to stop settling payments on behalf of Indian companies.
The official at India's oil ministry, however, said India hasn't so far got any indications from Turkey on stopping payments.
Indian refiners started settling crude oil payments with Iran through Turkey's state-owned Halkbank after an earlier settlement mechanism, which the U.S. said was opaque and could be used by Tehran to finance its alleged nuclear weapons program, was disbanded by the South Asian nation's central bank in December 2010.
Serdar Fadillioglu, director of the Financial Institutions Team at Halkbank, said he couldn't comment on the Iran transactions.
Indianpetro.com, a website that reports on India's oil and gas sector, said on Jan. 1 that state-run refiner Indian Oil had opened accounts with Russia's Gazprombank as it has decided to route payments through Moscow to ensure uninterrupted supply.
Executives at Indian Oil, Bharat Petroleum, Hindustan Petroleum and Mangalore Refinery didn't respond to phone calls.
The oil ministry official said that India is in talks with other countries like Saudi Arabia for sourcing crude in case of a fall in supplies from Iran.
Marc Champion in Istanbul contributed to this article.
Write to Rakesh Sharma at rakesh.sharma@dowjones.com
Credit: By Rakesh Sharma
Subject: Petroleum industry; Central banks; Supplies
Location: United States--US Strait of Hormuz Saudi Arabia
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 6, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914284888
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914284888?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Pricing Dispute Threatens Iran's Oil Exports to China
Author: Ma, Wayne
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 Jan 2012: n/a.
ProQuest document link
Abstract:
Oil exports to China could take a dip this month, as China International United Petroleum & Chemicals Co., known as Unipec, continues negotiating over the price of condensate, a light crude that can be used to make premium fuels such as kerosene and naphtha, from Iran's South Pars field, said the person familiar with Iran's sales.
Full text: BEIJING--Iran's crude-oil exports to China, its largest export customer, are expected to fall by almost 40% in January because of a dispute over pricing and other contract terms, a person familiar with Iran's oil sales said.
Though China could play a key role in the effectiveness of international sanctions on Iran, a major supplier to its energy-hungry economy, it has steadfastly declined to join international efforts to deprive Tehran of revenue.
Between January and November last year, China imported 25.3 million metric tons of crude from Iran, or about 555,000 barrels a day. Imports were up almost 30% from the previous year, customs data show.
China Foreign Ministry spokesman Hong Lei said on Thursday that the two countries have "regular and transparent cooperation" that doesn't violate any United Nations Security Council resolutions.
Roughly one-fifth of Iran's exported oil heads to China, according to Deutsche Bank, making it Iran's No. 1 single export customer. Iran is China's third-largest supplier, and Chinese companies are by far the biggest investors in Iran's energy sector.
This week, European Union member states agreed in principle to an embargo on Iranian oil as part of an effort to press Tehran to dial back its nuclear program, which is believed to be intended to produce nuclear weapons, a charge denied by Iran.
President Barack Obama on Dec. 31 authorized U.S. sanctions against Iran's central bank, a move that could affect the nation's oil sales.
U.S. Treasury Secretary Timothy Geithner will visit China and Japan in the coming week to discuss global economic developments, and will ask China and Japan to increase pressure on Iran, including financial measures targeting its central bank, the Treasury Department said Wednesday.
Oil exports to China could take a dip this month, as China International United Petroleum & Chemicals Co., known as Unipec, continues negotiating over the price of condensate, a light crude that can be used to make premium fuels such as kerosene and naphtha, from Iran's South Pars field, said the person familiar with Iran's sales.
Sinopec Corp., the parent company of Unipec, couldn't be immediately reached for comment.
The longer-than-anticipated negotiations delayed the start of Unipec's long-term supply contract, reducing China's Iranian crude imports by about 220,000 barrels a day, the person said. Although Unipec's contract could be finalized as early as next week, further delays could affect February orders as well, the person said.
Other contracts between Iran's national oil company and Chinese buyers have been finalized, the person said.
Unipec and state-backed Zhuhai Zhenrong Co. account for the bulk of China's crude imports from Iran, at about 460,000 barrels a day.
China's hiccups with Iranian crude supply come as South Korea and Japan weigh the implications of U.S. efforts to toughen sanctions against Iran. Indian national oil companies also are having difficulty routing payments through foreign banks for Iranian crude due to the sanctions.
Write to Wayne Ma at wayne.ma@dowjones.com
Credit: By Wayne Ma
Subject: Petroleum industry; Exports; Central banks; Suppliers
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 6, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914322756
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914322756?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Threat by Iran Adds to Specter of Conflict in Oil Lane
Author: Johnson, Keith
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Jan 2012: n/a.
ProQuest document link
Abstract:
In the past week, President Barack Obama authorized U.S. sanctions against Iran's central bank, which handles the country's oil revenue, and European Union member states agreed in principle to an embargo on Iranian oil, part of an effort to press Tehran to dial back its nuclear program.
Full text: U.S. officials and the international oil industry have a nightmare scenario: A desperate Iran, itching to strike back against the West for its sanctions, attempts to block the flow of oil through the strategic Strait of Hormuz.
U.S. and British officials have vowed to use force to unclog the international waterway, the narrow outlet through which one-fifth of the world's oil trade exits the Persian Gulf. Such action is still in the realm of posturing. But as rhetoric intensifies and economic pressure mounts on a divided Iranian regime, officials and analysts are concerned that Iran could misstep or overreach, sparking a conflict.
Sunday, a newspaper quoted a senior commander of the powerful Revolutionary Guard force as saying the country's leadership has decided that if its own petroleum exports are blocked, it "won't allow a drop of oil to pass through the Strait of Hormuz," the Associated Press reported.
"This is the strategy of the Islamic Republic in countering such threats," Revolutionary Guard deputy commander Ali Ashraf Nouri was quoted as saying by the Khorasan daily, according to the AP. Iranian politicians have issued similar threats in the past, the AP added, but this is the strongest statement yet by a top commander in the security establishment.
That followed Friday's announcement by Tehran that it plans military maneuvers in the strait. Only days earlier, the Iranian navy had concluded exercises in the nearby Gulf of Oman.
The new maneuvers, planned for the coming weeks, are potentially more menacing. They will take place in and around the strait itself and will involve Iran's Revolutionary Guard Corps navy, which is responsible for coastal defense in the strait and the Persian Gulf. Revolutionary Guard naval commanders have greater leeway than those of Iran's regular navy, and favor guerrilla-style tactics, including swarms of fast-moving attack craft, mines and mobile antiship missiles.
"Today the Islamic Republic of Iran has full domination over the region and controls all movements within it," Adm. Ali Fadavi, naval commander for the Revolutionary Guard, said in remarks reported by the Fars news agency. There was no immediate reaction from U.S. officials.
In the past two weeks, Iran has threatened to close the Strait of Hormuz, to restrict foreign warships, and to ban a U.S. aircraft carrier from the strait. Each time, U.S. officials responded with an implicit threat of force.
U.S. officials see Iran's threats as a response to punitive sanctions by the U.S. and its allies, to Iran's own weakening economy and for domestic consumption ahead of elections in March.
"Right now, a lot of this is political rhetoric--the reality on the water just doesn't match up," said Jonathan Rue, a former U.S. Marine and an analyst at the Institute for the Study of War in Washington. "I'd be shocked if they were actually to follow through on any of their threats--there's just no upside," he added.
Still, defense analysts and Iran experts say there are reasons to worry. Just as a U.S. oil embargo in the early 1940s pushed a hostile Japan into miscalculations that proved suicidal, U.S. economic pressure on Iran could provoke a desperate response from a regime that feels it is under siege, said Fred Kagan of the American Enterprise Institute.
In the past week, President Barack Obama authorized U.S. sanctions against Iran's central bank, which handles the country's oil revenue, and European Union member states agreed in principle to an embargo on Iranian oil, part of an effort to press Tehran to dial back its nuclear program.
This month Iran's crude-oil exports to China, its largest export customer, are expected to fall by almost 40% because of a dispute over pricing and other contract terms between Chinese and Iranian state oil companies, a person familiar with Iran's oil sales said. China has declined to join international efforts to deprive Tehran of revenue.
U.S. officials say they believe Iran's threats to close off the Persian Gulf were an attempt to rattle oil markets and drive up prices. Similarly, U.S. officials said that statements from the Pentagon vowing to keep traffic moving were meant reassure allies and calm markets, which responded anxiously to Iran's threats.
Officials and experts who have studied the chance of conflict and potential U.S. responses said any clash most likely would take place at sea. Iran has embarked on an ambitious naval-expansion plan meant to give it the muscle to be a stronger regional power.
The Revolutionary Guard Corps Navy commander, Adm. Fadavi, is a veteran of the so-called tanker wars that took place as part of the Iran-Iraq war of the 1980s. As the two warring countries targeted one another's vessels, U.S. warships tried to ensure the free flow of commercial traffic. After a U.S. vessel was damaged by an Iranian mine, American forces sank five Iranian ships.
Tension this time could turn violent in any of several ways, experts say.
Iranian officials have proposed legislation barring foreign warships from sailing through the strait without permission. The U.S. Navy routinely challenges such attempts to curtail freedom of navigation, even those made by allies, by steaming warships through international waters, dozens of times each year.
U.S. officials said this week that they consider the Strait of Hormuz international waters, and will continue normal deployment of U.S. warships.
Iran also could use its own boats and planes to try to harass oil tankers passing through the strait, much as it did during the Iran-Iraq war of the 1980s.
Finally, Iran could try to close the Strait of Hormuz entirely. The surest way to do that would be to mine the two-mile-wide shipping channels through which tanker traffic passes, though experts said that would be very difficult given the international surveillance of its naval activities.
If Iran could lay the mines, it would force the U.S., U.K. and allies to laboriously clear the strait. Doing so first would require destroying Iran's antiship missiles and its small attack craft, and finally using minesweepers to clear the waterway.
The entire process could take well over a month, experts said.
Julian E. Barnes
contributed to this article.
Write to Keith Johnson at keith.johnson@wsj.com
Credit: By Keith Johnson
Subject: Petroleum industry; Sanctions
Location: United States--US Strait of Hormuz Persian Gulf
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 7, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914453451
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914453451?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Frack Attack: How to Play the Next American Oil Boom
Author: Hough, Jack
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Jan 2012: n/a.
ProQuest document link
Abstract:
Analysts estimate that energy companies in the Standard & Poor's 500-stock index saw earnings growth of 34% in the fourth quarter--more than twice that of any other sector, according to S&P. The market has bid up these shares only cautiously--worried, no doubt, that oil prices could dip if world economic growth slows. New tactics like horizontal drilling and hydraulic fracturing are unlocking energy trapped in vast shale formations around the U.S., offsetting declines in production from conventional deposits.
Full text: Energy profits are booming and Big Oil shares look inexpensive. But investors with an appetite for risk might want to drill deeper into the sector to find smaller companies sitting on U.S. oil-shale riches--which make tempting takeover targets, analysts say.
Large oil companies are riding a 25% fourth-quarter surge in Nymex crude prices. Analysts estimate that energy companies in the Standard & Poor's 500-stock index saw earnings growth of 34% in the fourth quarter--more than twice that of any other sector, according to S&P.
The market has bid up these shares only cautiously--worried, no doubt, that oil prices could dip if world economic growth slows. S&P 500 energy companies trade at 10 times projected 2012 earnings, versus 12 times for the broader index.
Investors underestimate the strength of current oil demand, says Subash Chandra, who covers energy stocks for Jefferies, a New York investment bank.
Share prices imply a 2012 price for West Texas Intermediate crude of $80 a barrel, according to Mr. Chandra's calculations. But WTI crude recently sold at $101 a barrel, and he thinks it will average $95 in 2012.
Small U.S. energy companies are pricier than their larger brethren. Energy companies in the S&P SmallCap 600 index trade at nearly 16 times projected 2012 earnings, versus 15 for the broad index. But small oil companies might be worth their premium because of their holdings and expertise, and their role in a profound change taking place in U.S. energy production.
New tactics like horizontal drilling and hydraulic fracturing are unlocking energy trapped in vast shale formations around the U.S., offsetting declines in production from conventional deposits. As the Journal reported this week, North Dakota's Bakken shale is expected to begin producing more oil than Alaska's mammoth Pudhoe Bay field this year.
These tactics can be used to extract both oil and natural gas, but with the former rising and the latter slumping, companies are particularly interested in oil-rich shale.
Major oil companies have had to adjust course quickly. For decades, they were net sellers of U.S. assets, because the easiest deposits had been tapped. Smaller companies moved in and became expert at extracting difficult-to-reach deposits, including shale oil. With the recent technological breakthroughs, the majors have been eager buyers of U.S. companies with shale assets and experience, says William Featherston, who covers the sector for UBS.
Exxon Mobil bought XTO Energy in 2009, and Chevron snapped up Chief Oil & Gas in 2010. Norway's Statoil and Italy's ENI have also spent heavily on U.S. shale assets.
Mr. Featherston sees the sector as ripe for a takeover acceleration for three reasons: The shale opportunities are "massive," major oil companies are gushing with cash to invest, and these companies want to put the knowhow of U.S. shale specialists to work in their overseas properties.
Horizontal drilling is the process of drilling deep into the ground and then gradually changing direction to drill into horizontal layers of oil- and gas-rich rock. Hydraulic fracturing, or "fracking," involves pumping a mixture of water, sand and chemicals into the well at high pressure in order to break porous rock apart and release oil and gas.
"In the past, you drilled for oil 10 times and found some maybe four of those times if you were good," says Shawn Reynolds, who manages natural-resources portfolios for Van Eck, a mutual fund company. "With shale deposits, you know where the oil is. And with the new technology you can extract it profitably."
But fracking is controversial. Critics say it could damage natural habitats and water supplies--and even trigger earthquakes. The industry says fracking is safe and that it takes care to prevent environmental damage.
"You're going to see more regulation, but as politicians take a close look at the science, shale plays aren't going away," says Jefferies's Mr. Chandra. He points to New York Gov. Andrew Cuomo, who has recently sought to lift a ban on fracking.
For stock-pickers seeking smaller U.S. energy companies, Mr. Chandra likes Denver-based SM Energy and Houston-based Oasis Petroleum. "With independents being bought out, these two have the credentials that buyers are looking for," he says.
UBS's Mr. Featherston recently screened 40 candidates for traits including the size of idle energy deposits, the ability to exploit those deposits and pay packages for managers in the event of takeovers. He, too, sees SM and Oasis as attractive targets, along with Anadarko Petroleum, based in The Woodlands, Texas, and Cabot Oil & Gas and Southwestern Energy, both based in Houston.
Van Eck's Mr. Reynolds prefers an indirect approach to the shale boom that favors Houston-based Halliburton and Schlumberger and Switzerland's Weatherford International. These service companies will be called on by major oil companies to exploit newly bought shale, he says.
For fund investors, the PowerShares S&P SmallCap Energy Portfolio, an exchange-traded fund, tracks the aforementioned index of U.S. companies. It costs $29 a year per $10,000 invested.
Investors who don't like the higher stock valuations small oil companies carry might prefer the IQ Global Oil Small Cap ETF, despite its higher expenses of $75 a year per $10,000 invested.
U.S. firms make up 57% of the portfolio. In 2011, shares in Europe and emerging markets plunged, dragging the fund down 20% between its May 5 launch and Dec. 31. However, according to IndexIQ, creator of the index underlying the fund, the selloff has left it at just nine times portfolio earnings.
Jack Hough is a columnist at SmartMoney.com. Email: jack.hough@dowjones.com
Credit: By Jack Hough
Subject: Hydraulic fracturing; Petroleum industry; Investment policy; Energy policy; Natural gas; Investments; Small business
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 7, 2012
column: Upside
Section: Personal Finance
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914456309
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914456309?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. Settles With Exxon, Statoil Over Huge Oil Find
Author: Fowler, Tom; Gold, Russell
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Jan 2012: n/a.
ProQuest document link
Abstract:
Federal officials have settled a dispute with Exxon Mobil Corp. and Statoil ASA over one of the largest offshore oil discoveries ever made in the Gulf of Mexico because the companies had failed to come up with a plan to begin producing oil.
Full text: Federal officials have settled a dispute with Exxon Mobil Corp. and Statoil ASA over one of the largest offshore oil discoveries ever made in the Gulf of Mexico because the companies had failed to come up with a plan to begin producing oil.
Under the settlement, filed Friday, Exxon Mobil and Statoil will get to keep their leases in the Julia deepwater field--which Exxon estimates could hold one billion barrels of recoverable oil.
Exxon and Statoil also agreed to several major concessions, including a major increase in the royalty rate, which could end up meaning Exxon Mobil pays billions of additional dollars to the federal Treasury over the 35-year life of the oilfield. In addition, it agreed to build and install an offshore platform and begin producing oil by the middle of 2016.
"The settlement will allow Exxon Mobil to develop this very large, but technically challenging, resource as quickly as possible using a phased approach," said company spokesman Patrick McGinn in a statement.
If the lease had expired, Exxon would have faced the prospect it would revert back to the government, essentially losing a multibillion dollar asset.
The stakes in the case were also high for the government, which didn't want to be seen as bending its own rules even as it attempts to strengthen its offshore rules in the wake of the Deepwater Horizon oil spill.
An Interior Department spokeswoman said the agreement "provides incentives for timely and thorough development of the leases, and secures a fair return on those resources to the U.S. Treasury."
While the government extracted several concessions from Exxon, the Texas-based oil giant dodged a major embarrassment and loss of future revenue. Exxon was facing the prospect of having made one of the largest oil finds ever in its century-long history, only to lose it because it failed to follow federal rules for getting a lease extension.
The dispute over the Julia field began in October 2008, about a month before Exxon's 10-year lease expired. It applied for a five-year extension, but was denied because it hadn't set forth a specific development plan. Exxon and its partner Statoil, sued in federal court to prevent the government from taking back the lease.
Write to Russell Gold at russell.gold@wsj.com
Credit: By Tom Fowler And Russell Gold
Subject: Petroleum industry
Location: Gulf of Mexico
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 7, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914465901
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914465901?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. News: U.S. Agrees To Extend Exxon Lease For Oil Find
Author: Fowler, Tom; Gold, Russell
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]07 Jan 2012: A.5.
ProQuest document link
Abstract:
Federal officials have settled a dispute with Exxon Mobil Corp. and Statoil ASA over one of the largest offshore oil discoveries ever made in the Gulf of Mexico because the companies had failed to come up with a plan to begin producing oil.
Full text: Federal officials have settled a dispute with Exxon Mobil Corp. and Statoil ASA over one of the largest offshore oil discoveries ever made in the Gulf of Mexico because the companies had failed to come up with a plan to begin producing oil.
Under the settlement, filed Friday, Exxon Mobil and Statoil will get to keep their leases in the Julia deepwater field -- which Exxon estimates could hold one billion barrels of recoverable oil.
Exxon and Statoil also agreed to several major concessions, including a major increase in the royalty rate, which could end up meaning Exxon Mobil pays billions of additional dollars to the federal Treasury. In addition, it agreed to build and install an offshore platform and begin producing oil by the middle of 2016.
"The settlement will allow Exxon Mobil to develop this very large, but technically challenging, resource as quickly as possible using a phased approach," said company spokesman Patrick McGinn in a statement.
If lease had expired, Exxon would have faced the prospect it would revert back to the government, essentially losing a multibillion dollar asset.
The stakes in the case were also high for the government, which didn't want to be seen as bending its own rules even as it attempts to strengthen its offshore rules in the wake of the Deepwater Horizon oil spill.
An Interior Department spokeswoman said the agreement "provides incentives for timely and thorough development of the leases, and secures a fair return on those resources to the U.S. Treasury."
The dispute over the Julia field began in October 2008, about a month before Exxon's 10-year lease expired. It applied for a five-year extension, but was denied because it hadn't set forth a specific development plan. Exxon and its partner Statoil, sued to prevent the government from taking back the lease.
Credit: By Tom Fowler and Russell Gold
Subject: Petroleum industry
Location: Gulf of Mexico
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.5
Publication year: 2012
Publication date: Jan 7, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914619783
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914619783?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Threat by Iran Adds to Specter of Conflict in Oil Lane
Author: Johnson, Keith
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]07 Jan 2012: A.8. [Duplicate]
ProQuest document link
Abstract:
In the past week, President Barack Obama authorized U.S. sanctions against Iran's central bank, which handles the country's oil revenue, and European Union member states agreed in principle to an embargo on Iranian oil, part of an effort to press Tehran to dial back its nuclear program. [...] Iran could try to close the strait entirely.
Full text: U.S. officials and the international oil industry have a nightmare scenario: A desperate Iran, itching to strike back against the West for its sanctions, attempts to block the flow of oil through the strategic Strait of Hormuz.
U.S. and British officials have vowed to use force to unclog the international waterway, the narrow outlet through which one-fifth of the world's oil trade exits the Persian Gulf.
Such action is still in the realm of posturing. But as rhetoric intensifies and economic pressure mounts on a divided Iranian regime, officials and analysts are concerned that Iran could misstep or overreach, sparking a conflict.
The latest in a series of provocations came Friday, when Tehran said it plans military maneuvers in the Strait of Hormuz. The announcement came days after the Iranian navy concluded exercises in the nearby Gulf of Oman.
The new maneuvers, planned for the coming weeks, are potentially more menacing. They will take place in and around the strait itself and will involve Iran's Revolutionary Guard Corps navy, which is responsible for coastal defense in the strait and the Persian Gulf.
Revolutionary Guard naval commanders have greater leeway than those of Iran's regular navy, and favor guerrilla-style tactics, including swarms of fast-moving attack craft, mines, and mobile antiship missiles.
"Today the Islamic Republic of Iran has full domination over the region and controls all movements within it," Adm. Ali Fadavi, naval commander for the Revolutionary Guard, said in remarks reported by the Fars news agency. There was no immediate reaction from U.S. officials.
In the past two weeks, Iran has threatened to close the Strait of Hormuz, to restrict foreign warships, and to ban a U.S. aircraft carrier from the strait. Each time, U.S. officials responded with an implicit threat of force.
U.S. officials see Iran's threats as a response to punitive sanctions, to Iran's weakening economy, and for domestic consumption ahead of elections in March.
"Right now, a lot of this is political rhetoric -- the reality on the water just doesn't match up," said Jonathan Rue, a former U.S. Marine and an analyst at the Institute for the Study of War in Washington. "I'd be shocked if they were actually to follow through on any of their threats -- there's just no upside."
Still, defense analysts and Iran experts say there are reasons to worry. Just as a U.S. oil embargo in the early 1940s pushed a hostile Japan into miscalculations that proved suicidal, U.S. economic pressure on Iran could provoke a desperate response from a regime that feels it is under siege, said Fred Kagan of the American Enterprise Institute.
In the past week, President Barack Obama authorized U.S. sanctions against Iran's central bank, which handles the country's oil revenue, and European Union member states agreed in principle to an embargo on Iranian oil, part of an effort to press Tehran to dial back its nuclear program.
This month Iran's crude-oil exports to China, its largest export customer, are expected to fall by almost 40% because of a dispute over pricing and other contract terms between Chinese and Iranian state oil companies, a person familiar with Iran's oil sales said. China has declined to join international efforts to deprive Tehran of revenue.
U.S. officials say they believe Iran's threats to close off the Persian Gulf were an attempt to rattle oil markets and drive up prices. Similarly, U.S. officials said that statements from the Pentagon vowing to keep traffic moving were meant reassure allies and calm markets, which responded anxiously to Iran's threats.
Officials and experts who have studied the chance of conflict and potential U.S. responses said any clash most likely would take place at sea. Iran has embarked on a naval expansion plan meant to give it the muscle to be a stronger regional power.
Tension this time could turn violent in any of several ways, experts say.
Iranian officials have proposed legislation barring foreign warships from sailing through the strait without permission. The U.S. Navy routinely challenges such attempts to curtail freedom of navigation, even those made by allies, by steaming warships through international waters, dozens of times each year.
U.S. officials said this week that they consider the Strait of Hormuz international waters, and will continue normal deployment of U.S. warships.
Iran also could use its own boats and planes to try to harass oil tankers passing through the strait, much as it did during the Iran-Iraq war of the 1980s.
Finally, Iran could try to close the strait entirely. The surest way to do that would be to mine the two-mile-wide shipping channels through which tanker traffic passes, though experts said that would be very difficult given the international surveillance of its naval activities.
If Iran could lay the mines, it would force the U.S., U.K. and allies to laboriously clear the strait. Doing so first would require destroying Iran's antiship missiles, its small attack craft, and finally using minesweepers to clear the waterway.
The entire process could take well over a month, experts said.
---
Julian E. Barnes contributed to this article.
---
Vital Passage
The Strait of Hormuz is the world's most important oil-trade route
-- Almost 17 million barrels a day of oil flowed through in 2011, roughly 35% of all seaborne traded oil, or almost 20% of oil traded world-wide.
-- Last year, 14 crude oil tankers a day passed through on average. More than 85% of these exports went to Asian markets.
-- The strait is 21 miles wide at its narrowest point, but its shipping lanes are only two miles wide, separated by a two-mile buffer zone. It is still deep and wide enough to handle the world's largest crude oil tankers.
-- Closure of the strait would require longer alternate routes or overland pipelines including the 745-mile East-West Pipeline across Saudi Arabia to the Red Sea. Some oil could be pumped north via the Iraq-Turkey pipeline to the Mediterranean.
U.S. Energy Information Administration
Credit: By Keith Johnson
Subject: Sanctions; Warships; Military exercises; International disputes; Crude oil; Embargoes & blockades
Location: United States--US Strait of Hormuz Iran
Company / organization: Name: Revolutionary Guard-Iran; NAICS: 813940
Classification: 9178: Middle East; 8350: Transportation & travel industry; 1300: International trade & foreign investment
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.8
Publication year: 2012
Publication date: Jan 7, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914620123
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914620123?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
World News: Canada to Begin Hearings On Proposed Oil Pipeline
Author: Welsch, Edward
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]09 Jan 2012: A.8.
ProQuest document link
Abstract:
With that line's future in doubt, Canadian politicians and oil-industry executives have rallied behind Enbridge Inc.'s Northern Gateway pipeline as a way to boost export capacity and open up new markets in Asia as oil production climbs.
Full text: CALGARY -- The first of more than a year's worth of public hearings over a proposed pipeline designed to ship crude from Canada's landlocked oil-sands to the Pacific begins Tuesday, threatening to fan a debate in Canada over the country's growing status as a global energy powerhouse.
Prime Minister Stephen Harper recently ratcheted up support for the idea of transporting some of Canada's growing oil production westward to the coast, where it can be loaded onto tankers and sent to thirsty Asian markets. The new push comes after another proposed pipeline, TransCanada Corp.'s Keystone XL, was tripped up by politics in Washington.
Keystone XL would move crude from oil-rich Alberta to the U.S. Gulf Coast, but environmentalists and some powerful U.S. Democrats have opposed it. Late last year, President Barack Obama signed legislation -- part of a tax compromise with Republican lawmakers -- requiring him to make a decision on the pipeline by the end of February. The White House has signaled the deadline might force the president to reject the project.
With that line's future in doubt, Canadian politicians and oil-industry executives have rallied behind Enbridge Inc.'s Northern Gateway pipeline as a way to boost export capacity and open up new markets in Asia as oil production climbs. Canadian oil output is expected to grow 50% over the course of the decade, to 4.2 million barrels a day, according to the Canadian Association of Petroleum Producers, an industry group.
Enbridge is proposing a 730-mile pipeline that would run from Bruderheim, Alberta, to the coastal port Kitimat, British Columbia. The 5.5 billion Canadian dollar, or $5.35 billion, project would have a capacity of 525,000 barrels a day. The first hearings on the project will be held on Tuesday and Wednesday in Kitamaat Village, near the port.
The federal government in Ottawa and many Canadians -- especially in the west, where growing energy output and higher prices have bolstered economic prospects -- have embraced it as a way of diversifying Canada's energy sales beyond the U.S. market. Currently, almost all exports are sent south of the border.
"I think it's essential, based on what's occurred with Keystone XL, that this country does diversify its energy-export markets," said Mr. Harper in a radio interview on Thursday.
A University of Calgary study late last year estimated Northern Gateway and Keystone XL together would add C$131 billion to Canada's economy over 15 years. An Ipsos Reid poll, commissioned by Enbridge and published Thursday, found public support in British Columbia for the project outweighed opposition 48%-32%, while another poll by the independent polling firm Forum Research last month found opposition outweighing support by 46%-41%.
But the pipeline also faces some of the same stiff opposition that has held up Keystone XL in the U.S. Canadian and U.S. environmental groups have targeted the line as a way of pressuring Canada's oil-sands industry. Environmentalists say the unconventional petroleum-extraction method, in some cases more akin to strip mining than drilling, is excessively damaging to Alberta's boreal forests. They also say the Northern Gateway project risks oil spills along the line's route and along the coast, once oil is loaded onto tankers.
"There are still significant, unaddressed environmental concerns that make any sort of support of the Northern Gateway pipeline very difficult," said Nathan Lemphers, an analyst at the Pembina Institute, a Canadian environmental think tank.
A loose coalition of Canadian native groups with territory along the line's route has also publicly opposed it. More than 40 native tribes have claims on lands along the pipeline's route, and nearly all have said at one point or another that they oppose the pipeline. Though the ultimate decision on the project rests with Canada's federal government, native support is key to avoid lengthy legal disputes.
Canada's federal government and its oil industry maintain oil-sands extraction is an environmentally responsible way of meeting the world's growing energy needs, and Enbridge has said its pipeline would be built to the highest safety specifications.
The company also says it is making progress in persuading native tribes to sign up for an offer of a 10% equity stake in the project. Enbridge spokesman Paul Stanway on Friday said the pipeline company has signed legal agreements with some 40% of the tribes to support the pipeline.
Credit: By Edward Welsch
Subject: Petroleum industry; Oil sands; Federal legislation; Public hearings; Pipelines
Location: Canada
Classification: 9172: Canada; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.8
Publication year: 2012
Publication date: Jan 9, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914609750
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914609750?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Oil Prices Stall Above $101
Author: Berthelsen, Christian
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 Jan 2012: n/a.
ProQuest document link
Abstract:
Iran and Western countries have been increasingly at odds over the last two months, after international weapons inspectors accused Iran of pursuing nuclear weapons technology. [...] the U.S. and other Western nations have sought sanctions against Iran, and Iran has responded with threats to close the Strait of Hormuz, a key passageway for one-third of the world's ocean-borne oil.
Full text: NEW YORK--Oil futures ended the day little changed, balanced between conflicting pressures from euro-zone debt worries on the upside but supported by continued tensions between Iran and the West.
Light, sweet crude for February delivery settled at $101.31 a barrel on the New York Mercantile Exchange, down 25 cents or 0.3%. Brent crude on the ICE Futures Europe exchange was down 94 cents at $112.12 a barrel.
In the absence of new economic data or direction from the stock market, which was little changed throughout the day, the crude market had little guidance.
In Berlin, German Chancellor Angela Merkel and French President Nicolas Sarkozy met to discuss their latest initiative to contain Europe's sovereign-debt crisis, which relies on containing budget deficits in member countries. The sovereign-debt crisis has been pushed to the background recently amid the Iran tensions, but markets have begun to focus on it again as worries emerge that the bailout of Greece is unraveling.
Meanwhile, Iran continued to provoke ire. The country announced it was enriching uranium at a second facility, and an Iranian court sentenced an American citizen to death for allegedly spying for the Central Intelligence Agency.
U.S. officials condemned both developments. Iran and Western countries have been increasingly at odds over the last two months, after international weapons inspectors accused Iran of pursuing nuclear weapons technology.
Since then, the U.S. and other Western nations have sought sanctions against Iran, and Iran has responded with threats to close the Strait of Hormuz, a key passageway for one-third of the world's ocean-borne oil.
"It really has been kind of a ying-yang type of situation here," said Phil Flynn, an analyst at brokerage PFG Best in Chicago. "We'd probably see more of a downside move if it weren't for the Iran situation, because the market would be more focused on Europe and nervous about Europe. The bullish and bearish forces are keeping us flat."
In a research note, Ritterbusch & Associates noted that crude held up above the psychologically important $100 a barrel level despite some intraday volatility, and said the market could remain in a "holding pattern" until weekly oil inventory data comes out Wednesday.
"WTI crude feels like a market wanting to head lower but is currently being precluded in this regard by a steady tone to the equities, particularly within the U.S., where favorable economic guidance continues to be seen out of most releases," the firm said.
Traders and analysts were also watching developments in Nigeria, Africa's largest oil exporter, where a nationwide strike was under way against the end of fuel subsidies. Still, people familiar with the matter told Dow Jones the strike has not yet had an impact on oil trade.
Front-month February reformulated gasoline blendstock, or RBOB, settled up 0.74 cent at $2.7590 a gallon. February heating oil ended up 0.28 cent at $3.0730 a gallon.
Credit: By Christian Berthelsen
Subject: Petroleum industry
Location: United States--US New York
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 9, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914703381
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914703381?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
China Is Expected to Resist Oil Shift
Author: Davis, Bob; Ma, Wayne; Page, Jeremy
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 Jan 2012: n/a.
ProQuest document link
Abstract:
In September, David Cohen, the undersecretary for terrorism and financial intelligence, visited China and Hong Kong to persuade local officials and bankers to help strengthen the sanctions against Iran and North Korea. [...] other U.S. officials have had discussions on sanctions with Chinese oil companies and Chinese government agencies.
Full text: BEIJING--U.S. Treasury Secretary Timothy Geithner is likely to get a skeptical hearing in Beijing on Tuesday and Wednesday as he presses leaders to reduce purchases of Iranian oil and explains tough new U.S. sanctions rules meant to hobble Iran's financial sector.
Chinese officials are wary about cutting off a major source of supply, as are their counterparts in Tokyo, which Mr. Geithner will visit after Beijing. In China's case, the issue is also overlaid with nationalist politics. It doesn't want to be seen as succumbing to increased U.S. pressure to punish another nation, particularly when the latest effort was driven by the U.S. Congress, not a new United Nations agreement.
Indeed, if the European Union goes through with plans to cut off oil imports from Iran, and China were one of its few big buyers left, Beijing could find itself in a strong position to wring commercial concessions from Iran on a series of oil-industry contract disputes. The U.S. and Europe have been trying to press Iran to scrap a nuclear-weapons program; Iran says it isn't developing such weapons.
"To the U.S., the Chinese will be passive-aggressive," says Patrick Chovanec, a business professor at Beijing's Tsinghua University. "They won't tell the U.S. they're not going along, but implicitly it will be 'You don't tell us what to do.' "
Vice Foreign Minister Cui Tiankai bluntly dismissed the new U.S. sanctions effort. "These issues cannot be resolved through sanctions," he said at a media briefing on Monday. "Negotiations are also needed to solve the issue."
President Barack Obama recently signed into law a measure he initially opposed that would bar from U.S. financial markets foreign financial institutions that do business with Iran's central bank, which plays a critical role in facilitating trade with Iran. One way for a nation to get an exemption is to show a "significant reduction" in Iranian oil imports. The law would increase pressure on Chinese financial institutions that finance Chinese business deals in Iran.
The administration says it won changes in the legislation before it became law to give it more flexibility. "We encourage everyone that trades with Iran to significantly reduce their oil imports," said a Treasury official.
U.S. officials say China has been abiding by the requirements of U.N.-approved sanctions, but they have been trying to encourage Beijing to go further by--among other things--instructing Chinese banks not to deal with any Iranian counterparts engaged in the country's weapons program.
Even before the new law, Washington believed that China's largest banks were becoming increasingly cooperative with U.S. sanctions efforts. But Washington is still concerned that Iran is seeking new "access points" to international finance through smaller banks in Hong Kong and mainland China.
In September, David Cohen, the undersecretary for terrorism and financial intelligence, visited China and Hong Kong to persuade local officials and bankers to help strengthen the sanctions against Iran and North Korea. Since then other U.S. officials have had discussions on sanctions with Chinese oil companies and Chinese government agencies.
In 2011 through Nov. 30, China's oil imports from Iran rose roughly 30% from the year-ago period. China imports about 11% of its crude oil from Iran, making Iran its No. 3 supplier after Saudi Arabia and Angola.
Since December, though, exports have begun to fall compared to a year earlier. Industry analysts doubt that's the result of U.S. pressure. Rather, negotiations between China United Petroleum & Chemicals Co, known as Unipec, and the National Iranian Oil Co., over commercial issues have dragged on longer than expected, they say.
But U.S. pressure may have played a role in China slowing down the pace of investment in oil and gas projects. Chinese oil firms are concerned about being hit by U.S. sanctions, say energy executives in Beijing. Even so, the more isolated Iran becomes economically, the more leverage Beijing may have in its various disputes with Iran. In 2010, China was Iran's largest oil import market, according to the U.S. Energy Information Administration, with Japan No. 2.
China is caught between its extensive commercial relations with Iran and its need to keep strong ties to the U.S. economy, said Pang Zhongying, director of Nankai University's Institute of Global Studies. "China has no choice but to prepare for the worst and try to avoid Chinese losses" in the U.S.-Iran showdown, he said.
Appearing to give in to the U.S. would play poorly at home for Chinese officials. "It will only take a few years before China is faced with zero oil," said a posting on an online forum of People's Daily, the Communist Party's newspaper. "By that time, the U.S. and EU will be strangling us."
Mr. Geithner's visit will mark a rare opportunity to discuss the issue with the two men who are expected to spearhead the new leadership of the Communist Party following a once-a-decade power transition beginning later this year.
On Wednesday, he is expected to meet Vice President Xi Jinping, the man due to take over as party chief in October or November this year, as well as Vice Premier Li Keqiang, who is widely expected to become premier after the leadership change.
U.S. officials are keen to gain to as much access as possible this year to the two men, about whom little is known outside the party elite. Mr Geithner's visit will also allow both sides to discuss preparations for Mr Xi's expected visit to the U.S. later this year, probably in February.
Write to Bob Davis at bob.davis@wsj.com , Wayne Ma at wayne.ma@dowjones.com and Jeremy Page at jeremy.page@wsj.com
Credit: By Bob Davis, Wayne Ma and Jeremy Page
Subject: Petroleum industry; Financial institutions; International finance; Sanctions
Location: United States--US
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 10, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914725338
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914725338?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journa l
U.S. News: How Microbes Teamed to Clean Gulf --- Scientists Studied 52 Species of Bacteria and Water Currents to Explain Demise of Oil and Gas Plume
Author: Naik, Gautam
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]10 Jan 2012: A.3.
ProQuest document link
Abstract:
The model showed that the topography in the Gulf had played a vital role. Because the Gulf is bounded on three sides by land -- north, east and west -- the water currents don't flow in a single direction as in a river.\n
Full text: A fortuitous combination of ravenous bacteria, ocean currents and local topography helped to rapidly purge the Gulf of Mexico of much of the oil and gas released in the Deepwater Horizon disaster of 2010, researchers reported on Monday.
After spewing oil and gas for nearly three months, the BP PLC well was finally capped in mid-July 2010. Some 200,000 tons of methane gas and about 4.4 million barrels of petroleum spilled into the ocean. Given the enormity of the spill, many scientists predicted that a significant amount of the resulting chemical pollutants would likely persist in the region's waterways for years.
According to a new federally funded study published Monday by the National Academy of Sciences, those scientists were wrong. By the end of September 2010, the vast underwater plume of methane, plus other gases, had all but disappeared. By the end of October, a significant amount of the underwater offshore oil -- a complex substance made from thousands of compounds -- had vanished as well.
"There was a lot of doomsday talk," said microbiologist David Valentine of the University of California, Santa Barbara, and co-author of the study, published in Proceedings of the National Academy of Sciences. But it turns out "the ocean harbors organisms that can handle a certain amount" of oil and gas pollutants, he said.
A year ago, Dr. Valentine and other scientists published a paper describing how bacteria that feed on naturally occurring oil and gas leaks underwater had apparently devoured much of the toxic chemicals released in the BP spill. That federally funded study, published in the journal Science, triggered disbelief among other researchers who questioned whether microbes could gobble up that much gas and oil so quickly.
Dr. Valentine and colleagues have now used a computer model to explain just how that scenario might have played out, though some scientists remain skeptical.
It was an intricate challenge. The first step was to estimate the flow rate of the various hydrocarbons from the well over the 87 days that the spill continued. The researchers identified 26 classes of such chemicals; they then had to figure out which chemicals stayed in the deep plume that remained more than 3,000 feet underwater, and which rose up to the surface. A lot of the surface oil evaporated or washed up on Gulf shorelines.
Next, the scientists set about identifying the main species of oil-and-gas-eating bacteria that lived in the deep Gulf. They identified 52 main species of such microbes. The scientists also estimated how quickly the bacteria consumed oil and gas and how much the bacteria colonies grew.
The final step was to model the complex movement of the water in the Gulf to determine where the oil and gas -- and the bacteria -- got transported. Igor Mezic, a colleague of Dr. Valentine's and also a co-author, had published a study in 2011 predicting where the BP oil slick had spread. That analysis included data from the U.S. Navy's model of the Gulf's currents and observations of the water's movements immediately after the spill and for months after it ended.
The UC Santa Barbara researchers decided to marry their two computer models. When they ran the joint model, they found it helped to explain the puzzle of the vanishing oil spill.
The model showed that the topography in the Gulf had played a vital role. Because the Gulf is bounded on three sides by land -- north, east and west -- the water currents don't flow in a single direction as in a river. Instead, the water sloshes around, back and forth, as if it were trapped in a washing machine.
An initial population of bacteria encountered the spill near the BP well, its population grew, and then it was swept away by the ocean currents. But when the water circled back -- that washing-machine effect -- it was already loaded with these hungry bacteria, which immediately went on the attack again, mopping up another round of hydrocarbons. These repeated forays over the BP well, by the ever-growing bacterial populations, sped up the rate at which the methane and oil got devoured.
Ira Leifer, a petroleum geochemist also at UC Santa Barbara who co-wrote a rebuttal to the 2011 paper published in Science, said the latest study was limited because it was based on a computer model "which is only as good as the input or assumptions" on which it is based. He noted that the authors had neglected to include a discussion of whether the bacteria would run out of critical nutrients necessary for them to consume the oil and gas and reproduce.
Credit: By Gautam Naik
Subject: Studies; Bacteria; Oil spills; Environmental cleanup
Location: United States--US Gulf of Mexico
Company / organization: Name: National Academy of Sciences; NAICS: 541711; Name: BP PLC; NAICS: 211111, 324110, 447110
Classification: 9190: United States; 8510: Petroleum industry; 1540: Pollution control
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.3
Publication year: 2012
Publication date: Jan 10, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914759580
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914759580?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
World News: China Is Expected To Resist Oil Shift
Author: Davis, Bob; Ma, Wayne; Page, Jeremy
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]10 Jan 2012: A.7. [Duplicate]
ProQuest document link
Abstract:
China imports about 11% of its crude oil from Iran, making Iran its No. 3 supplier after Saudi Arabia and Angola. Since December, though, exports have begun to fall compared with a year earlier.
Full text: BEIJING -- U.S. Treasury Secretary Timothy Geithner is likely to get a skeptical hearing in Beijing on Tuesday and Wednesday as he presses leaders to reduce purchases of Iranian oil and explains new U.S. sanctions meant to hobble Iran's financial sector.
Chinese officials are wary about cutting off a major source of supply, as are their counterparts in Tokyo, which Mr. Geithner will visit after Beijing.
In China's case, the issue is also overlaid with nationalist politics. Beijing doesn't want to be seen as succumbing to increased U.S. pressure to punish another nation, particularly when the latest effort was driven by Congress, not a new United Nations agreement.
If the European Union goes through with plans to cut off oil imports from Iran, Beijing could find itself in a strong position to wring commercial concessions from Iran on a series of oil-industry contract disputes. The U.S. and Europe have been trying to press Iran to scrap a nuclear-weapons program; Iran says it has no such program.
"To the U.S., the Chinese will be passive-aggressive," says Patrick Chovanec, a business professor at Beijing's Tsinghua University. "They won't tell the U.S. they're not going along, but implicitly it will be 'You don't tell us what to do.' "
Vice Foreign Minister Cui Tiankai bluntly dismissed the new U.S. sanctions effort. "These issues can't be resolved through sanctions," he said at a media briefing on Monday. "Negotiations are also needed to solve the issue."
President Barack Obama recently signed into law a measure that would bar from U.S. financial markets foreign financial institutions that do business with Iran's central bank, which plays a critical role in facilitating foreign trade.
One way for a nation to get an exemption is to show a "significant reduction" in Iranian oil imports. The law could increase pressure on Chinese financial institutions that finance Chinese business deals in Iran.
Mr. Obama initially opposed the measure, and the administration says it won changes in the legislation to give it more flexibility. "We encourage everyone that trades with Iran to significantly reduce their oil imports," said a Treasury official.
U.S. officials say China has been abiding by the requirements of U.N.-approved sanctions, but they have been trying to encourage Beijing to go further by -- among other things -- instructing Chinese banks not to deal with any Iranian counterparts engaged in the country's weapons program.
Even before the new law, Washington believed China's largest banks were becoming increasingly cooperative with U.S. sanctions efforts. But Washington is still concerned that Iran is seeking new access points to international finance through smaller banks in Hong Kong and mainland China.
In 2011 through Nov. 30, China's oil imports from Iran rose roughly 30% from a year earlier. China imports about 11% of its crude oil from Iran, making Iran its No. 3 supplier after Saudi Arabia and Angola.
Since December, though, exports have begun to fall compared with a year earlier. Industry analysts doubt that is the result of U.S. pressure. Rather, negotiations over commercial issues have dragged on between China United Petroleum & Chemicals Co, or Unipec, and the National Iranian Oil Co., they say.
But U.S. pressure may have played a role in China's slowing down the pace of investment in oil and gas projects. Chinese oil firms are concerned about being hit by U.S. sanctions, say energy executives in Beijing. Even so, the more economically isolated Iran becomes, the more leverage Beijing may have in its disputes with the country. In 2010, China was Iran's largest oil-import market, according to the U.S. Energy Information Administration, with Japan No. 2.
China is caught between its extensive commercial relations with Iran and its need to keep strong ties to the U.S. economy, said Pang Zhongying, director of Nankai University's Institute of Global Studies. "China has no choice but to prepare for the worst and try to avoid Chinese losses" in the U.S.-Iran showdown, he said.
Credit: By Bob Davis, Wayne Ma and Jeremy Page
Subject: International trade; Sanctions; Oil; Foreign policy -- United States--US
Location: United States--US China Iran
People: Geithner, Timothy
Classification: 9180: International; 8510: Petroleum industry; 1300: International trade & foreign investment
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.7
Publication year: 2012
Publication date: Jan 10, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914783424
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914783424?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
India Still Getting Oil from Iran
Author: Sharma, Rakesh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 Jan 2012: n/a.
ProQuest document link
Abstract:
The refiners have been making payments to Iran for oil supplies through Turkey's Halkbank since July, after India's central bank in December 2010 disbanded a settlement mechanism that the U.S. said could be used by Tehran to finance its alleged nuclear weapons program.
Full text: NEW DELHI - India still gets normal crude-oil shipments from Iran, two senior officials at India's oil ministry said, though refiners in the South Asian nation have started looking for alternate arrangements to prevent any supply shortages.
India gets about three-quarters of the crude it requires through imports, and Iran is its second-largest supplier after Saudi Arabia. The refiners have been making payments to Iran for oil supplies through Turkey's Halkbank since July, after India's central bank in December 2010 disbanded a settlement mechanism that the U.S. said could be used by Tehran to finance its alleged nuclear weapons program.
Now, with the U.S. and Europe tightening sanctions to force Tehran into suspending the alleged nuclear program, Turkey may become unwilling to route India's payments, according to media reports.
"We haven't heard any such thing from Turkey," one of the officials told said when asked about the reports. "The payments are continuing and we are getting supplies."
The second official said the refiners, however, have started talks with suppliers like Saudi Arabia due to the risk to supplies from Iran in wake of sanctions from the West.
Both officials didn't want to be named.
U.S. President Barack Obama signed a bill into law late last month, empowering U.S. authorities to impose penalties on foreign banks dealing with the Central Bank of Iran to settle oil payments. The European Union has also agreed in principle to ban imports of Iranian crude oil.
In India, Mangalore Refinery & Petrochemicals Ltd., Indian Oil Corp., Bharat Petroleum Corp., Hindustan Petroleum Corp. and Essar Oil Ltd. (source crude oil from Iran.
Essar, which gets 3.0 million barrels of crude a month from Iran, "is not being impacted by the Iranian situation," a company spokesman said. "At our Vadinar refinery [in the western state of Gujarat], we continue to be able to source the crude we require from Iran."
A Bharat Petroleum executive, who didn't want to be named, said supplies from Iran were normal even though it hasn't been able to pay as Halkbank didn't open its payment account last year. The executive didn't give any reasons for Halkbank's refusal in opening its account.
"Our volumes are small so Iran is continuing supplies despite our inability to pay," the executive said. "We are in discussions with the oil ministry for an alternative payment route."
The other refiners are routing payments via Turkey.
Write to Rakesh Sharma at rakesh.sharma@dowjones.com
Credit: By Rakesh Sharma
Subject: Central banks; Supplies
Location: United States--US Saudi Arabia
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 10, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914938768
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914938768?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
How Microbes Teamed to Clean Gulf; Scientists Studied 52 Species of Bacteria and Water Currents to Explain Demise of Oil and Gas Plume
Author: Naik, Gautam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 Jan 2012: n/a.
ProQuest document link
Abstract:
The model showed that the topography in the Gulf had played a vital role. Because the Gulf is bounded on three sides by land--north, east and west--the water currents don't flow in a single direction as in a river.
Full text: A fortuitous combination of ravenous bacteria, ocean currents and local topography helped to rapidly purge the Gulf of Mexico of much of the oil and gas released in the Deepwater Horizon disaster of 2010, researchers reported on Monday.
After spewing oil and gas for nearly three months, the BP PLC well was finally capped in mid-July 2010. Some 200,000 tons of methane gas and about 4.4 million barrels of petroleum spilled into the ocean. Given the enormity of the spill, many scientists predicted that a significant amount of the resulting chemical pollutants would likely persist in the region's waterways for years.
According to a new federally funded study published Monday by the National Academy of Sciences, those scientists were wrong. By the end of September 2010, the vast underwater plume of methane, plus other gases, had all but disappeared. By the end of October, a significant amount of the underwater offshore oil--a complex substance made from thousands of compounds--had vanished as well.
"There was a lot of doomsday talk," said microbiologist David Valentine of the University of California, Santa Barbara, and co-author of the study, published in Proceedings of the National Academy of Sciences. But it turns out "the ocean harbors organisms that can handle a certain amount of input" in the form of oil and gas pollutants, he said.
A year ago, Dr. Valentine and other scientists published a paper describing how bacteria that feed on naturally occurring oil and gas leaks underwater had apparently devoured much of the toxic chemicals released in the BP spill. That federally funded study, published in the journal Science, triggered disbelief among other researchers who questioned whether microbes could gobble up that much gas and oil so quickly.
Dr. Valentine and colleagues have now used a computer model to explain just how that scenario might have played out, though some scientists remain skeptical.
It was an intricate challenge. The first step was to estimate the flow rate of the various hydrocarbons from the well over the 87 days that the spill continued. The researchers identified 26 classes of such chemicals; they then had to figure out which of these chemicals stayed in the deep plume that remained more than 3,000 feet underwater, and which ones rose up to the surface. For example, in the plume, certain chemicals dissolved completely in the water, including the methane gas, while some of the oil droplets were atomized and remained suspended in the water. A lot of the surface oil evaporated or washed up on Gulf shorelines.
Next, the scientists set about identifying the main species of oil-and-gas-eating bacteria that lived in the deep Gulf. They identified 52 main species of such microbes. The scientists also estimated how quickly the bacteria consumed oil and gas and how much the bacteria colonies grew.
The final step was to model the complex movement of the water in the Gulf to determine where the oil and gas--and the bacteria--got transported. Igor Mezic, a colleague of Dr. Valentine's and also a co-author, had published a study in 2011 predicting where the BP oil slick had spread. That analysis included data from the U.S. Navy's model of the Gulf's ocean currents and observations of the water's movements immediately after the spill and for several months after it ended.
The UC Santa Barbara researchers decided to marry their two computer models--the one about the spill-eating bacteria with the one capturing the movement of water. When they ran the joint model, they found that it helped to explain the puzzle of the rapidly vanishing oil spill.
The model showed that the topography in the Gulf had played a vital role. Because the Gulf is bounded on three sides by land--north, east and west--the water currents don't flow in a single direction as in a river. Instead, the water sloshes around, back and forth, as if it were trapped in a washing machine.
An initial population of bacteria encountered the spill near the BP well, its population grew, and then it was swept away by the ocean currents. But when the water circled back--that washing-machine effect--it was already loaded with these hungry bacteria, which immediately went on the attack again, mopping up another round of hydrocarbons. These repeated forays over the BP well, by the ever-growing bacterial populations, sped up the rate at which the methane and offshore oil got devoured.
Dr. Valentine suggested that oil companies ought to ascertain the currents, water motion and native microbial community in the water before embarking on any major offshore drilling project. "Then, if there is an event, we'd be many steps ahead of understanding where the oil may go and what the environment's response may be," he said.
Ira Leifer, a petroleum geochemist also at UC Santa Barbara who co-wrote a rebuttal to the 2011 paper published in Science, said the latest study was limited because it was based on a computer model "which is only as good as the input or assumptions" on which it is based. He noted, for example, that the authors had neglected to include a discussion of whether the bacteria would run out of critical nutrients necessary for them to consume the oil and gas and reproduce.
The research was funded by the National Science Foundation, the Department of Energy and the Office of Naval Research.
Write to Gautam Naik at gautam.naik@wsj.com
Credit: By Gautam Naik
Subject: Oil spills; Studies; Bacteria; Gases
Company / organization: Name: National Academy of Sciences; NAICS: 541711
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 10, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 914941363
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/914941363?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Geithner Presses China to Curb Iran Oil Imports
Author: Davis, Bob; McMahon, Dinny
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]11 Jan 2012: n/a.
ProQuest document link
Abstract:
China's agenda included pressing the U.S. to reduce restrictions on high-tech exports and to encourage Chinese investment in the U.S. The U.S. generally tries to turn those conversations into a discussion of how China needs to tighten its protection on intellectual property, so U.S. firms will feel more comfortable sharing cutting-edge technology with Chinese firms.
Full text: BEIJING--U.S. Treasury Secretary Timothy Geithner urged top Chinese officials to greatly reduce China's imports of Iranian crude oil, and explained to them details of a new U.S. sanctions policy against countries that don't curtail their purchases.
"We are in the early stages of a broad global diplomatic effort to take advantage of this new legislation to significantly intensify the pressure on Iran," a senior U.S. official said in Beijing. "We are telling them [the Chinese] what's important to us and they are listening."
The senior U.S. official added that "We have a reasonable shot at getting a number of countries to wean themselves off Iranian oil."
It is far from clear whether the Chinese will go along with the sanctions regime. Faced with U.S. initiatives, Chinese officials customarily listen and weigh the alternatives but take months before making their decision clear.
In public, Chinese officials have forcefully opposed unilateral U.S. sanctions on Iran. However, U.S. and other officials tend to discount Chinese public statements and watch what Beijing does.
The U.S. believes that Beijing has taken steps to rein in companies that do business with Iranian firms that could be involved in Iran's nuclear program. But U.S. officials aren't sure whether a recent slowdown in Chinese purchases of Iranian crude represents a political signal from China about its willingness to follow the U.S. lead or is simply the result of a commercial dispute between Chinese and Iranian energy firms.
The U.S. sanctions policy is aimed at sharply reducing Iran's exports to its biggest markets, including big Asian nations such as China, India, Japan and South Korea. A new law would bar from U.S. financial markets foreign financial institutions that do business with Iran's central bank, which plays a critical role in facilitating foreign trade. One way for a nation to get an exemption is to show a "significant reduction" in Iranian oil imports.
The law could have a devastating impact on Chinese banks that to do business in the U.S. and by extension harm the ability of many Chinese companies to export.
On other matters, Mr. Geithner argued in the discussions that China should continue to let its currency appreciate. There has been some speculation Beijing would radically slow or even a halt the yuan's rise to help Chinese exporters as growth slows.
However, the Chinese "talk about continued appreciation," the U.S. senior official said. "They recognize that their growth strategy leaves them too dependent on external demand" and so needs to be altered.
A number of analysts expect China to reduce the rate of yuan appreciation versus the dollar this year to about 2% to 3%, compared with about 5% last year.
In a brief public statement on Wednesday, Mr. Geithner was complimentary of Beijing's policies. "On economic growth, financial stability around the world, on nonproliferation, we have what we view as a very strong relationship with your government and we're looking forward to building on that," Mr. Geithner said before meeting Chinese Vice President Xi Jinping.
Mr. Xi is expected to become China's Communist Party chief later this year and assume the presidency in 2013. Mr. Geithner also met on Wednesday with Premier Wen Jiabao, and Vice Premiers Li Keqiang and Wang Qishan.
Mr. Wen told Mr. Geithner that the global economic situation is "highly complex." He added that "I always believe when it comes to China and the U.S., dialogue works better than confrontation, and cooperation works better than containment."
The U.S. had a broad agenda for Mr. Geithner's visit, including Iranian oil imports, the economic situation in Europe and the continued appreciation of the yuan.
Mr. Geithner left other trade matters--including a new Obama administration plan to create a government panel to focus on trade issues with China--to discussions between White House aide Michael Froman, Treasury Undersecretary Lael Brainard and Chinese officials.
China's agenda included pressing the U.S. to reduce restrictions on high-tech exports and to encourage Chinese investment in the U.S. The U.S. generally tries to turn those conversations into a discussion of how China needs to tighten its protection on intellectual property, so U.S. firms will feel more comfortable sharing cutting-edge technology with Chinese firms.
The U.S. is looking to cripple Iran's oil industry as a way to persuade the nation to scrap a nuclear weapons program. Iran denies it is developing nuclear weapons.
Financial institutions have six months to comply before the U.S. decides whether to impose sanctions--putting the decision in the middle of the U.S. election season. For both the U.S. and Asian nations, the sanctions decision will require perilous political calculations. If President Obama shies away from imposing sanctions, he could be hammered by his political opponents for failing to do enough to curb Iran's nuclear program.
But imposing sanctions on China, the world's second-largest economy and one of the few fast-growing ones, would threaten relations with Beijing, complicating a U.S. shift in its political and economic focus toward Asia.
For China, cutting imports from Iran could open the leadership, in the midst of its own transition, to criticism it is caving in to U.S. pressure. But failing to cut imports could harm relations with the U.S., its most important economic partner.
Chinese Premier Wen Jiabao is scheduled to visit the Middle East soon, which U.S. officials interpret as an effort to diversify China's oil supplies, so it isn't so reliant on Iran. About 11% of China's crude oil imports come from Iran.
Mr. Geithner headed to Tokyo on Wednesday to discuss the Iran issue and other economic matters. He is meeting with Prime Minister Yoshihiko Noda and Finance Minister Jun Azumi on Thursday.
For Japan and South Korea, the incentive to comply with U.S. wishes is much greater because they are U.S. allies and depend on U.S. military power. Even so, officials in both nations are unhappy with the new U.S. push. "We are concerned about an impact on global energy prices," an official at Japan's Ministry of Foreign Affairs said Wednesday. "We are also worried about how a fuel shortage might impact rebuilding" after the massive earthquake and tsunami that hit Japan in March.
Still, Japan's Minister of Foreign Affairs Koichiro Gemba is touring the Middle East this week, asking major oil-producing countries, including Saudi Arabia and the United Arab Emirates, to increase oil production in order to stabilize prices, and urging Iran to back down from its threats to close the strategic Strait of Hormuz in case of an embargo on Iranian crude exports.
Mr. Geithner is delivering a "very tough message," said U.S. energy analyst Philip Verleger, " 'You are with us or you are against us.'"
Saudi Arabia, a rival of Iran's, is likely to pick up exports to make up for any loss of Iranian crude.
One possibility is that some countries will shift to barter deals with Iran, which wouldn't require energy firms to use their home banks or other institutions that deal with Iran's central bank. Iraq depended on barter sales of oil when it was faced international sanctions during the reign of Saddam Hussein. "I believe China is trying to set up some barter deals--and is probably getting a 50% discount," said Mr. Verleger.
Iran would be under great pressure to cut prices to assure it can sell its crude.
One area where China and the U.S. seem to agree is how to handle Europe. Both are dissatisfied with the size of the bailout fund put together by European nations and the time it has taken for the Europeans to get the fund running. China has said it would make contributions to the International Monetary Fund to boost its ability to make emergency loans to Europe and elsewhere, but has said it was waiting for the Europeans to finalize the plans for its own rescue funds.
According to a Western official in Beijing, China also has been waiting for the U.S. to give its go-ahead to the IMF to create a new fund. The U.S. has withheld that approval as a way to put pressure on the Europeans to act.
Mari Iwata in Tokyo contributed to this article.
Write to Bob Davis at bob.davis@wsj.com
Credit: By Bob Davis And Dinny McMahon
Subject: International trade; International relations-US; Sanctions; Exports
Location: United States--US
People: Geithner, Timothy
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 11, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 915024941
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/915024941?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iran Embargo Fuels Oil-Price Fears
Author: Peaple, Andrew
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]11 Jan 2012: n/a.
ProQuest document link
Abstract:
Saudi Arabia, with spare production capacity of 2.3 million barrels a day, according to the International Energy Agency, can provide enough supplies to compensate for the banned Iranian oil:
Full text: Diplomacy and finance can make awkward bedfellows. Take the proposed European Union embargo on Iranian oil imports, which is causing anxiety in several countries. Iran counts for 7% of the Continent's oil imports but a higher proportion in Greece, Italy and Spain, three of the euro zone's weakest economies. That has led to calls for the embargo to be phased in, to prevent a mad dash for replacement supplies forcing up prices.
True, extra oil supply from Saudi Arabia and Libya could mitigate that risk near-term. Europe currently imports around 450,000 barrels of oil a day from Iran, around 18% of total Iranian exports. Saudi Arabia, with spare production capacity of 2.3 million barrels a day, according to the International Energy Agency, can provide enough supplies to compensate for the banned Iranian oil: It already increased daily production by 300,000 barrels from October to November.
Still, switching oil suppliers isn't straightforward. Some refineries are set up to handle specific types of crude oil and can't quickly switch to processing new grades. That is a particular problem in Greece, which relied on Iran for 34% of its oil imports in the first 10 months of 2011. European refiners' Iranian imports are mostly based on one-year contracts, industry people say.
And the proposed embargo comes at an already uncertain time for global oil supply. Nigerian unions are threatening strike action that could affect the country's two-million-barrels-a-day output. Iraq, where production has reached 2.7 million barrels a day, is also experiencing civil unrest. The U.S., meanwhile, is trying to persuade Asian countries, including China, to reduce Iranian oil imports, so they may have to find alternative supplies. International pressure could provoke Iran into retaliatory action, further destabilizing the world market.
The price of Brent crude has been relatively stable for several months at $113 a barrel. But higher prices may be unavoidable regardless of what the diplomats decide.
Write to Andrew Peaple at andrew.peaple@dowjones.com
Credit: By Andrew Peaple
Subject: Petroleum industry; Supplies; Production capacity
Location: Saudi Arabia
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 11, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 915202025
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/915202025?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Geithner Prods China, Japan on Iran Oil Imports
Author: Davis, Bob; McMahon, Dinny
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 Jan 2012: n/a.
ProQuest document link
Abstract:
A new law would bar from U.S. financial markets those foreign financial institutions that do business with Iran's central bank, which plays a critical role in facilitating trade. China's agenda included pressing the U.S. to reduce restrictions on high-tech exports and to encourage Chinese investment in the U.S. The U.S. is looking to cripple Iran's oil industry as a way to persuade the nation to scrap a nuclear weapons program.
Full text: BEIJING--Treasury Secretary Timothy Geithner urged Chinese officials to greatly reduce China's imports of Iranian crude oil, and explained to them details of a new U.S. sanctions policy against countries that don't curtail their purchases.
Later, Mr. Geithner secured an assurance from Japan that it would cut back on the crude it imports from Tehran.
"We are in the early stages of a broad global diplomatic effort to take advantage of this new legislation to significantly intensify the pressure on Iran," a senior U.S. official said. "We are telling them [the Chinese] what's important to us and they are listening.""We have a reasonable shot at getting a number of countries to wean themselves off Iranian oil."
It is far from clear whether the Chinese will go along with the sanctions regime. Faced with U.S. initiatives, Chinese officials customarily take months before making their decision clear. In public, Chinese officials have forcefully opposed unilateral U.S. sanctions on Iran.
The U.S. believes Beijing has taken steps to rein in companies that do business with Iranian firms that could be involved in Iran's nuclear program. But U.S. officials aren't sure whether a recent slowdown in Chinese purchases of Iranian crude represents a Chinese inclination to follow the U.S. lead or is simply the result of a commercial dispute between Chinese and Iranian energy firms.
The U.S. sanctions policy is aimed at sharply reducing Iran's exports to its biggest markets, including China, India, Japan and South Korea. A new law would bar from U.S. financial markets those foreign financial institutions that do business with Iran's central bank, which plays a critical role in facilitating trade. Nations can be exempt through a "significant reduction" in Iranian oil imports. The law could be devastating for Chinese banks that do business in the U.S. and by extension harm Chinese firms' ability to export.
Mr. Geithner also argued in the discussions that China should continue to let its currency appreciate. There has been some speculation Beijing would radically slow or even halt the yuan's rise to help Chinese exporters as growth slows. However, the Chinese "talk about continued appreciation," the U.S. senior official said. "They recognize that their growth strategy leaves them too dependent on external demand" and so needs to be altered. A number of analysts expect China to let the yuan rise about 2% to 3% against the dollar this year, compared with about 5% last year.
In a brief public statement on Wednesday, Mr. Geithner was complimentary of Beijing's policies. "On economic growth, financial stability around the world, on nonproliferation, we have what we view as a very strong relationship with your government and we're looking forward to building on that," Mr. Geithner said before meeting Chinese Vice President Xi Jinping, expected to become China's next president in 2013.
Mr. Geithner also met on Wednesday with Premier Wen Jiabao, who told Mr. Geithner, "When it comes to China and the U.S., dialogue works better than confrontation, and cooperation works better than containment."
The U.S. had a broad agenda for Mr. Geithner's visit, including Iranian oil imports, the economic situation in Europe and the yuan's continued rise. China's agenda included pressing the U.S. to reduce restrictions on high-tech exports and to encourage Chinese investment in the U.S.
The U.S. is looking to cripple Iran's oil industry as a way to persuade the nation to scrap a nuclear weapons program. Iran denies it is developing nuclear weapons.
Financial institutions have six months to comply before the U.S. decides whether to impose sanctions--putting the decision in the middle of the U.S. election season. For both the U.S. and Asian nations, the sanctions decision will require perilous political calculations. If President Obama shies away from imposing sanctions, he could be hammered by opponents for failing to do enough to curb Iran's nuclear program.
But imposing sanctions on China would threaten relations with Beijing, complicating a U.S. shift in its political and economic focus toward Asia.
For China, cutting imports from Iran could open the leadership, in the midst of its own transition, to criticism it is caving in to U.S. pressure.
Mr. Geithner headed to Tokyo on Wednesday to discuss the Iran issue and other economic matters.
Mr. Geithner got an assurance from his counterpart that Tokyo will take steps to reduce its dependency on oil imports from Iran. "We want to take action to further reduce our 10% share," Finance Minister Jun Azumi said at a joint press conference with Mr. Geithner Thursday.
"We appreciate Japan's cooperation," Mr. Geithner said following an hourlong meeting with Mr. Azumi, adding that the U.S. is in the early stages of consulting its allies on Iran.
Japan has been cutting down on its share of Iranian crude oil over recent years as international pressure builds on Tehran to give up its uranium enrichment program.
For Japan and South Korea, the incentive to comply with U.S. wishes is much greater because they are U.S. allies and depend on U.S. military power. Even so, officials in both nations are unhappy with the new U.S. push. "We are concerned about an impact on global energy prices," an official at Japan's Ministry of Foreign Affairs said Wednesday. "We are also worried about how a fuel shortage might impact rebuilding" after the massive earthquake and tsunami that hit Japan in March.
Still, Japan's Minister of Foreign Affairs Koichiro Gemba is touring the Middle East this week, asking major oil-producing countries, including Saudi Arabia and the United Arab Emirates, to increase oil production in order to stabilize prices, and urging Iran to back down from its threats to close the strategic Strait of Hormuz in case of an embargo on Iranian crude exports.
Mr. Geithner is delivering a "very tough message," said U.S. energy analyst Philip Verleger, " 'You are with us or you are against us.'"
Saudi Arabia, a rival of Iran's, is likely to pick up exports to make up for any loss of Iranian crude.
One possibility is that some countries will shift to barter deals with Iran, which wouldn't require energy firms to use their home banks or other institutions that deal with Iran's central bank. Iraq depended on barter sales of oil when it was faced international sanctions during the reign of Saddam Hussein. "I believe China is trying to set up some barter deals--and is probably getting a 50% discount," said Mr. Verleger.
Iran would be under great pressure to cut prices to assure it can sell its crude.
Mari Iwata, Tatsuo Ito and Kelly Olsen in Tokyo contributed to this article.
Write to Bob Davis at bob.davis@wsj.com
Credit: By Bob Davis And Dinny McMahon
Subject: Sanctions; Nuclear weapons; Exports; Shootings; Financial institutions
Location: United States--US
People: Geithner, Timothy
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 12, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 915237362
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/915237362?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Japan Says It Will Reduce Iran Oil Imports
Author: Olsen, Kelly; Ito, Tatsuo
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 Jan 2012: n/a.
ProQuest document link
Abstract:
The Geithner-Azumi talks come as Japanese Foreign Minister Koichiro Gemba wraps up a tour of the Middle East this week where he asked major oil-producing countries, including Saudi Arabia and the United Arab Emirates, to increase oil production.
Full text: TOKYO--Japan's finance minister told visiting U.S. Treasury Secretary Timothy Geithner that his country will take steps to reduce its dependency on oil imports from Iran, taking a much more conciliatory approach to the matter than China did a few days ago.
"We want to take actions to further reduce our 10% dependency as soon as possible in a planned manner," Japan Finance Minister Jun Azumi said.
Japanese crude imports from Iran came to about 10% of its total crude imports in 2010, but Mr. Azumi said that Japan has reduced its oil imports from there by 40% over the past five years.
On the second leg of his Asian trip, Mr. Geithner said that the U.S. appreciates Japan's cooperation in dealing with Iran as the U.S. explores ways to cut off Iran's central bank from the global financial system.
"We very much appreciate the support Japan has provided in standing with us and the international community," Mr. Geithner said at a joint press conference, regarding the U.S. objective to pressure Iran over its suspected nuclear weapons program. He said that the U.S. was working closely with Europe, Japan and other countries to pressure Iran.
Mr. Geithner, however, characterized those efforts as being in "the early stages, just the initial stages" of consultations.
Concerns over U.S. legislation that would punish global banks that deal with the Iranian central bank have grown among Iranian oil importers such as China, Japan and South Korea.
During his trip to China earlier this week, Mr. Geithner urged officials to greatly reduce imports of Iranian crude oil, and explained to them a new U.S. sanctions policy against countries that don't curtail their purchases.
But it is far from clear whether the Chinese will go along with the sanctions regime. Faced with U.S. initiatives, Chinese officials customarily take months before making their decision clear. In public, Chinese officials have forcefully opposed unilateral U.S. sanctions on Iran.
Mr. Azumi said Thursday that Japan would work closely with the U.S. on the issue.
The Geithner-Azumi talks come as Japanese Foreign Minister Koichiro Gemba wraps up a tour of the Middle East this week where he asked major oil-producing countries, including Saudi Arabia and the United Arab Emirates, to increase oil production. JX Nippon Oil & Energy Corp., Japan's largest refiner by capacity, said Tuesday that it has been in talks with Saudi Arabia and a few other oil producers about possible purchases in case of a ban on Iranian crude.
Messrs. Azumi and Geithner also discussed broader global financial issues, including the ongoing crisis in Europe and Japan's efforts to recover from last year's earthquake, tsunami and nuclear crisis.
"We agreed that Europe itself, as its first step, should strengthen its crisis firewalls to give a sense of stability to the market," Mr. Azumi said.
Mr. Geithner also emphasized the importance for Europe of making its financial backstop strong and credible to markets and praised the role played by the International Monetary Fund in the region's strategy.
"We are fully prepared to support a more substantial role by the IMF in the context of supporting, supplementing a stronger European response," he said. Mr. Geithner also said that Europe's leaders "appear to be making some progress in containing" their crisis.
The two also took a swipe at China, urging Beijing to let is currency appreciate further.
Mr. Azumi said Japan will continue to call on China to make its currency regime more flexible to better reflect its economic fundamentals and Mr. Geithner said the U.S. shared with Japan an interest among the Group of 20 industrialized and developing economies to see undervalued currencies rise.
Separately, Japan's government and central bank expressed concern that a U.S. rule on proprietary trading could adversely effect the Japanese government bond market and cause banks to wind down operations in each others' countries.
The joint letter from the Financial Services Agency and the Bank of Japan asks the U.S. to give "due consideration" to how it implements the "Volcker Rule" that would limit some proprietary trading by banks in the U.S. The letter was dated Dec. 28, 2011.
A Japanese finance ministry official said earlier that Mr. Azumi raised Japan's concerns in his meeting with Mr. Geithner.
Write to Tatsuo Ito at tatsuo.ito@dowjones.com
Credit: By Kelly Olsen And Tatsuo Ito
Subject: Sanctions; Central banks; Petroleum production
Location: United States--US
People: Geithner, Timothy
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 12, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 915360846
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/915360846?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Geithner Prods China and Japan Over Iranian Oil
Author: Davis, Bob; McMahon, Dinny; Ito, Tatsuo
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]12 Jan 2012: A.11.
ProQuest document link
Abstract:
A new law would bar from U.S. financial markets foreign institutions that do business with Iran's central bank.
Full text: BEIJING -- Treasury Secretary Timothy Geithner urged Chinese officials to greatly reduce imports of Iranian oil and secured an assurance from Japan to cut back on crude from Tehran.
"We are in the early stages of a broad global diplomatic effort to take advantage of this new legislation to significantly intensify the pressure on Iran," a senior U.S. official said."We have a reasonable shot at getting a number of countries to wean themselves off Iranian oil."
It is far from clear whether the Chinese will go along with the new U.S. sanctions regime. In public, Chinese officials have forcefully opposed unilateral sanctions on Iran.
A new law would bar from U.S. financial markets foreign institutions that do business with Iran's central bank. The law could be devastating for Chinese banks doing business in the U.S. and by extension harm Chinese firms' ability to export.
After his Beijing visit, Mr. Geithner traveled to Japan where he got an assurance from his counterpart on Thursday that Tokyo would take steps to reduce its dependency on oil imports from Iran. "We want to take action to further reduce our 10% share," Finance Minister Jun Azumi said at a news conference with Mr. Geithner. Mr. Azumi didn't offer specific details.
Credit: By Bob Davis, Dinny McMahon and Tatsuo Ito
Subject: Sanctions; Foreign investment; International trade; International relations-US; Crude oil; Imports
Location: United States--US China Japan Iran
People: Geithner, Timothy
Classification: 1300: International trade & foreign investment; 8510: Petroleum industry; 9178: Middle East; 9179: Asia & the Pacific; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.11
Publication year: 2012
Publication date: Jan 12, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 915502561
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/915502561?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Europe's Oil Firms Cook Up a Treat
Author: Flynn, Alexis
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 Jan 2012: n/a.
ProQuest document link
Abstract:
Growing tension between Iran and the West and threats to supply in Nigeria are likely to keep crude prices elevated for the foreseeable future. Since higher energy prices are currently translating into superior cash generation, analysts say the sector's top firms already feel confident enough to give money back to investors.
Full text: European energy companies are expected to return more money to shareholders in 2012 as stubbornly high oil prices swell their balance sheets.
With full-year results only weeks away, expectations are growing that heavyweights like Royal Dutch Shell will cap an extraordinary 12 months by raising dividends.
According to Deutsche Bank, the sector has "plenty of headroom" to support a forecast of 5% aggregate dividend growth in 2012. Already, it says, companies in the sector are expected to accumulate 50% more cash than they need to cover operating costs in 2012 and 2013.
Even BP PLC may raise its dividend.
The U.K. oil company, which for many years was known for bumper payouts, had to suspend its dividend in the wake of 2010's Gulf of Mexico oil spill. Only last February did it resume payments, at a lower level.
As the company's ultimate liabilities for the spill become clearer, management could be confident enough to increase the payouts, analysts from Credit Suisse say.
Investors in recent years have had to contend with major oil companies plowing their free cash into new sources of oil, and the technology to extract it, although the sector has remained a reliable source of dividends.
Still, Moody's Investors Service points out, four energy companies--Shell, BP, Total SA and Statoil ASA--rank among the 20 European firms with the best cash positions. It also notes that the European energy sector as a whole ranks third, after utilities and automotive firms, in terms of its cash holdings.
Investors are still spooked by the memory of 2008. Crude prices were then rapidly dragged down by Lehman Brothers' collapse and a sudden contraction in the global economy. Oil firms' stock prices fell, but analysts say history is unlikely to repeat itself in 2012.
Oil and gas prices weathered last year's uncertain macroeconomic environment because of supply issues, such as the civil war in Libya, while the earthquake and tsunami in Japan forced the government to temporarily shut down all nuclear power generation. Utilities had to scramble to buy liquefied natural gas, lending strength to LNG prices.
Growing tension between Iran and the West and threats to supply in Nigeria are likely to keep crude prices elevated for the foreseeable future.
Since higher energy prices are currently translating into superior cash generation, analysts say the sector's top firms already feel confident enough to give money back to investors.
"Healthy cash flow should leave room to increase shareholder returns in the form of dividends or buybacks, for some select companies," said Credit Suisse in a note.
It added that chief financial officers will also likely keep some cash on the books as insurance against economic risk and in case opportunities for mergers arise.
Continued high oil prices are the keystone upon which any largess rests, analysts argue. "The sector now requires an average $90 a barrel to achieve cash neutralityacross 2012/13," said Deutsche Bank. If a company is cash-neutral, it is generating enough cash to cover its costs.
The firm most likely to deliver continued dividend increases in the medium term is Shell, according to analysts at Nomura. The bank says Shell will continue to see the benefit of its long-term investments in big-ticket projects in Canada and Qatar.
However, Goldman Sachs sounded a note of caution on Shell's fortunes. It said that while the Anglo-Dutch giant could enjoy a bumper year, its fourth-quarter results could bring down its earnings per share.
Credit: By Alexis Flynn
Subject: Petroleum industry; Investments; Dividends; Earnings per share; Oil spills; Bank acquisitions & mergers
Company / organization: Name: Credit Suisse Group; NAICS: 522110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 12, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 915669632
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/915669632?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
EU Iran Oil Embargo Timing Still in Question
Author: Robinson, Frances
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Jan 2012: n/a.
ProQuest document link
Abstract:
Oil prices dropped late Thursday after some reports that the EU was likely to delay the Iran embargo by up to six months to give countries that import Iranian oil time to find alternatives and to allow existing supply agreements to expire.
Full text: BRUSSELS--A European Union embargo on Iranian oil could be enacted after a six-month grace period under one of the options being considered, but there is still no consensus on the matter, Brussels diplomats said Friday.
"The discussions on new sanctions against Iran are still ongoing," said Michael Mann, spokesman for EU foreign policy chief Catherine Ashton. "Any reports are nothing more than speculation."
Oil prices dropped late Thursday after some reports that the EU was likely to delay the Iran embargo by up to six months to give countries that import Iranian oil time to find alternatives and to allow existing supply agreements to expire. Some of the EU's most economically-stressed countries, including Greece, Spain and Italy, are among the largest importers of Iranian oil.
The EU agreed in principle to enact an embargo on all purchases of Iranian oil, but set aside difficult questions, such as the time-frame for implementation.
EU diplomats familiar with the discussions said Friday that while six months is one of the possible options, there is no convergence yet.
"There's no majority convergence on any one date yet," the diplomat said. "Looking at it mathematically, six months could be the outcome, but the chair hasn't made a decision."
The talks continue as the U.S. increases pressure on Iran in an attempt to curb its nuclear aspirations. Top U.S. officials, including U.S. Treasury Secretary Timothy Geithner, have also been lobbying Asian countries to lessen their imports of Iranian crude. Tehran insists its nuclear program is for peaceful purposes.
Some European refiners have already taken steps in anticipation of the embargo to wind up existing Iranian oil supply or find replacements, refining sources have said. However, some of these same companies continue to receive Iranian oil shipments under long-term contracts, while others haven't changed their buying strategy.
Foreign ministers will gather in Brussels Jan. 23, where they are expected to sign off on a package of sanctions including oil restrictions and financial measures.
Extra meetings have been added to the Brussels calendar next week to discuss Iran, including a Thursday meeting of the Committee of Permanent Representatives to the EU, an influential Brussels panel, a third EU diplomat said.
"There's no solid agreement yet," she told Dow Jones Newswires. "Options include a six-month grace period with a review clause inserted explicitly in the text, to assess how member states are handling it."
Greece had resisted the Iranian embargo and has expressed reservations about the speed of implementation. The talks will also include discussion of Italian oil giant Eni SpA's demand that $2 billion it is owed by Iran be paid in crude oil. Italian officials have expressed confidence that these shipments will be exempt from the embargo.
Diplomats will also discuss the financial element of the sanctions package, including a possible asset freeze for certain individuals and sanctions on the Iranian Central Bank.
Benoit Faucon in London contributed to this article.
Credit: By Frances Robinson
Subject: Petroleum industry; Sanctions; Diplomatic & consular services
Location: United States--US
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 13, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 915652527
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/915652527?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Goldman Lifts Oil Forecasts
Author: Hotter, Andrea
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Jan 2012: n/a.
ProQuest document link
Abstract:
[...] we could simply see a swap of Saudi oil for Iranian by Europe being largely offset by China filling its strategic reserves with Iranian oil instead of Saudi.
Full text: LONDON--Goldman Sachs Group Inc. raised its oil price forecasts Friday as it shrugged off the influence of tensions between Iran and the West and cited more positive near-term economic developments in the U.S. and China and the reduced risk of contagion from Europe.
The U.S. bank increased its forecast for West Texas Intermediate crude by 8%, to $113 a barrel on a three-month basis, from $104.50 a barrel previously. It also increased its six-month forecast to $115 a barrel from $113.50 a barrel and its 12-month outlook to $123.50 a barrel from $122.50a barrel.
Similarly it increased its Brent crude forecast by 2% to $120 a barrel on a three-month basis, from $117.50 a barrel previously, and maintained its six- and 12-month forecasts at $120 a barrel and $127.50 a barrel respectively.
Goldman said the crude-oil market isn't embedding an "Iran premium" into the price of oil, despite European Union preparations for more sanctions against the country, likely including an embargo on Iranian crude. The bank said Saudi Arabia is stepping up to fill the supply gap to refiners as they seek alternative sources of oil ahead of the proposed sanctions, and that this is putting pressure on prices and time spreads in the physical market.
But once the details of the EU embargo become known and new supply relationships become established, this downward pricing pressure will dissipate, Goldman said.
"We ultimately expect European refineries to replace the Iranian crude with Saudi barrels, clearing the current surplus, while China absorbs the surplus of Iranian crude, in part to fill its strategic reserves," the bank said. "Consequently, we could simply see a swap of Saudi oil for Iranian by Europe being largely offset by China filling its strategic reserves with Iranian oil instead of Saudi."
Adding to the potential for higher prices is that as Saudi production rises, the Organization of Petroleum Exporting countries will be operating with a very thin layer of spare capacity, making the market vulnerable to disruptions, particularly in Nigeria. As brinkmanship between the West and Iran heightens, threats to close the Strait of Hormuz--a critical oil shipping choke point, accounting for roughly 35% of all sea-borne traded crude and flows of 17 million barrels a day--will increase.
But Goldman said that in reality, the Strait is unlikely to close.
"Closing the Strait isn't in anyone's interest, including Iran's," it noted. "An attempt to close the Strait would be met by a strong military response from the U.S., which would be able to reopen the waterway, and a release of strategic reserves to supply the market in the interim."
The bank said the negative influence on near-term prices from the tensions between Iran and the West is "likely masking the more positive near-term developments from the better-than expected economic numbers in the U.S. and China and the reduced risk of European contagion."
"Consequently, we expect prices to remain well-supported even if tensions with Iran subside, and we see the risk to oil prices increasingly skewed to the upside in 2012."
Write to Andrea Hotter at andrea.hotter@dowjones.com
Credit: By Andrea Hotter
Subject: Petroleum industry; Prices; Oil reserves
Location: United States--US
Company / organization: Name: Goldman Sachs Group Inc; NAICS: 523120, 523110; Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 13, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 915680971
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/915680971?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Japan Plays Down Pledge to Cut Iran Oil Imports
Author: Olsen, Kelly; Nishiyama, George
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Jan 2012: n/a.
ProQuest document link
Abstract:
Japan is a close economic and security ally of the U.S., which has been ramping up pressure on Iran over its suspected nuclear weapons program by trying to cut off the country's central bank, which plays an important role in its oil trade, from the international financial system.
Full text: TOKYO--Japanese Prime Minister Yoshihiko Noda said Friday that Tokyo will first hold talks with U.S. officials before deciding on cuts in its crude-oil imports from Iran, backing down from earlier comments by his finance minister that Japan was ready to do so immediately.
"I think he was giving an explanation on how our country has already cut its imports of Iranian crude by 40% in the last five years and that he was stating his personal forecast of how things would develop going forward," Mr. Noda said at a news conference, when asked about comments by Finance Minister Jun Azumi.
Mr. Azumi told visiting U.S. Treasury Secretary Timothy Geithner on Thursday that Japan wanted to further reduce its 10% dependency on Iranian imports "as soon as possible in a planned manner."
But Mr. Noda, speaking to reporters after he carried out a small reshuffle of his cabinet, said measures that Japan may take against Iran would be decided after officials held talks with U.S. counterparts who will be in Japan next week.
After Mr. Azumi made the comments, unusually forthright for a Japanese minister, his colleagues rushed to play them down.
Foreign Minister Koichiro Gemba earlier Friday characterized Mr. Azumi's remark as a "prediction," while the government's top spokesman, Chief Cabinet Secretary Osamu Fujimura, described them as just "one opinion."
Mr. Azumi also appeared to soften his stance, saying Friday that it is too early to say when and by how much Japan will reduce Iranian oil imports under pressure of possible U.S. sanctions.
Speaking at a news conference after he was reappointed Friday, he also played down the signs of a rift in the cabinet, saying that there was little difference regarding how Japan should act on the issue given the "international environment in which our country is situated."
Japan is a close economic and security ally of the U.S., which has been ramping up pressure on Iran over its suspected nuclear weapons program by trying to cut off the country's central bank, which plays an important role in its oil trade, from the international financial system. Financial institutions in countries that import oil from Iran and deal with the central bank face possible sanctions under a new U.S. law.
But any cut in imports of crude oil is a vital issue for Japan, which depends entirely on imports for the oil it consumes.
While Iranian imports accounted for nearly 10% of all oil imports in 2010, the supplies have taken on greater significance as Japan is relying more on thermal power plants for its electricity following the March disaster at the Fukushima Daiichi nuclear plant.
Many nuclear reactors taken offline for maintenance have not been restarted as they await clearance of stress tests imposed following the Fukushima accident.
Credit: By Kelly Olsen And George Nishiyama
Subject: Nuclear weapons; Nuclear power plants; Press conferences; Central banks
Location: United States--US
People: Noda, Yoshihiko
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 13, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 915697334
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/915697334?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Falls Further Below $100
Author: DiColo, Jerry A
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Jan 2012: n/a.
ProQuest document link
Abstract:
The ratings service notified the French government and other European governments that it will lower their debt ratings, according to reports Friday, sending the euro to 16-month lows against the dollar and taking the wind out of riskier assets such as oil, stocks and other commodities.
Full text: NEW YORK--Crude futures fell Friday in tandem with a slumping euro as Standard & Poor's prepared to downgrade France's credit rating, adding new fears about Europe's economy.
The ratings service notified the French government and other European governments that it will lower their debt ratings, according to reports Friday, sending the euro to 16-month lows against the dollar and taking the wind out of riskier assets such as oil, stocks and other commodities.
The news of imminent downgrades renewed worries about a potential stumbling block for the global economy, and oil demand. Traders quickly switched gears to focus on Europe's credit crisis after a selloff Thursday was sparked by potential delays to the EU embargo on Iranian oil.
"We started the week terrified about Iran, and we ended the week focused on Europe again," said Peter Beutel, head of trading advisor Cameron Hanover. "There's been a wet blanket thrown over commodities, stocks, currencies and it's due to the S&P downgrades."
Light, sweet crude for February delivery settled 40 cents, or 0.4%, lower at $98.70 a barrel on the New York Mercantile Exchange, after falling as low as $97.70 a barrel earlier in the session.
Brent crude on the ICE futures exchange traded 28 cents lower at $110.92 a barrel.
Oil fell in tandem with a drop in the euro as traders fled riskier assets. The euro fell as low as $1.2624. Oil typically falls when the dollar rises, as it makes crude more expensive for buyers using other currencies.
Futures have tumbled from well above $100 earlier this week, with declines centered on a potential delay in the E.U.'s Iranian oil embargo by as much as six month. Plans for the ban had raised tensions between Iran and the west, with Iran threatening to shut down the Strait of Hormuz, a chokepoint for a third of the world's waterborne oil shipments.
Traders said the S&P downgrades could have resulted in a steeper selloff, but with tensions still high surrounding the Strait, it remains risky to bet on lower prices.
"It's tough to sell with both hands with this Iran stuff still in the background," said Pete Donovan, vice president and trader at Vantage Trading.
Still, some analysts predict oil has further to climb. Goldman Sachs Group Inc. on Friday increased its oil price forecast, citing more positive near-term economic developments in the U.S. and China.
The bank increased its forecast for West Texas Intermediate crude by 8%, to $113 a barrel on a three-month basis, from $104.50 a barrel. It also increased its six-month forecast to $115 a barrel from $113.50 a barrel and its 12-month outlook to $123.50 a barrel from $122.50 a barrel.
Front-month February reformulated gasoline blendstock, or RBOB, settled 0.29 cent higher at $2.7342 a gallon. February heating oil settled 2.69 cents lower at $3.0272 a gallon.
Credit: By Jerry A. DiColo
Subject: Petroleum industry; American dollar; Futures
Location: New York
Company / organization: Name: Standard & Poors Corp; NAICS: 511120, 523999, 541519, 561450
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 13, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 915750436
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/915750436?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Nigeria Oil Workers Threaten to Join Strikes
Author: Hinshaw, Drew; Kent, Sarah
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Jan 2012: n/a.
ProQuest document link
Abstract:
Millions of Nigeria's poor citizens viewed the subsidy as the only benefit they had enjoyed from the country's oil wealth, until Mr. Jonathan scrapped it on Jan. 1, citing budgetary reasons. [...] tens of thousands of protesters have marched down highways in major cities every day, including the capital of Lagos, and unions began labor stoppages on Monday.
Full text: Nigeria's government will meet with unions Saturday to try to negotiate an end to a strike that is costing Africa's top oil producer an estimated $1 billion a day, as oil workers threatened to raise the stakes by joining the strikes and halting crude production.
The government has failed to narrow differences with Nigeria's two oil workers' unions, which have said they will begin powering down the country's vast oil production facilities if President Goodluck Jonathan doesn't restore a subsidy that had kept the pump price of gas at just $1.55 a gallon.
Nigeria's biggest oil-workers' union vowed to push ahead with Sunday's planned strike if meetings with government Saturday don't produce results. "The outcome of the meeting will determine whether we shut production," said Lumumba Okugbawa, deputy general secretary of Pengassan.
Other unions, including the smaller oil syndicate, said they would hold off on strikes and protests over the weekend, amid worries of further violence that has already resulted in a handful of deaths and hundreds of injuries.
The oil workers would be the latest to join the so-called Occupy Nigeria movement. Millions of Nigeria's poor citizens viewed the subsidy as the only benefit they had enjoyed from the country's oil wealth, until Mr. Jonathan scrapped it on Jan. 1, citing budgetary reasons.
Since then, tens of thousands of protesters have marched down highways in major cities every day, including the capital of Lagos, and unions began labor stoppages on Monday. Analysts say the $1 billion a day that the strikes and demonstrations are costing the economy would cost far more if oil workers also stop working. About 95% of Nigeria's export proceeds--and 80% of government revenue--comes from crude.
The oil-workers strike threat has put political pressure on Mr. Jonathan as scenes of cities paralyzed have left the president looking weak.
But some analysts say the government retains the upper hand because Nigerian oil workers can't afford an extended period without pay.
"It's a very nuclear option," said Ecobank Capital gas analyst Rolake Akinola. "Once they're shut down, it could take months to restart production....I don't think either side wants that."
Buyers of Nigerian oil would also feel the pinch of any production halt. Nigeria exports about two million barrels of crude a day--less than 1% of global production--but it is a high-grade oil preferred by U.S. refineries, which receive more than 40% of the country's production. Nigeria accounted for 9% of all U.S. crude imports in 2010, nearly as much as Saudi Arabia, according to the U.S. Energy Information Administration.
An interruption in Nigerian production would likely spread crude price increases globally, said analyst Amrita Sen at Barclays Capital in London, at a time when oil traders are already anxious over Iranian threats to shut the Persian Gulf's Strait of Hormuz.
"The market is already tight, facing constraints," said Ms. Sen.
Mr. Jonathan and labor leaders are sticking to positions that remain far apart. Labor is demanding government restore the fuel subsidy in full. Presidential aides say that is fiscally impossible. The $7.5 billion-a-year subsidy is equal to a fourth of all spending included in the 2012 budget.
Credit: By Drew Hinshaw And Sarah Kent
Subject: Petroleum industry; Petroleum production; Demonstrations & protests
People: Jonathan, Goodluck
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 13, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 915750999
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/915750999?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil India Plans to Buy Shale Gas Assets in U.S., Australia
Author: Sharma, Rakesh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 Jan 2012: n/a.
ProQuest document link
Abstract:
State-run Oil India Ltd. plans to buy shale gas assets worth up to $200 million and is scouting for potential acquisitions in the U.S. and Australia as it seeks to gain expertise in the field ahead of India's plans to auction blocks in the country, a senior executive said Monday.
Full text: NEW DELHI -- State-run Oil India Ltd. plans to buy shale gas assets worth up to $200 million and is scouting for potential acquisitions in the U.S. and Australia as it seeks to gain expertise in the field ahead of India's plans to auction blocks in the country, a senior executive said Monday.
"Shale gas is going to be the future of unconventional oil exploration and development," Director Finance T.K. Ananth Kumar said. "We prefer to go in for a joint venture partnership rather than fully owning the asset. This is our strategy for acquisition of shale gas."
Oil India's shares were up 0.27% at 1,160 rupees at 0400 GMT while the broader benchmark index was down 0.21% at 16,120.77.
The U.S. shale gas boom has transformed the gas market and made the country a net exporter. India is seeking to tap into its shale gas resources to meet rising gas demand from power plants and factories.
Oil Minister Jaipal Reddy said in October that the government will reveal its policy on shale gas block auctions in 2012. The South Asian nation expects to launch its auction of blocks by the end of 2013.
Oil India joins other Indian companies--such as Reliance Industries Ltd. and GAIL (India) Ltd. which have already acquired acreage in the U.S.--to get technology for exploiting the natural resource and secure fuel supplies.
Oil India Director Finance Mr. Kumar said his company is reviewing two, three assets, but he didn't give any details.
The Mint newspaper Monday cited Oil India Chairman N.M. Borah as saying that the company is in talks with a U.S.-listed firm to buy a 25% stake for some $200 million in acreage in Texas.
Write to Rakesh Sharma at rakesh.sharma@dowjones.com
Credit: By Rakesh Sharma
Subject: Petroleum industry; Acquisitions & mergers
Location: United States--US
Company / organization: Name: Oil India Ltd; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 16, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 916136957
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916136957?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
ConocoPhillips Seeks Partner for Canada Oil-Sands Assets
Author: Welsch, Edward
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 Jan 2012: n/a.
ProQuest document link
Abstract:
CALGARY--ConocoPhillips is seeking a 50-50 joint-venture partner for its oil-sands projects in Western Canada, according to the investment-banking firm marketing the assets.
Full text: CALGARY--ConocoPhillips is seeking a 50-50 joint-venture partner for its oil-sands projects in Western Canada, according to the investment-banking firm marketing the assets.
The U.S.'s third-largest energy company is seeking to sell an interest in its Surmont, Thornbury, Clyden, Saleski, Crow Lake and McMillan Lake projects, most of which are undeveloped or, like Surmont, at an early stage of production.
ConocoPhillips said its oil-sands assets are currently producing 12,000 barrels of oil a day, but have a potential peak production of more than 500,000 barrels a day. They are spread over 715,000 acres in northeastern Alberta and have 30 billion barrels of oil in place.
The assets were put up on the website of investment banking firm Scotia Waterous, a division of Scotia Capital, late last week, according to a spokesman for the firm.
Write to Edward Welsch at edward.welsch@dowjones.com
Credit: By Edward Welsch
Subject: Petroleum industry
Location: Western Canada United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 16, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 916237076
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916237076?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iran Warns Saudis Not to Raise Oil Output
Author: Faucon, Benoît; Sharma, Rakesh; Se Young Lee
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Jan 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Iran warned Saudi Arabia against delivering additional oil to world markets to compensate for a drop in Iranian oil exports if they are hit by sanctions, as the U.S. continued to have mixed success in convincing Iran's major oil customers to reduce their purchases of Iranian oil.
The warning from Tehran came a day after Saudi Arabia's oil minister publicly pledged to boost the kingdom's production by as much as 2.7 million barrels a day, more than Iran exports, if there was market demand for more oil.
Though Saudi oil minister Ali Naimi didn't mention Iran, the pledge came as the West is ratcheting up pressure on the Islamic Republic over its nuclear program by targeting its exports.
"We invite Saudi officials to further reflect on and consider" their pledge to make up for any cut in oil exports, Iran's Foreign Minister Ali Akbar Salehi said, in comments carried by state news agency IRNA.
Although indirect, the exchange marked the first verbal sparring between Iran and one of the Western-allied monarchies directly across the Persian Gulf.
At the end of last year, U.S. President Barack Obama signed a law imposing sanctions against banks that trade with the Iran's central bank, through which much of Iranian oil sales are cleared. The European Union also has agreed in principle on an Iranian oil-import ban. Neither effort would go into effect until later this year.
Mr. Salehi said Mr. Naimi's pledges "will create all possible problems later" between Saudi Arabia and its Iranian neighbor and called them "not friendly signals."
Iran has threatened for several weeks to try to close the Strait of Hormuz, where one-third of the world's traded oil passes, if sanctions are imposed, while the U.S. has warned Iran it would do whatever is necessary to keep the strait open.
India said on Tuesday it would continue to purchase Iranian oil and wouldn't seek a waiver from the U.S. to sidestep the sanctions--effectively saying it intended to ignore the U.S. sanctions regime. Under the U.S. sanctions program, President Obama can grant exceptions and waivers from U.S.-imposed penalties to countries that reduce Iranian oil purchases.
Indian Foreign Secretary Ranjan Mathai said his government would only recognize multilateral sanctions imposed by the United Nations.
"We have accepted sanctions which are made by the United Nations. Other sanctions do not apply to individual countries. We don't accept that position," Mr. Mathai told a news conference.
India gets about three-quarters of the crude oil it requires through imports. Iran is its second-largest supplier after Saudi Arabia.
"We continue to buy oil from Iran. A large number of European Union countries also buy oil from Iran," Mr. Mathai said.
Mr. Mathai said a multi-ministerial Indian delegation is on its way to Tehran "to work out a mechanism for uninterrupted purchase of oil from Iran and to work out a financing mechanism."
South Korea said it will continue bilateral discussions with the U.S. to find an acceptable compromise on sanctions against Iran's crude-oil exports, as the resource-poor country attempts to safeguard its energy security without alienating its key ally and trade partner.
South Korea gets nearly 10% of its crude oil from Iran, and would have difficulty finding alternative supplies quickly. The government has said it will look to secure alternative supplies to Iranian crude from Iraq and Kuwait.
A delegation of U.S. officials led by Robert Einhorn, special adviser on nonproliferation and arms control, met with South Korean officials on Tuesday to solicit Seoul's cooperation on U.S.-led efforts to curtail Iran's oil revenue.
The U.S. delegation stressed the importance of resolving the standoff over Iran's nuclear program through global cooperation, the South Korean government said.
The U.S. seeks a gradual reduction of Iranian oil imports, to avoid disrupting the global crude-oil market or hurting its allies, though the rising tensions with Iran have already pushed crude prices higher.
In response, South Korean officials expressed their desire to go along with the multilateral effort but stressed the importance of minimizing the impact of the sanctions on the Korean economy, which is almost wholly dependent on overseas producers for its energy needs.
"The two sides agreed to continue efforts to reach an amicable solution that takes into account the interests of our country and companies while achieving the target sought by the U.S.," a South Korean Foreign Ministry spokesman said. The two countries plan additional talks over the matter but didn't specify any dates.
Washington can choose to grant Seoul either an exception or a waiver to its sanctions. To be an exception, South Korea would have 180 days from the date the U.S. law took effect to reduce Iranian crude imports, while for a waiver it would have to act within a 120-day period in a way that would reinforce U.S. security.
Seoul is more likely to opt to be considered as an exception, according to people familiar with the matter, a path that would require it to reduce Iranian crude imports significantly by the end of June.
Saurabh Chaturvedi
contributed to this article.
Credit: By Benoît Faucon, Rakesh Sharma and Se Young Lee
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 17, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 916359667
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916359667?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Iran Confronts Saudis on Oil Offer
Author: Faucon, Benoît; Sharma, Rakesh; Se Young Lee
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Jan 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Iran warned Saudi Arabia against delivering additional oil to world markets to compensate for a drop in Iranian oil exports if they are hit by sanctions, as the U.S. continued to have mixed success in convincing Iran's major oil customers to reduce their purchases of Iranian oil.
The warning from Tehran came a day after Saudi Arabia's oil minister publicly pledged to boost the kingdom's production by as much as 2.7 million barrels a day, more than Iran exports, if there was market demand for more oil.
Though Saudi oil minister Ali Naimi didn't mention Iran, the pledge came as the West is ratcheting up pressure on the Islamic Republic over its nuclear program by targeting its exports.
"We invite Saudi officials to further reflect on and consider" their pledge to make up for any cut in oil exports, Iran's Foreign Minister Ali Akbar Salehi said, in comments carried by state news agency IRNA.
Although indirect, the exchange marked the first verbal sparring between Iran and one of the Western-allied monarchies directly across the Persian Gulf.
At the end of last year, U.S. President Barack Obama signed a law imposing sanctions against banks that trade with the Iran's central bank, through which much of Iranian oil sales are cleared. The European Union also has agreed in principle on an Iranian oil-import ban. Neither effort would go into effect until later this year.
Mr. Salehi said Mr. Naimi's pledges "will create all possible problems later" between Saudi Arabia and its Iranian neighbor and called them "not friendly signals."
Iran has threatened for several weeks to try to close the Strait of Hormuz, where one-third of the world's traded oil passes, if sanctions are imposed, while the U.S. has warned Iran it would do whatever is necessary to keep the strait open.
India said on Tuesday it would continue to purchase Iranian oil and wouldn't seek a waiver from the U.S. to sidestep the sanctions--effectively saying it intended to ignore the U.S. sanctions regime. Under the U.S. sanctions program, President Obama can grant exceptions and waivers from U.S.-imposed penalties to countries that reduce Iranian oil purchases.
Indian Foreign Secretary Ranjan Mathai said his government would only recognize multilateral sanctions imposed by the United Nations.
"We have accepted sanctions which are made by the United Nations. Other sanctions do not apply to individual countries. We don't accept that position," Mr. Mathai told a news conference.
India gets about three-quarters of the crude oil it requires through imports. Iran is its second-largest supplier after Saudi Arabia.
"We continue to buy oil from Iran. A large number of European Union countries also buy oil from Iran," Mr. Mathai said.
Mr. Mathai said a multi-ministerial Indian delegation is on its way to Tehran "to work out a mechanism for uninterrupted purchase of oil from Iran and to work out a financing mechanism."
South Korea said it will continue bilateral discussions with the U.S. to find an acceptable compromise on sanctions against Iran's crude-oil exports, as the resource-poor country attempts to safeguard its energy security without alienating its key ally and trade partner.
South Korea gets nearly 10% of its crude oil from Iran, and would have difficulty finding alternative supplies quickly. The government has said it will look to secure alternative supplies to Iranian crude from Iraq and Kuwait.
A delegation of U.S. officials led by Robert Einhorn, special adviser on nonproliferation and arms control, met with South Korean officials on Tuesday to solicit Seoul's cooperation on U.S.-led efforts to curtail Iran's oil revenue.
The U.S. delegation stressed the importance of resolving the standoff over Iran's nuclear program through global cooperation, the South Korean government said.
The U.S. seeks a gradual reduction of Iranian oil imports, to avoid disrupting the global crude-oil market or hurting its allies, though the rising tensions with Iran have already pushed crude prices higher.
In response, South Korean officials expressed their desire to go along with the multilateral effort but stressed the importance of minimizing the impact of the sanctions on the Korean economy, which is almost wholly dependent on overseas producers for its energy needs.
"The two sides agreed to continue efforts to reach an amicable solution that takes into account the interests of our country and companies while achieving the target sought by the U.S.," a South Korean Foreign Ministry spokesman said. The two countries plan additional talks over the matter but didn't specify any dates.
Washington can choose to grant Seoul either an exception or a waiver to its sanctions. To be an exception, South Korea would have 180 days from the date the U.S. law took effect to reduce Iranian crude imports, while for a waiver it would have to act within a 120-day period in a way that would reinforce U.S. security.
Seoul is more likely to opt to be considered as an exception, according to people familiar with the matter, a path that would require it to reduce Iranian crude imports significantly by the end of June.
Saurabh Chaturvedi contributed to this article.
Write to Rakesh Sharma at rakesh.sharma@dowjones.com and Se Young Lee at vincent.lee@dowjones.com
Credit: By Benoît Faucon, Rakesh Sharma and Se Young Lee
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 18, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 916418046
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916418046?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Iran Confronts Saudis on Oil Offer
Author: Faucon, Benoit; Sharma, Rakesh; Se Young Lee
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]18 Jan 2012: A.8. [Duplicate]
ProQuest document link
Abstract:
Iran warned Saudi Arabia against delivering additional oil to world markets to compensate for a drop in Iranian oil exports if they are hit by sanctions, as the U.S. continued to have mixed success in convincing Tehran's major customers to reduce their purchases of Iranian oil.
Full text: Iran warned Saudi Arabia against delivering additional oil to world markets to compensate for a drop in Iranian oil exports if they are hit by sanctions, as the U.S. continued to have mixed success in convincing Tehran's major customers to reduce their purchases of Iranian oil.
The warning from Tehran came a day after Saudi Arabia's oil minister pledged to boost the kingdom's production by as much as 2.7 million barrels a day, more than Iran exports, if there is market demand for it.
Though Saudi oil minister Ali Naimi didn't mention Iran, the pledge came as the West is ratcheting up pressure on the Islamic Republic over its nuclear program by targeting its exports.
"We invite Saudi officials to further reflect on and consider" their pledge to make up for any cut in oil exports, Iran's Foreign Minister Ali Akbar Salehi said in comments carried by state news agency IRNA.
Although indirect, the exchange marked the first verbal sparring between Iran and one of the Western-allied monarchies directly across the Persian Gulf.
President Barack Obama in December signed a law imposing sanctions on banks that trade with the Iranian central bank, through which much of Iran's oil sales are cleared. The European Union also has agreed in principle on an Iranian oil-import ban. Neither effort would go into effect until later this year.
Mr. Salehi said Mr. Naimi's pledges "will create all possible problems later" between Saudi Arabia and Iran, and called them "not friendly signals."
Iran has threatened for several weeks to try to close the Strait of Hormuz, where one-third of the world's traded oil passes, if sanctions are imposed, while the U.S. has warned Iran it would do whatever is necessary to keep the strait open.
While U.S. officials have been lobbying other nations to cut back on Iranian oil, India said on Tuesday it would continue to purchase Iran's oil exports and wouldn't seek a waiver from the U.S. measures -- effectively saying it intended to ignore the U.S. sanctions regime.
Under the U.S. sanctions program, the president can grant exceptions and waivers from U.S.-imposed penalties to countries that reduce Iranian oil purchases.
Indian Foreign Secretary Ranjan Mathai said his government would recognize only multilateral sanctions imposed by the United Nations.
Mr. Mathai said an Indian delegation is on its way to Tehran "to work out a mechanism for uninterrupted purchase of oil from Iran and to work out a financing mechanism."
India gets about three-quarters of the crude oil it requires through imports. Iran is its second-largest supplier after Saudi Arabia.
Also on Tuesday, South Korea said it will continue bilateral discussions with the U.S. to find an acceptable compromise on sanctions, as the resource-poor country attempts to safeguard its energy security without alienating its ally and trade partner.
South Korea gets nearly 10% of its crude oil from Iran and would have difficulty quickly finding alternative supplies. The government has said it will look to secure crude from Iraq and Kuwait instead.
A delegation of U.S. officials led by Robert Einhorn, special adviser on nonproliferation and arms control, met with South Korean officials on Tuesday to solicit Seoul's cooperation on U.S.-led efforts to curtail Iran's oil revenue.
The U.S. delegation stressed the importance of resolving the standoff over Iran's nuclear program through global cooperation, the South Korean government said.
The U.S. seeks a gradual reduction of Iranian oil imports, to avoid disrupting the global crude-oil market or hurting its allies.
South Korean officials said they wanted to go along with a multilateral effort but stressed the importance of minimizing the impact of the sanctions on the South Korean economy, which is almost wholly dependent on overseas producers for its energy needs.
Rising tensions with Iran have already pushed crude prices higher. In New York trading on Tuesday, crude oil closed up $2.01 at $100.71 a barrel, up 1.90% so far this year.
---
Saurabh Chaturvedi contributed to this article.
Credit: By Benoit Faucon, Rakesh Sharma and Se Young Lee
Subject: Sanctions; Exports; International relations; Foreign policy; Oil; International trade
Location: United States--US Iran Saudi Arabia
Classification: 9180: International; 1300: International trade & foreign investment; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.8
Publication year: 2012
Publication date: Jan 18, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 916499840
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916499840?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Essar Oil May Appeal in Tax Case
Author: Choudhury, Santanu; Sharma, Rakesh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Jan 2012: n/a.
ProQuest document link
Abstract:
The country's highest court Tuesday overturned a judgment of a lower court that allowed Essar Oil, a unit of London-listed Essar Energy PLC, to pay an estimated 91 billion rupees ($1.8 billion) in sales tax to the Gujarat state government in six equal annual installments starting from the financial year 2013-14.
Full text: NEW DELHI - Essar Oil Ltd. said Wednesday it is considering an appeal against a Supreme Court of India ruling to exclude the private-sector refiner from a program that would have allowed it to defer paying sales tax.
The country's highest court Tuesday overturned a judgment of a lower court that allowed Essar Oil, a unit of London-listed Essar Energy PLC, to pay an estimated 91 billion rupees ($1.8 billion) in sales tax to the Gujarat state government in six equal annual installments starting from the financial year 2013-14. Essar was granted the sales tax deferment benefit for its Vadinar refinery in Gujarat under a state government program to encourage large infrastructure projects.
The Supreme Court's decision could mean that Essar will have to pay the state government the deferred tax amount sooner than anticipated. Essar, which has a nameplate refining capacity of 14 million tons a year, aims to expand capacity at Vadinar to 18 million tons by March at an investment of 83 billion rupees and further to 20 million tons by September for 17 billion rupees.
The top court's ruling dragged shares of Essar Oil sharply lower Wednesday. The shares plunged as much as 23% during the day before closing 11.5% lower at 51.40 rupees in a flat Mumbai market.
"We are studying the Supreme Court judgment and are evaluating our course of action, which includes all options including filing a review petition in the Supreme Court," the company's chief executive Lalit Gupta told reporters. "We will also approach the Gujarat government and will discuss with them the likely repayment schedule."
Mr. Gupta said Essar was scheduled to start commercial production at the refinery by Aug. 15, 2003. But it halted construction work due to a stay by the Gujarat High Court on all building activity in the region following a public-interest litigation against another company. The Supreme Court lifted the stay in January 2004 and Essar Oil resumed work.
The company then sought more time to complete the project and avail the sales tax benefit, but the Gujarat government refused an extension. Mr. Gupta said that Essar then approached the high court, which ruled in its favor.
Commercial production at Vadinar started in May 2008.
Mr. Gupta also said that Essar received a benefit of 63.08 billion rupees until end-December 2011 in deferred sales tax payment. He added that the company has estimated a total benefit of 91 billion rupees until 2013.
The company's chief financial officer, V. Ashok, said Essar has already assigned 18 billion rupees of its current sales tax deferment liability to an associate company.
Mr. Ashok also said that Essar is in talks with its lenders to exit a debt restructuring program and that it expects the process to be completed shortly. He added that the company hasn't defaulted on any its financing agreements.
Essar Oil entered into a debt restructuring pact with its lenders in 2004 for its refinery project.
Write to Rakesh Sharma at rakesh.sharma@dowjones.com
Credit: By Santanu Choudhury And Rakesh Sharma
Subject: Debt restructuring; Supreme Court decisions; Petroleum refineries; Sales taxes
Company / organization: Name: Essar Oil Ltd; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 18, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 916501541
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916501541?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
IEA Cuts Oil-Demand Forecast
Author: Herron, James
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Jan 2012: n/a.
ProQuest document link
Abstract:
Last month, the IEA forecast slight growth in fourth-quarter demand, but a combination of mild weather, economic weakness and high crude prices reduced consumption for the first time since the third quarter of 2009.
Full text: LONDON--The International Energy Agencytook an ax to its oil-demand forecast, after consumption fell in the fourth quarter of 2011 for the first time since the tail end of the credit crunch.
The agency, which represents major energy-consuming countries, warned of "the rising likelihood of a sharp economic slowdown, if not outright recession," that creates the possibility of zero oil-demand growth in 2012.
"The data is supportive of our view that the oil price should move lower in the first half of 2012," analysts at Bernstein Research said in a note to clients.
Light, sweet crude for February delivery fell 12 cents, or 0.1%, to $100.59 a barrel on the New York Mercantile Exchange and is down four of the past five sessions.
The IEA warned of multiple risks to oil supply, not least the looming sanctions against Iranian crude exports that could cause significant oil-supply difficulties for European refiners. However, the IEA also noted that Western sanctions are unlikely to have a meaningful effect until the middle of the year and will probably be flexible enough to avoid a severe oil-market reaction.
"At least a portion of Iran's 2.5 million barrels a day of crude exports will likely be denied to [Organization for Economic Cooperation and Development] refiners during second half 2012, although more apocalyptic scenarios for sustained disruption to Strait of Hormuz transits look less likely," it said.
Oil demand in the fourth quarter fell 300,000 barrels a day from the same period the previous year. Last month, the IEA forecast slight growth in fourth-quarter demand, but a combination of mild weather, economic weakness and high crude prices reduced consumption for the first time since the third quarter of 2009.
The IEA cut a further 500,000 barrels a day from its demand forecast for the first quarter of 2012, citing the same "growth-impeding" combination of economic woes in Europe and continued high prices due to the tensions between Iran and the West.
Oil-demand growth for the whole of 2012 was cut by 200,000 barrels a day to 1.1 million barrels a day. "Upcoming revision to the GDP forecasts of the [International Monetary Fund] and other institutions might result in much weaker growth still," the IEA said. Barring further revisions, the IEA's forecasts leave the oil market almost perfectly balanced in 2012. The world's requirement for crude oil from the Organization of Petroleum Exporting Countries is exactly the 30-million-barrel-a-day production ceiling the group agreed to in December, it said.
Almost all of the growth in demand for oil in 2012 will be met from higher production outside OPEC, it said.
Write to James Herron at james.herron@dowjones.com
Credit: By James Herron
Subject: Petroleum industry; Crude oil prices
Company / organization: Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 18, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 916562119
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916562119?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
IEA Cuts Oil-Demand Forecast
Author: Herron, James
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 Jan 2012: n/a.
ProQuest document link
Abstract:
Last month, the IEA forecast slight growth in fourth-quarter demand, but a combination of mild weather, economic weakness and high crude prices reduced consumption for the first time since the third quarter of 2009.
Full text: LONDON--The International Energy Agency took an ax to its oil-demand forecast, after consumption fell in the fourth quarter of 2011 for the first time since the tail end of the credit crunch.
The agency, which represents major energy-consuming countries, warned of "the rising likelihood of a sharp economic slowdown, if not outright recession," that creates the possibility of zero oil-demand growth in 2012.
"The data is supportive of our view that the oil price should move lower in the first half of 2012," analysts at Bernstein Research said in a note to clients.
Light, sweet crude for February delivery fell 12 cents, or 0.1%, to $100.59 a barrel on the New York Mercantile Exchange and is down four of the past five sessions.
The IEA warned of multiple risks to oil supply, not least the looming sanctions against Iranian crude exports that could cause significant oil-supply difficulties for European refiners. However, the IEA also noted that Western sanctions are unlikely to have a meaningful effect until the middle of the year and will probably be flexible enough to avoid a severe oil-market reaction.
"At least a portion of Iran's 2.5 million barrels a day of crude exports will likely be denied to [Organization for Economic Cooperation and Development] refiners during second half 2012, although more apocalyptic scenarios for sustained disruption to Strait of Hormuz transits look less likely," it said.
Oil demand in the fourth quarter fell 300,000 barrels a day from the same period the previous year. Last month, the IEA forecast slight growth in fourth-quarter demand, but a combination of mild weather, economic weakness and high crude prices reduced consumption for the first time since the third quarter of 2009.
The IEA cut a further 500,000 barrels a day from its demand forecast for the first quarter of 2012, citing the same "growth-impeding" combination of economic woes in Europe and continued high prices due to the tensions between Iran and the West.
Oil-demand growth for the whole of 2012 was cut by 200,000 barrels a day to 1.1 million barrels a day. "Upcoming revision to the GDP forecasts of the [International Monetary Fund] and other institutions might result in much weaker growth still," the IEA said. Barring further revisions, the IEA's forecasts leave the oil market almost perfectly balanced in 2012. The world's requirement for crude oil from the Organization of Petroleum Exporting Countries is exactly the 30-million-barrel-a-day production ceiling the group agreed to in December, it said.
Almost all of the growth in demand for oil in 2012 will be met from higher production outside OPEC, it said.
Write to James Herron at james.herron@dowjones.com
Credit: By James Herron
Subject: Petroleum industry; Crude oil prices
Company / organization: Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 19, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 916631305
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916631305?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
IEA Cuts Oil-Demand View As Crude Consumption Falls
Author: Herron, James
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]19 Jan 2012: C.4.
ProQuest document link
Abstract:
Last month, the IEA forecast slight growth in fourth-quarter demand, but a combination of mild weather, economic weakness and high crude prices reduced consumption for the first time since the third quarter of 2009.
Full text: LONDON -- The International Energy Agency took an ax to its oil-demand forecast, after consumption fell in the fourth quarter of 2011 for the first time since the tail end of the credit crunch.
The agency, which represents major energy-consuming countries, warned of "the rising likelihood of a sharp economic slowdown, if not outright recession," that poses the possibility of zero oil-demand growth in 2012.
Light, sweet crude for February delivery fell 12 cents, or 0.1%, to $100.59 a barrel on the New York Mercantile Exchange and is down four of the past five sessions.
The IEA warned of multiple risks to oil supply, not least the looming sanctions against Iranian crude exports that could cause significant oil-supply difficulties for European refiners. However, the IEA also noted that Western sanctions are unlikely to have a meaningful effect until the middle of the year and will probably be flexible enough to avoid a severe oil-market reaction.
Oil demand in the fourth quarter fell 300,000 barrels a day from the same period the previous year. Last month, the IEA forecast slight growth in fourth-quarter demand, but a combination of mild weather, economic weakness and high crude prices reduced consumption for the first time since the third quarter of 2009.
The IEA cut 500,000 barrels a day from its demand forecast for the first quarter of 2012, citing the same "growth-impeding" combination of economic woes in Europe and continued high prices due to tensions between Iran and the West.
Oil-demand growth for the whole of 2012 was cut by 200,000 barrels a day to 1.1 million barrels a day. "Upcoming revision to the GDP forecasts of the [International Monetary Fund] and other institutions might result in much weaker growth still," the IEA said.
Credit: By James Herron
Subject: Commodity prices; Crude oil prices
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Jan 19, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 916676937
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916676937?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Saudi Aims Put Focus on Oil Majors' Costs
Author: Peaple, Andrew
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 Jan 2012: n/a.
ProQuest document link
Abstract:
BG, for example, should see most growth in the next decade in Brazil, where it will generate a positive investment return with oil prices above $30; others with relatively cheap projects include Galp, Petrobras and Occidental.
Full text: Saudi Arabia's new aim to keep oil prices at around $100 per barrel, up from $75, may seem to signal ever-rising revenues for oil majors. But what if the Saudis' real intention is to irk Iran and tame oil prices, which are already trading around that target? Should the world's swing oil producer succeed, the majors' differing strengths could start to emerge more clearly.
Without higher prices, further gains for oil-company valuations will have to come from elsewhere. That helps explain why most oil companies are increasing their spending on new exploration and production. But some may prove able to add new barrels more profitably than others. The oil price needed to ensure industry projects now in development avoid a negative return ranges from around $20 per barrel up to $90, according to Citi.
Areas such as the pre-salt rocks off Brazil's coast or the recent new discoveries off Norway's coast may prove cheaper to exploit given their relative ease of access. By contrast, projects to produce heavy oil in North America, or oil in ultra-deep waters off the West African coast could be more costly because of their technical challenges.
Most oil majors invest in a wide range of projects. But those with portfolios weighted to lower-cost areas could win out. BG, for example, should see most growth in the next decade in Brazil, where it will generate a positive investment return with oil prices above $30; others with relatively cheap projects include Galp, Petrobras and Occidental. By contrast, Total has interests in some low-cost areas such as off French Guiana, but some expensive-looking liquefied natural gas projects. On average, it will require $60 oil for its new investment projects to break even, Citi estimates.
There are risks: Governments that judge oil companies to be making excess returns could jack up taxes, for example. And new frontiers, like Brazil's offshore, can spring unexpected costs and delays on companies, eroding return on investment. But as investors become less able to rely on ever-increasing oil prices to support oil majors' shares, they should pay more attention to which companies can grow in the cheapest way.
Write to Andrew Peaple at andrew.peaple@dowjones.com
Credit: By Andrew Peaple
Subject: Petroleum industry; Energy economics; Prices
Location: Saudi Arabia
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 19, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 916680532
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916680532?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
China Seeks Alternative Oil Suppliers as Wen Wraps Up Mideast Trip
Author: Spegele, Brian
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 Jan 2012: n/a.
ProQuest document link
Abstract:
Mr. Wen defended Beijing's deep-seated energy ties with Iran on Wednesday but said China opposed its nuclear-weapons program, which some countries including Saudi Arabia view as an imminent threat to regional security.
Full text: BEIJING--China is forging ahead with long-term efforts to reduce a reliance on its traditional oil suppliers, including Iran, even as it publicly brushes aside U.S. and European pressure to cut its Iranian imports.
Premier Wen Jiabao on Thursday wrapped up a trip to the Persian Gulf, where he inked billions of dollars in deals with key U.S. allies including Saudi Arabia, the United Arab Emirates and Qatar. Though Mr. Wen didn't visit Iran, his trip came as China faces questions over its apparent support for Tehran.
Mr. Wen defended Beijing's deep-seated energy ties with Iran on Wednesday but said China opposed its nuclear-weapons program, which some countries including Saudi Arabia view as an imminent threat to regional security. "We are deeply concerned about the situation in the Persian Gulf and the Middle East," he said during a news conference in Doha.
China's deepening ties with U.S.-friendly countries in the Middle East parallel broader efforts to diversify its sources of foreign oil. Smaller exporters in the Middle East and emerging suppliers in Africa and Latin America are making up increasingly sizable shares of China's total crude imports.
Additionally, the overall share of China's top three suppliers--Saudi Arabia, Angola and Iran--has dropped slowly but steadily since 2009, according to China customs data, even as overall crude imports surged roughly 14% between 2009 and November 2011, the latest data available. Imports from Venezuela doubled during the same period, while crude imports from Kazakhstan, Iraq and the UAE grew rapidly as well.
China's diversification program has a long way to go, and Iran still supplies roughly 11% of its oil imports. Any move by China to significantly curtail Iran imports could drive up global prices as Beijing seeks sources elsewhere.
The diversification drive has gained greater urgency amid disruptions among China's smaller crude suppliers, including Libya and Sudan, and growing concern in Beijing that unrest of the Arab Spring could spread.
Tehran has threatened to blockade the Strait of Hormuz, a critical oil-transit channel, in response to the U.S.-led sanctions. Meanwhile, Sudan and South Sudan have been locked in an oil-transit dispute, which threatens to cause major disruptions in its China shipments. Sudan supplied 5% of China's oil imports in the first 11 months of last year.
"China is making good progress toward diversifying its oil supply," said Gordon Kwan, a Hong Kong-based energy analyst at Mirae Asset Securities. "If they were to concentrate on just one or two countries that just accidentally went out of production, [global] oil prices could easily double."
Last week as part of Mr. Wen's trip, China Petrochemical Corp., known as Sinopec Group, and state-owned giant Saudi Arabian Oil Co. signed a deal to build a 400,000-barrel-a-day refinery at Yanbu, on the Red Sea coast. The project is worth about $8.5 billion. Analysts expect much of the Yanbu refinery product will be sold to the Saudi market instead of being shipped to China as a way to build favor with the Saudis, which China hopes will foster deeper inroads into the country's energy supplies. Sinopec joined the project after ConocoPhillips last year pulled out.
Experts said Mr. Wen likely pressed Saudi Arabia for reassurances that it was willing to increase its own production in the event of an Iranian shortfall. China's Foreign Ministry has declined to say whether Mr. Wen made this request. At a daily press briefing on Thursday, Foreign Ministry spokesman Liu Weimin accused the U.S. of escalating tensions with Iran.
Separately on Thursday, China National Petroleum Corp., another of China's major energy companies, said it reached a deal with Qatar Petroleum International and Royal Dutch Shell PLC to build a refining facility in the eastern Chinese city of Taizhou. It is the latest in a string of refineries set up in China through joint ventures with partners from energy-rich countries that often come with supply agreements. CNPC and Russia's OAO Rosneft plan to open a large refinery in the eastern city of Tianjin.
Besides diversifying its oil suppliers, China is increasing the ways overseas oil reaches China. Mr. Wen on Wednesday said China opposed Iran's threats to blockade the Strait of Hormuz. Beijing also fears transit disruptions in the Strait of Malacca, near Singapore, and a major potential chokepoint where the U.S. Navy has a strong presence.
China Petroleum Engineering & Construction Corp., a subsidiary of CNPC, is building a pipeline to bypass the Strait of Hormuz. The pipeline is expected to begin operation later this year. CNPC is also operating a separate oil pipeline from eastern Russia to the Chinese refining hub of Daqing.
Beijing, in a bid to bypass the Strait of Malacca, is also building with its southwestern neighbor Myanmar an oil pipeline that connects the Bay of Bengal and the southwestern Chinese province of Yunnan.
Credit: By Brian Spegele
Subject: Petroleum industry; Petroleum refineries; Suppliers
Location: Saudi Arabia United States--US Persian Gulf Middle East United Arab Emirates
People: Wen Jiabao
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 19, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 916747842
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916747842?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Euro Zone Is Stung As Oil Costs Rise
Author: Szalay, Eva
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 Jan 2012: n/a.
ProQuest document link
Abstract:
The price of oil is nearing record highs in euro terms, posing a further risk to already-fragile European economies but providing support to oil-linked currencies like the Russian ruble, analysts say. Because oil is traded in dollars on the global market and the euro has depreciated in value against the dollar in recent weeks, individuals and companies in the euro zone have seen their energy costs rise, even though consumption has shrunk as the region likely heads toward recession.
Full text: The price of oil is nearing record highs in euro terms, posing a further risk to already-fragile European economies but providing support to oil-linked currencies like the Russian ruble, analysts say.
Because oil is traded in dollars on the global market and the euro has depreciated in value against the dollar in recent weeks, individuals and companies in the euro zone have seen their energy costs rise, even though consumption has shrunk as the region likely heads toward recession.
"While demand for oil in Europe has been declining at a fast rate in recent months due to the deceleration in economic activity, Europe's oil bill has not, due to high energy prices," Bank of AmericaMerrill Lynch said in a note to clients.
The higher fuel costs for euro-zone consumers--taking a chunk out of their disposable incomes, much like an added tax or an interest-rate rise--risk creating a negative feedback loop for the beleaguered region by pushing the euro even lower as economic growth wilts, and in turn lifting consumers' oil prices further.
The price of Brent crude rose 89 cents a barrel to $111.55 on Thursday, which translates to more than [euro]86 a barrel, within sight of its record high of [euro]92.55 in July 2008.
Although the euro has rebounded from the 16-month lows registered against the dollar last week, and it climbed back above $1.29 Thursday, it is still more than 5% below where it was three months ago.
The price of oil, meanwhile, remains well supported amid political tensions between major oil producer Iran and the West. All other things being equal, a weaker euro tends to weigh on the price of oil, because it hurts European demand. But the tensions with Iran, which are causing supply concerns, have overridden any effects of a weaker euro on the global oil market. And that is causing pain for the euro-zone.
"A round of higher oil prices or even higher oil prices in euros, could deepen Europe's recession," Bank of AmericaMerrill Lynch said in its note.
Jean-Claude Juncker, president of the Eurogroup of euro-zone finance ministers, said Wednesday that the euro zone was already on the brink of a technical recession.
Things could get even tougher.
Swiss bank UBS this week slashed its current three-month forecast for the euro against the dollar to $1.15 from a previous $1.35, while Goldman Sachs last week raised its expectations for Brent crude over the same period by 2% to $120 a barrel.
But what's bad for one currency could be a boon for others, like the ruble. Because oil is Russia's main export, the ruble tends to climb along with crude prices.
Since the year started, the ruble has risen around 3% against the dollar, despite growing political unrest. Fitch Ratings' announcement Monday that it was cutting its outlook on Russian's credit rating failed to dent the Russian currency., which instead rose in tandem with the oil price.
Credit: By Eva Szalay
Subject: Recessions; Economic conditions; Petroleum industry; Eurozone; Currency
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 19, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 916763472
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916763472?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Natural Gas Tumbles, Oil Slips on Weak Demand
Author: Strumpf, Dan; DiColo, Jerry A
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 Jan 2012: n/a.
ProQuest document link
Abstract:
[...] a sharp decline in imports, combined with an increase in gasoline stocks and weak demand for the fuel has painted a bleak picture of domestic gasoline use. Production efficiencies have made production increasingly cheaper, while many wells yield large quantities of crude oil and other liquids that fetch higher prices and justify continued gas production.
Full text: NEW YORK--Natural-gas futures plunged Thursday to their lowest level in 10 years after the U.S. reported a smaller-than-normal decline in inventories last week, as mild temperatures continue to damp demand for gas-fired heating.
The Department of Energy said gas stockpiles drew 87 billion cubic feet last week to 3.29 trillion cubic feet, a record for this time of year. The decline was roughly in line with expectations, but came in well below last year's draw of 228 billion cubic feet and under the 162 billion-cubic-foot five-year average draw for the week.
"It's just an amazing millstone on the neck of the market," said Pax Saunders, analyst at Gelber & Associates in Houston, of the volume of gas in storage for this time of year. "It's just weighing it down and dropping it in the water."
Natural gas for February delivery recently fell 15 cents, or 6.1%, to settle at $2.322 a million British thermal units on the New York Mercantile Exchange, building on losses earlier in the morning.
Thursday marks the eighth consecutive session of lower prices and third session in a row that the contract has set a new 10-year low.
Meanwhile, crude-oil futures also turned lower after a report on U.S. oil stockpiles suggested U.S. fuel demand remains weak.
Light, sweet crude oil for February delivery fell 20 cents to settle at at $100.39 a barrel on the New York Mercantile Exchange, down from highs above $102 before the data were released. Brent crude oil on the ICE futures exchange settled 89 cents higher at $111.55 a barrel.
The U.S. Energy Information Administration report Thursday showed a 3.4-million-barrel decline in U.S. oil inventories for the week ended Jan. 13, which surprised analysts who had called for an increase. But a sharp decline in imports, combined with an increase in gasoline stocks and weak demand for the fuel has painted a bleak picture of domestic gasoline use.
"There was a huge falloff in imports and it's lackluster, to say the least, on the gasoline front," said Matt Smith, an analyst at Summit Energy. "It's a very bearish picture from the domestic demand side."
Gasoline demand for the latest week was the lowest since February 2001, as measured by products supplied to the market.
The drop in gasoline use stood in contrast to improvements in broader U.S. economic data in recent weeks. On Thursday, weekly jobless claims fell to the lowest level since April 2008 and manufacturing data have also shown improvement since worries of a double-dip recession appeared last summer.
Those economic indicators have helped to keep oil prices above $100 a barrel as investors wager that crude-oil demand will improve as industries recover and more commuters head to work.
"The economic numbers are another step forward," said Carl Larry, head of trading adviser Oil Outlooks and Opinions. Still, he cautioned that Europe's weakening economic outlook remains a key area of concern for the crude-oil market.
With crude-oil prices holding in a tight range, analysts are questioning whether the Energy Department report will be able to knock the price of oil from its triple-digit perch.
For one, tensions between Iran and the West over a potential European Union oil embargo has put a floor under prices, as investors fear that any escalation could quickly send oil higher.
Front-month February reformulated gasoline blendstock, or RBOB, settled 0.96 cent lower at $2.8158 a gallon. February heating oil recently settled 2.26 cents higher at $3.036 a gallon.
In the natural-gas market, prices typically rise this time of year as cold weather spurs demand for the fuel used to heat homes and offices. That usually triggers triple-digit draws from storage in January.
But warmer-than-average temperatures that have swept the country this winter have upset that usual cycle. The modest draws have left some market observers to wonder whether enough storage capacity will be left over after winter to accommodate climbing stockpiles later in the year.
"We've had warmer-than-normal weather this winter and we appear to be on slate to have some more. That's creating a mismatch between supply and demand," said Peter Beutel, head of the trading advisory firm Cameron Hanover.
Traders received further evidence Thursday that demand is likely to remain weak through much of the winter. The National Oceanic and Atmospheric Administration in its monthly U.S. outlook called for above-normal temperatures throughout the East Coast, Midwest and much of the Southwest through the end of February.
In the meantime, natural-gas producers have shown little incentive to curb output. The so-called shale-gas boom has unlocked vast supplies of cheap natural gas across much of the U.S. in recent years. Production efficiencies have made production increasingly cheaper, while many wells yield large quantities of crude oil and other liquids that fetch higher prices and justify continued gas production.
Write to Jerry A. DiColo at jerry.dicolo@dowjones.com
Credit: By Dan Strumpf And Jerry A. DiColo
Subject: Petroleum industry; Crude oil prices; Natural gas; Futures; Gasoline
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 19, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: Englis h
Document type: News
ProQuest document ID: 916765406
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916765406?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The Purity of Olive Oil; Is What You Buy at the Supermarket Really 'Extra Virgin'?
Author: Palling, Bruce
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Jan 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Since ancient times, olive oil has held an almost mythical status; it was considered to be not just an essential culinary adornment, but a contraceptive, detergent, pesticide and perfume. Today, its following remains cult-like, with devotees wed to tasting rituals, such as only tasting it in special glass containers at 28 degrees Celsius, and touting obscure bits of knowledge about the numerous olive oil varietals, from Albatro to Salicino, from which it is pressed. Throw in its additional health benefits, and sales of olive oil have doubled in the past two decades, according to International Olive Council figures.
But, as with all good things, retaining its high quality and purity has become a bone of contention, especially when it comes to labeling olive oil as "extra virgin."
A book published earlier this month "Extra Virginity: The Sublime and Scandalous World of Olive Oil" by Tom Mueller (Atlantic Books in the U.K.) explores the wide-scale adulteration of the product. Mr. Mueller, an American writer who lives in the northwestern Italian province of Liguria, first exposed the scandals surrounding the fraudulent production of olive oil in an essay published in the New Yorker in 2007. This included the blending of cheaper vegetable oils such as sunflower or hazelnut and then selling it as extra virgin olive oil, or deodorizing lower-grade olive oil to remove noxious flavors. Another scam was the importation of inferior olive oils into Italy and then selling them as if this was the country of origin.
This book expands the scope of his earlier work and makes unsettling reading for anyone who imagines that what they purchase in many supermarkets is actually high-quality olive oil, with all of its attendant life-enhancing attributes.
"The olive oil stocked on the shelves of the average supermarket is of a very, very low standard and most are flawed in one way or another," Mr. Mueller said in an interview earlier this week. He also believes the description of olive oil as "extra virgin" is a virtually meaningless phrase.
"According to the letter of the law--as drawn up by the U.S. [Department of Agriculture], the Australian government and an intergovernmental organization called the International Olive Council--the category 'extra virgin' olive oil is quite a low bar. The definition is that the oil must meet several basic chemical parameters, have some flavor or aroma of olives and cannot have any sensory flaws," he says. "This really doesn't say much about its quality, only that it cannot be bad. It is a bit like selling First Growth Bordeaux and cartons of nondescript stuff both under the category of fine wine."
The argument is that poor-quality, low-priced olive oils are driving the genuine high-quality producers out of business, as it is possible to purchase liter bottles of "Extra Virgin" olive oil in British supermarkets for less than £5.
Due to the labor-intensive practices of small-scale olive-oil producers in hilly regions like Tuscany, it would be a struggle for them to sell their handcrafted product for less than three or four times this amount, Mr. Mueller contends. These are the producers who create the intensely flavored, peppery oil that is used in the best restaurants or sold in small delicatessens and grocery stores.
Each autumn, London's River Café co-founder Ruth Rogers takes most of the kitchen staff to tour the leading producers in northern Italy to assess the olive oil vintage, which can vary as much as those of wines. Certain oils that catch the attention of the staff are bottled under the restaurant's private label, which includes harvest details.
Just last month, both kitchen and front-of-house staff tasted about a dozen oils to choose a handful River Café would use. A week later, I went there for lunch. Sian Owen, River Café's head chef, explained that the meal I was served used at least four different oils, depending on the dish. "The oil on the bruschetta was Selvapiana from Chianti Rufina in northern Tuscany, which is more robust to withstand the grill flavors. On the finely chopped raw veal dish plus the freshly grilled langoustines, we used Capenzzana oil, which is closer to Florence as it is a very beautiful delicate oil. With the wood-roasted turbot, I put on the I Canonici oil from the Fontodi estate in Chianti Classico, as its peppery, green flavors work best with fish."
Despite his criticism of the industry, Mr. Mueller isn't pessimistic about the future. "I have a sense of optimism because consumers are finally beginning to ask the right questions, like who is making this, how fresh is it, why isn't there a harvest date on this, what is rancidity, why are bitter and pungent flavors good? However, when it comes to enforcement of the regulations, I am less bullish--what is going to happen in southern Italy and Spain when the European Union agricultural subsidies fall off in 2013? This is serious stuff and it is going to get worse. In the European Union, the influence from above is largely negative--they merely wish to promote olive oil consumption but they don't celebrate quality."
The International Olive Council didn't respond to requests for comment.
Says Mr. Mueller: "I think in this case, the consumer is going to force the issue by saying 'I want an early harvest Picual variety,' or asking their supermarket 'why are you selling me this olive oil which smells bad?' It is a similar process to the way that wine drinkers, lovers of artisanal cheese and coffee have improved quality through their knowledge and demands."
Write to Bruce Palling at wsje.weekend@wsj.com
Credit: By Bruce Palling
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 20, 2012
column: Bruce Palling on Food
Section: Europe
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuestdocument ID: 916763509
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916763509?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Flood Victims Languish in Oil Boomtown; Shortage of Workers in North Dakota City Stymies Homeowners Trying to Rebuild; a Job for 'Anyone Who Wants to Work'
Author: Nicas, Jack
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Jan 2012: n/a.
ProQuest document link
Abstract:
Natural disasters slammed cities across the nation's midsection and South last summer, but few have faced the challenges of this flood-ravaged city of 41,000: a severe housing and labor shortage sparked by the nearby oil boom and now worsened by the flood. After heavy rains in Canada filled upstream reservoirs, the Mouse River spilled over its banks in June, flooding 3,230 homes, or about a quarter of the city's residences.
Full text: MINOT, N.D.--Seven months after a flood submerged a third of this thriving city on the edge of the state's oil boom, Cindy Garrett is still living in a federally provided trailer on her neighbor's lawn. Her problem: She can't find workers to repair her house.
She waited four months for an electrician to rewire her home, and she is still waiting for a plumber to fix her broken pipes. If Minot weren't booming, "we'd already be back in our home," the retired 54-year-old said.
Natural disasters slammed cities across the nation's midsection and South last summer, but few have faced the challenges of this flood-ravaged city of 41,000: a severe housing and labor shortage sparked by the nearby oil boom and now worsened by the flood.
Businesses here are struggling to keep up with roaring demand, while the 12,000 displaced residents are confronting an expensive real-estate market and a lack of skilled workers to rebuild.
After a winter that had been unusually mild until recently, just 10% to 20% of the flooded homeowners have been able to return to their homes--and most have done repair work themselves, city officials say. Meanwhile, officials are weighing whether to raze another 300 to 400 homes to bolster flood defenses.
Minot's boom began in 2008, when geologists found that the nearby Bakken oil shale held as much as 4.3 billion barrels of crude. A gusher of oil workers boosted the local economy and filled almost all the city's beds. Minot officials say that early last year, the city was beginning to catch up to demand for housing, retail and other services.
"We saw the light at the end of the tunnel," said John MacMartin, president of the Minot Area Chamber of Commerce. "Then the flood came, and that tunnel collapsed."
After heavy rains in Canada filled upstream reservoirs, the Mouse River spilled over its banks in June, flooding 3,230 homes, or about a quarter of the city's residences. By the river's crest--nearly four feet above its 1881 record--anywhere from two to 15 feet of floodwater covered 18 square miles here.
With home prices already high, swelling 40% from 2007 to 2010, the flood goosed the market again. In the six months before the flood, about 240 homes sold for a median price of $183,000, according to local real-estate data. In the six months since, about 310 homes sold for a median price of $232,000--a 27% jump.
"Finding a home here for under $150,000 is pretty much impossible, unless, of course, it's flood-damaged," said local real-estate agent Bob Timm.
With so many people looking for places to live, rent has also shot up since the flood, residents say. John Abbey, a waiter at a local diner, said the monthly rent for his two-bedroom apartment jumped to $900 from $495 this month, forcing him onto the couch to fit a second and third roommate.
During the flood, the Mouse filled the city's central valley, home to most of Minot's low-income residents. When their homes were destroyed, including 500 mobile units, many left town because they could no longer afford Minot.
The exodus has cost local businesses many of their employees--particularly in the service industry--while the rising cost of living pushes other workers to higher-paying jobs in the oil fields.
Angela Wright, manager of the local Pizza Hut, said about half of her 25 workers fled after the flood, and she has struggled to refill their positions. The restaurant now advertises $15-an-hour positions on its marquee.
Mr. MacMartin, the chamber president, said almost every business here is desperate for help. Local fast-food joints often close early because they can't find enough workers, he said. At the airport, strangers share cabs because there aren't enough drivers.
Mark Mattson, owner of a commercial construction company, said he turns down jobs because of a lack of workers. "I've got two to three people on each job right now when I should have eight to 10," he said. Plenty of people want to move to Minot to work for him, he said, "but there's nowhere to stay."
A local development group says the city has 3,000 unfilled jobs--about double the amount a year ago--and Minot officials estimate the unemployment rate here is less than 2%. "For anyone that wants to work, there's a job," Mayor Curt Zimbelman said.
Several day-care centers were also destroyed in the flood, creating another shortage that has hurt the work force. "Finding a job's not the problem. It's finding someone to watch her," said Andie Waltz, holding her two-year-old daughter's hand.
Rev. Paul Kruger said the day care at his church, which has 173 children on the waiting list, turned down funds to expand because it couldn't find potential workers a place to live.
Residents and city officials also say price-gouging has been prevalent since the flood among plumbers, electricians and builders. Jay Davis, a local radio-station owner, said bids to replace a water heater in his flooded home ranged as high as $1,600--double what he paid in 2008.
Dan Goins, an electrician who drove the eight hours to Minot from his Minneapolis home, said he charges a regular rate plus per-diem costs, but acknowledged he could ask for more. "Back home, you have to fight for the job," he said. "Here, the customers are fighting for you."
Credit: By Jack Nicas
Subject: Real estate sales; Floods; Labor shortages; Housing prices; Homeowners
Company / organization: Name: Microsoft Corp; NAICS: 334611, 511210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 20, 2012
Section: US
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 916791434
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916791434?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
China Shops Around for Oil, Wary of Iran, Arab Spring
Author: Spegele, Brian
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Jan 2012: n/a.
ProQuest document link
Abstract:
CNPC and Russia's OAO Rosneft plan to open a large refinery in the eastern city of Tianjin. Besides diversifying its oil suppliers, China is increasing the ways overseas oil reaches China.
Full text: BEIJING--China signed billions of dollars in deals with key U.S. allies during its premier's visit to the Persian Gulf, forging ahead with long-term efforts to rely less on its traditional oil suppliers, including Iran--even as it publicly brushes aside U.S. and European pressure to cut its Iranian imports.
Premier Wen Jiabao on Thursday wrapped up his trip to Saudi Arabia, the United Arab Emirates and Qatar. Though Mr. Wen didn't visit Iran, his trip came as China faces questions over its apparent support for Tehran.
Mr. Wen defended Beijing's deep-seated energy ties with Iran on Wednesday but in an acknowledgment of concerns in the region said China opposed Iran's nuclear-weapons program which Saudi Arabia and others view as an imminent threat to regional security. "We are deeply concerned about the situation in the Persian Gulf and the Middle East," he said during a news conference in Doha.
China has in the past few years seen the risks of relying too much on any one country or region for oil, which has prompted it to reach out to emerging suppliers in Africa and Latin America, which along with smaller Mideast exporters are making up more and more of China's total crude imports.
These concerns have intensified as Iran--its No. 3 outside supplier after Saudi Arabia and Angola--comes under increasing pressure from the West just as the spread of Arab Spring uprisings threatens to further disrupt supply across the region.
The overall share of Chinese imports from its top three suppliers has dropped slowly but steadily since 2009, according to China customs data, even as overall crude imports surged roughly 14% from 2009 to November 2011, the latest data available. Imports from Venezuela doubled during the period, while crude imports from Kazakhstan, Iraq and the U.A.E. grew rapidly as well.
China's diversification program has a long way to go, and it's unlikely to dig too deeply into the 11% share of its oil that still comes from Iran. However, any move by China to significantly curtail Iranian imports could drive up global prices as Beijing seeks to make up for the shortfall on short notice.
For China's part, its supplies from Libya have been the only sizable disruptions caused by the Arab Spring. But any turmoil among its major sources of crude such as Saudi Arabia, or for that matter, Iran, would be of great concern for Beijing, underscoring its need to reduce it heavy reliance on oil from the region.
Tehran has threatened to blockade the Strait of Hormuz, a critical oil-transit channel, in response to the U.S.-led sanctions. Meanwhile, Sudan and South Sudan have been locked in an oil-transit dispute, which threatens to cause major disruptions in its China shipments. Sudan supplied 5% of China's oil imports in the first 11 months of last year.
"China is making good progress toward diversifying its oil supply," said Gordon Kwan, a Hong Kong-based energy analyst at Mirae Asset Securities. "If they were to concentrate on just one or two countries that just accidentally went out of production, [global] oil prices could easily double."
Last week as part of Mr. Wen's trip, China Petrochemical Corp., known as Sinopec Group, and state-owned giant Saudi Arabian Oil Co. signed a deal to build a 400,000-barrel-a-day refinery at Yanbu, on the Red Sea coast. The project is valued at approximately $8.5 billion. Analysts expect much of the Yanbu refinery product will be sold to the Saudi market instead of being shipped to China as a way to build favor with the Saudis, which China hopes will foster deeper inroads into the country's energy supplies. Sinopec joined the project after ConocoPhillips last year pulled out.
Experts said Mr. Wen likely pressed Saudi Arabia for reassurances that it was willing to increase its own production in the event of an Iranian shortfall. China's Foreign Ministry has declined to say whether Mr. Wen made this request. At a daily press briefing on Thursday, Foreign Ministry spokesman Liu Weimin accused the U.S. of escalating tensions with Iran.
Separately on Thursday, China National Petroleum Corp., another of China's major energy companies, said it reached a deal with Qatar Petroleum International and Royal Dutch Shell PLC to build a refining facility in the eastern Chinese city of Taizhou. It is the latest in a string of refineries set up in China through joint ventures with partners from energy-rich countries that often come with supply agreements. CNPC and Russia's OAO Rosneft plan to open a large refinery in the eastern city of Tianjin.
Besides diversifying its oil suppliers, China is increasing the ways overseas oil reaches China. Mr. Wen on Wednesday said China opposed Iran's threats to blockade the Strait of Hormuz. Beijing also fears transit disruptions in the Strait of Malacca, near Singapore, and a major potential chokepoint where the U.S. Navy has a strong presence.
China Petroleum Engineering & Construction Corp., a subsidiary of CNPC, is building a pipeline to bypass the Strait of Hormuz. The pipeline is expected to begin operation later this year. CNPC is also operating a separate oil pipeline from eastern Russia to the Chinese refining hub of Daqing.
Beijing, in a bid to bypass the Strait of Malacca, is also building with its southwestern neighbor Myanmar an oil pipeline that connects southwestern China with the Bay of Bengal.
Write to Brian Spegele at brian.spegele@wsj.com
Credit: By Brian Spegele
Subject: Petroleum industry; Petroleum refineries; Suppliers
Location: United States--US Saudi Arabia Persian Gulf
People: Wen Jiabao
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 20, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 916791452
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916791452?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: China Courts New Oil Supply As It Resists Iran Sanctions
Author: Spegele, Brian
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]20 Jan 2012: A.7.
ProQuest document link
Abstract:
Mr. Wen defended Beijing's deep-seated energy ties with Iran on Wednesday but in an acknowledgment of concerns in the region said China opposed Iran's nuclear-weapons program, which Saudi Arabia and others view as an imminent threat to regional security.
Full text: BEIJING -- China signed billions of dollars in deals with key U.S. allies during its premier's visit to the Persian Gulf, forging ahead with long-term efforts to rely less on its traditional oil suppliers, including Iran -- even as it publicly brushes aside U.S. and European pressure to cut its Iranian imports.
Premier Wen Jiabao on Thursday wrapped up his trip to Saudi Arabia, the United Arab Emirates and Qatar. Though Mr. Wen didn't visit Iran, his trip came as China faces questions over its apparent support for Tehran.
Mr. Wen defended Beijing's deep-seated energy ties with Iran on Wednesday but in an acknowledgment of concerns in the region said China opposed Iran's nuclear-weapons program, which Saudi Arabia and others view as an imminent threat to regional security. "We are deeply concerned about the situation in the Persian Gulf and the Middle East," he said during a news conference in Doha.
China has in the past few years seen the risks of relying too much on any one country or region for oil, which has prompted it to reach out to emerging suppliers in Africa and Latin America, which along with smaller Mideast exporters are making up more and more of China's total crude imports.
These concerns have intensified as Iran -- its No. 3 outside supplier after Saudi Arabia and Angola -- comes under increasing pressure from the West just as the spread of Arab Spring uprisings threatens to further disrupt supply across the region.
The overall share of Chinese imports from its top three suppliers has dropped slowly but steadily since 2009, according to China customs data, even as overall crude imports surged roughly 14% from 2009 to November 2011, the latest data available. Imports from Venezuela doubled during the period, while crude imports from Kazakhstan, Iraq and the U.A.E. grew rapidly as well.
China's diversification program has a long way to go, and it's unlikely to dig too deeply into the 11% share of its oil that still comes from Iran. However, any move by China to significantly curtail Iranian imports could drive up global prices as Beijing seeks to make up for the shortfall on short notice.
For China's part, its supplies from Libya have been the only sizable disruptions caused by the Arab Spring. But any turmoil among its major sources of crude such as Saudi Arabia, or for that matter, Iran, would be of great concern for Beijing, underscoring its need to reduce its reliance on oil from the region.
Tehran has threatened to blockade the Strait of Hormuz, a critical oil-transit channel, in response to the U.S.-led sanctions. Meanwhile, Sudan and South Sudan have been locked in an oil-transit dispute, which threatens to cause major disruptions in its China shipments. Sudan supplied 5% of China's oil imports in the first 11 months of last year.
"China is making good progress toward diversifying its oil supply," said Gordon Kwan, a Hong Kong-based energy analyst at Mirae Asset Securities. "If they were to concentrate on just one or two countries that just accidentally went out of production, [global] oil prices could easily double."
Last week as part of Mr. Wen's trip, China Petrochemical Corp., known as Sinopec Group, and state-owned giant Saudi Arabian Oil Co. signed a deal to build a 400,000-barrel-a-day refinery at Yanbu, on the Red Sea coast. The project is valued at approximately $8.5 billion. Analysts expect much of the Yanbu refinery product will be sold to the Saudi market instead of being shipped to China as a way to build favor with the Saudis, which China hopes will foster deeper inroads into the country's energy supplies. Sinopec joined the project after ConocoPhillips last year pulled out.
Experts said Mr. Wen likely pressed Saudi Arabia for reassurances that it was willing to increase its own production in the event of an Iranian shortfall. China's Foreign Ministry has declined to say whether Mr. Wen made this request.
Separately on Thursday, China National Petroleum Corp., another of China's major energy companies, said it reached a deal with Qatar Petroleum International and Royal Dutch Shell PLC to build a refining facility in the eastern Chinese city of Taizhou. It is the latest in a string of refineries set up in China through joint ventures with partners from energy-rich countries that often come with supply agreements.
China is also increasing the ways overseas oil reaches it. Mr. Wen Wednesday said China opposed Iran's threats to blockade the Strait of Hormuz. A subsidiary of CNPC is building a pipeline to bypass the strait. And Beijing, which also fears transit disruptions in the Strait of Malacca, is building with Myanmar a pipeline to link southwestern China with the Bay of Bengal.
Credit: By Brian Spegele
Subject: Petroleum industry; Suppliers; International relations; Crude oil
Location: China Arab countries
People: Wen Jiabao
Classification: 9180: International; 1210: Politics & political behavior; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.7
Publication year: 2012
Publication date: Jan 20, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 916832773
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916832773?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Euro Zone Is Stung As Oil Costs Rise
Author: Szalay, Eva
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Jan 2012: n/a.
ProQuest document link
Abstract:
The price of oil is nearing record highs in euro terms, posing a further risk to already-fragile European economies but providing support to oil-linked currencies like the Russian ruble, analysts say. Because oil is traded in dollars on the global market and the euro has depreciated in value against the dollar in recent weeks, individuals and companies in the euro zone have seen their energy costs rise, even though consumption has shrunk as the region likely heads toward recession.
Full text: The price of oil is nearing record highs in euro terms, posing a further risk to already-fragile European economies but providing support to oil-linked currencies like the Russian ruble, analysts say.
Because oil is traded in dollars on the global market and the euro has depreciated in value against the dollar in recent weeks, individuals and companies in the euro zone have seen their energy costs rise, even though consumption has shrunk as the region likely heads toward recession.
"While demand for oil in Europe has been declining at a fast rate in recent months due to the deceleration in economic activity, Europe's oil bill has not, due to high energy prices," Bank of AmericaMerrill Lynch said in a note to clients.
The higher fuel costs for euro-zone consumers--taking a chunk out of their disposable incomes, much like an added tax or an interest-rate rise--risk creating a negative feedback loop for the beleaguered region by pushing the euro even lower as economic growth wilts, and in turn lifting consumers' oil prices further.
The price of Brent crude rose 89 cents a barrel to $111.55 on Thursday, which translates to more than [euro]86 a barrel, within sight of its record high of [euro]92.55 in July 2008.
Although the euro has rebounded from the 16-month lows registered against the dollar last week, and it climbed back above $1.29 Thursday, it is still more than 5% below where it was three months ago.
The price of oil, meanwhile, remains well supported amid political tensions between major oil producer Iran and the West. All other things being equal, a weaker euro tends to weigh on the price of oil, because it hurts European demand. But the tensions with Iran, which are causing supply concerns, have overridden any effects of a weaker euro on the global oil market. And that is causing pain for the euro-zone.
"A round of higher oil prices or even higher oil prices in euros, could deepen Europe's recession," Bank of AmericaMerrill Lynch said in its note.
Jean-Claude Juncker, president of the Eurogroup of euro-zone finance ministers, said Wednesday that the euro zone was already on the brink of a technical recession.
Things could get even tougher.
Swiss bank UBS this week slashed its current three-month forecast for the euro against the dollar to $1.15 from a previous $1.35, while Goldman Sachs last week raised its expectations for Brent crude over the same period by 2% to $120 a barrel.
But what's bad for one currency could be a boon for others, like the ruble. Because oil is Russia's main export, the ruble tends to climb along with crude prices.
Since the year started, the ruble has risen around 3% against the dollar, despite growing political unrest. Fitch Ratings' announcement Monday that it was cutting its outlook on Russian's credit rating failed to dent the Russian currency., which instead rose in tandem with the oil price.
Sarah Kent and Clare Connaghan contributed to this article.
Credit: By Eva Szalay
Subject: Recessions; Economic conditions; Petroleum industry; Eurozone; Currency
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 20, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 916894421
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916894421?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Exxon Mobil, JPMorgan Chase: Money Flow Leaders (XOM, JPM)
Author: MARKET DATA STAFF
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Jan 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Exxon Mobil Corp. topped the list at midday for, which tracks stocks that fell in price but had the largest inflow of money. See the.
JPMorgan Chase & Co. topped the list for, which tracks stocks that rose in price but had the largest outflow of money. See the.
Go to () for complete coverage.
Credit: By MARKET DATA STAFF
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 20, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 916895915
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916895915?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Can Big Oil Repeat Its Big Year?
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Jan 2012: n/a.
ProQuest document link
Abstract:
First and foremost: security. Chevron, Exxon and Shell likely all delivered cash flow per share growth of 30% in 2011, well ahead of the traditional growth stocks of the exploration and production sector, according to Credit Suisse.
Full text: Even today, $1.67 trillion is a lot of money. That is the amount wiped off the combined market capitalization of the top 50 energy companies between the end of 2007 and the end of 2011. Breaking it down offers big clues on Big Oil's prospects for 2012.
Every year, PFC Energy, a Washington, D.C.-based consultancy, ranks the top 50 listed energy companies in the world by market value. The latest, due Monday, has a surprise. The biggest gainers in 2011 were the dinosaurs of oil and gas: the supermajors. Their collective value increased by 8%, compared with a 7% decline for the PFC Energy 50 overall. It is only the second time they have led the field in the ranking's 13-year history.
Conventional wisdom holds this shouldn't be the case. Faith in the supermajors--Exxon Mobil, Chevron, Royal Dutch Shell, BP, ConocoPhillips and Total--has waned as state-backed rivals like PetroChina have emerged and smaller competitors have opened up new frontiers like U.S. shale. Seemingly too big to grow but too small to offset the power of petro-states, the supermajors have been priced for decline.
Why did investors fall in love with them again in 2011? First and foremost: security. The S&P 500 ended 2011 down slightly after wild swings. In choppy markets, scale and cash payouts provide comfort. And the supermajors, with a collective value of $1.2 trillion at year end, provide it in spades. The three U.S. ones alone paid out 9% of all S&P 500 dividends and buybacks in the year ended September 2011, according to data from Standard & Poor's and Capital IQ.
So how about that missing $1.67 trillion? It is gone despite the average price of Brent crude being 53% higher in 2011 than in 2007 (and 13% higher than in 2008, year of the super-spike). About half of that market value was lost by listed state-controlled national oil companies, or NOCs, like PetroChina. State support has its advantages, but it also means NOCs serve two masters: markets and mandarins. That makes them riskier investments.
While the NOCs in the ranking lost 44% of their value between 2007 and 2011, the supermajors declined by just 22%.
But it isn't just safety that helped the supermajors lead the charge in 2011. Chevron, Exxon and Shell likely all delivered cash flow per share growth of 30% in 2011, well ahead of the traditional growth stocks of the exploration and production sector, according to Credit Suisse.
Ed Westlake, analyst at Credit Suisse, says the oil majors are more sensitive to oil prices than many investors think. In part, that is because much of their global natural-gas production is sold at prices linked to oil, rather than at the depressed, de-linked levels that prevail in the U.S.
This year, the supermajors are forecast to make $67 billion in free cash flow, according to FactSet Research Systems. That is down slightly from 2011's expectation but still equates to a healthy free cash flow yield of 5.6%.
Goldman Sachs points out, however, that unlike a year ago, supermajor stocks enter 2012 trading at a slight premium to their smaller integrated oil peers. That, coupled with the fact that 2011's cash-flow surge is unlikely to be repeated, means some investors' gains may be redeployed into other energy stocks.
It seems unlikely that the supermajors will register the biggest gains in the PFC Energy 50 2012. That doesn't make them a bad investment. With markets still unsettled--Europe, in particular, remains unpredictable--Big Oil will likely remain a safe haven. Stocks don't always have to be the biggest winners to be reliable repositories of value.
Write to Liam Denning at liam.denning@wsj.com
Credit: By Liam Denning
Subject: Petroleum industry; Stock prices; Investments; Growth stocks
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 20, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917085637
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917085637?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
China's Oil Imports from Iran Jump
Author: Ma, Wayne
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Jan 2012: n/a.
ProQuest document link
Abstract:
China's imports from Iran could decline in the months ahead due to a dispute over commercial issues between China International United Petroleum & Chemicals Co., known as Unipec, and National Iranian Oil Co. Unipec has skipped imports of about 220,000 barrels a day from Iran in January and further delays could affect February orders as well.
Full text: BEIJING--China's crude-oil imports from Iran last year were up 30% from 2010, to 27.76 million metric tons, China's General Administration of Customs reported Saturday. That works out to about 557,000 barrels a day.
China's overall crude imports were up just 6.1%.
Beijing has steadfastly defended its relationship with Iran, the No. 3 supplier of crude to its energy-hungry economy, as the U.S. and Europe try to increase pressure on Iran over its nuclear activities.
China's imports from Iran could decline in the months ahead due to a dispute over commercial issues between China International United Petroleum & Chemicals Co., known as Unipec, and National Iranian Oil Co. Unipec has skipped imports of about 220,000 barrels a day from Iran in January and further delays could affect February orders as well.
For December, China's overall crude imports came to to 21.92 million tons, up 5.1% from a year earlier, customs data showed. At 5.18 million barrels a day, that was still short of analysts' estimates of between 5.5 million and 6 million barrels a day.
High refinery runs had led analysts to forecast higher imports: Refinery throughput in December was the highest ever, likely due to the stockpiling of refined oil products ahead of the Lunar New Year holiday. One reason for the mismatch between imports and throughput could be that more crude was drawn from storage in December, analysts said. China's commercial crude stocks fell for a third consecutive month in December, the official Xinhua news agency said Thursday in its fortnightly OGP energy newsletter.
China's imports of refined oil products in December were underpinned by fuel oil imports, up 30% to 2.64 million tons. Diesel imports were down 41% to 270,822 tons, while diesel exports were down 65% to 60,861 tons. Kerosene imports were down 22% to 669,079 tons.
China's full-year crude imports totaled 253.78 million tons, the data showed. At 6.1%, the growth rate was down sharply from 2010's 18%, which may be related to China's slowing economy. Gross domestic product in the third quarter was up 9.1% from a year earlier, easing from the 9.5% pace of the second quarter and 9.7% of the first quarter. Some economists have warned of further deceleration to 8% this year.
Write to Wayne Ma at wayne.ma@dowjones.com
Credit: By Wayne Ma
Subject: Petroleum industry; Economic growth; Petroleum refineries; Gross Domestic Product--GDP
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 21, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 916955642
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916955642?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. News: Flood Victims Languish in Oil Boomtown --- Shortage of Workers in North Dakota City Stymies Homeowners Trying to Rebuild; a Job for 'Anyone Who Wants to Work'
Author: Nicas, Jack
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]21 Jan 2012: A.3.
ProQuest document link
Abstract:
Natural disasters slammed cities across the nation's midsection and South last summer, but few have faced the challenges of this flood-ravaged city of 41,000: a severe housing and labor shortage sparked by the nearby oil boom and now worsened by the flood. After heavy rains in Canada filled upstream reservoirs, the Mouse River spilled over its banks in June, flooding 3,230 homes, or about a quarter of the city's residences.
Full text: MINOT, N.D. -- Seven months after a flood submerged a third of this thriving city on the edge of the state's oil boom, Cindy Garrett is still living in a federally provided trailer on her neighbor's lawn. Her problem: She can't find workers to repair her house.
She waited four months for an electrician to rewire her home, and she is still waiting for a plumber to fix her broken pipes. If Minot weren't booming, "we'd already be back in our home," the retired 54-year-old said.
Natural disasters slammed cities across the nation's midsection and South last summer, but few have faced the challenges of this flood-ravaged city of 41,000: a severe housing and labor shortage sparked by the nearby oil boom and now worsened by the flood.
Businesses are struggling to keep up with roaring demand, while 12,000 displaced residents are confronting an expensive real-estate market and a lack of skilled workers to rebuild.
After a winter that had been unusually mild until recently, just 10% to 20% of the flooded homeowners have been able to return to their homes -- and most have done repair work themselves, city officials say. Meanwhile, officials are weighing whether to raze another 300 to 400 homes to bolster flood defenses.
Minot's boom began in 2008, when geologists found that the nearby Bakken oil shale held as much as 4.3 billion barrels of crude. A gusher of oil workers boosted the local economy and filled almost all the city's beds. Minot officials say that early last year, the city was beginning to catch up to demand for housing, retail and other services.
"We saw the light at the end of the tunnel," said John MacMartin, president of the Minot Area Chamber of Commerce. "Then the flood came, and that tunnel collapsed."
After heavy rains in Canada filled upstream reservoirs, the Mouse River spilled over its banks in June, flooding 3,230 homes, or about a quarter of the city's residences. By the river's crest -- nearly four feet above its 1881 record -- anywhere from two to 15 feet of floodwater covered 18 square miles here.
With home prices already high, swelling 40% from 2007 to 2010, the flood goosed the market again. In the six months before the flood, about 240 homes sold for a median price of $183,000, according to local real-estate data. In the six months since, about 310 homes sold for a median price of $232,000 -- a 27% jump.
"Finding a home here for under $150,000 is pretty much impossible, unless, of course, it's flood-damaged," said local real-estate agent Bob Timm.
With so many people looking for places to live, rent has also shot up since the flood, residents say. John Abbey, a waiter at a local diner, said the monthly rent for his two-bedroom apartment jumped to $900 from $495 this month, forcing him onto the couch to fit a second and third roommate.
During the flood, the Mouse filled the city's central valley, home to most of Minot's low-income residents. When their homes were destroyed, including 500 mobile units, many left town because they could no longer afford Minot.
The exodus has cost local businesses many of their employees -- particularly in the service industry -- while the rising cost of living pushes other workers to higher-paying jobs in the oil fields.
Angela Wright, manager of the local Pizza Hut, said about half of her 25 workers fled after the flood, and she has struggled to refill their positions. The restaurant now advertises $15-an-hour positions on its marquee.
Mr. MacMartin said almost every business here is desperate for help. Local fast-food joints often close early because they can't find enough workers, he said. At the airport, strangers share cabs because there aren't enough drivers.
Mark Mattson, owner of a commercial construction company, said he turns down jobs because of a lack of workers. "I've got two to three people on each job right now when I should have eight to 10," he said. Plenty of people want to move to Minot to work for him, he said, "but there's nowhere to stay."
A local development group says the city has 3,000 unfilled jobs -- about double the amount a year ago -- and Minot officials estimate the unemployment rate here is less than 2%. "For anyone that wants to work, there's a job," Mayor Curt Zimbelman said.
Several day-care centers were also destroyed in the flood, creating another shortage that has hurt the work force. "Finding a job's not the problem. It's finding someone to watch her," said Andie Waltz, holding her two-year-old daughter's hand.
Rev. Paul Kruger said the day care at his church, which has 173 children on the waiting list, turned down funds to expand because it couldn't find potential workers a place to live.
Residents and city officials say price-gouging has been prevalent since the flood among plumbers, electricians and builders. Jay Davis, a radio-station owner, said bids to replace a water heater in his flooded home ranged as high as $1,600 -- double what he paid in 2008.
Dan Goins, an electrician who drove the eight hours to Minot from his Minneapolis home, said he charges a regular rate plus per-diem costs, but acknowledged he could ask for more. "Back home, you have to fight for the job," he said. "Here, the customers are fighting for you."
Credit: By Jack Nicas
Subject: Real estate sales; Floods; Labor shortages; Housing prices; Homeowners; Disaster recovery
Location: Minot North Dakota
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.3
Publication year: 2012
Publication date: Jan 21, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 916957223
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/916957223?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Flood Victims Languish in Oil Boomtown; Shortage of Workers in North Dakota City Stymies Homeowners Trying to Rebuild; a Job for 'Anyone Who Wants to Work'
Author: Nicas, Jack
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Jan 2012: n/a.
ProQuest document link
Abstract:
Natural disasters slammed cities across the nation's midsection and South last summer, but few have faced the challenges of this flood-ravaged city of 41,000: a severe housing and labor shortage sparked by the nearby oil boom and now worsened by the flood. After heavy rains in Canada filled upstream reservoirs, the Mouse River spilled over its banks in June, flooding 3,230 homes, or about a quarter of the city's residences.
Full text: MINOT, N.D.--Seven months after a flood submerged a third of this thriving city on the edge of the state's oil boom, Cindy Garrett is still living in a federally provided trailer on her neighbor's lawn. Her problem: She can't find workers to repair her house.
She waited four months for an electrician to rewire her home, and she is still waiting for a plumber to fix her broken pipes. If Minot weren't booming, "we'd already be back in our home," the retired 54-year-old said.
Natural disasters slammed cities across the nation's midsection and South last summer, but few have faced the challenges of this flood-ravaged city of 41,000: a severe housing and labor shortage sparked by the nearby oil boom and now worsened by the flood.
Businesses here are struggling to keep up with roaring demand, while the 12,000 displaced residents are confronting an expensive real-estate market and a lack of skilled workers to rebuild.
After a winter that had been unusually mild until recently, just 10% to 20% of the flooded homeowners have been able to return to their homes--and most have done repair work themselves, city officials say. Meanwhile, officials are weighing whether to raze another 300 to 400 homes to bolster flood defenses.
Minot's boom began in 2008, when geologists found that the nearby Bakken oil shale held as much as 4.3 billion barrels of crude. A gusher of oil workers boosted the local economy and filled almost all the city's beds. Minot officials say that early last year, the city was beginning to catch up to demand for housing, retail and other services.
"We saw the light at the end of the tunnel," said John MacMartin, president of the Minot Area Chamber of Commerce. "Then the flood came, and that tunnel collapsed."
After heavy rains in Canada filled upstream reservoirs, the Mouse River spilled over its banks in June, flooding 3,230 homes, or about a quarter of the city's residences. By the river's crest--nearly four feet above its 1881 record--anywhere from two to 15 feet of floodwater covered 18 square miles here.
With home prices already high, swelling 40% from 2007 to 2010, the flood goosed the market again. In the six months before the flood, about 240 homes sold for a median price of $183,000, according to local real-estate data. In the six months since, about 310 homes sold for a median price of $232,000--a 27% jump.
"Finding a home here for under $150,000 is pretty much impossible, unless, of course, it's flood-damaged," said local real-estate agent Bob Timm.
With so many people looking for places to live, rent has also shot up since the flood, residents say. John Abbey, a waiter at a local diner, said the monthly rent for his two-bedroom apartment jumped to $900 from $495 this month, forcing him onto the couch to fit a second and third roommate.
During the flood, the Mouse filled the city's central valley, home to most of Minot's low-income residents. When their homes were destroyed, including 500 mobile units, many left town because they could no longer afford Minot.
The exodus has cost local businesses many of their employees--particularly in the service industry--while the rising cost of living pushes other workers to higher-paying jobs in the oil fields.
Angela Wright, manager of the local Pizza Hut, said about half of her 25 workers fled after the flood, and she has struggled to refill their positions. The restaurant now advertises $15-an-hour positions on its marquee.
Mr. MacMartin, the chamber president, said almost every business here is desperate for help. Local fast-food joints often close early because they can't find enough workers, he said. At the airport, strangers share cabs because there aren't enough drivers.
Mark Mattson, owner of a commercial construction company, said he turns down jobs because of a lack of workers. "I've got two to three people on each job right now when I should have eight to 10," he said. Plenty of people want to move to Minot to work for him, he said, "but there's nowhere to stay."
A local development group says the city has 3,000 unfilled jobs--about double the amount a year ago--and Minot officials estimate the unemployment rate here is less than 2%. "For anyone that wants to work, there's a job," Mayor Curt Zimbelman said.
Several day-care centers were also destroyed in the flood, creating another shortage that has hurt the work force. "Finding a job's not the problem. It's finding someone to watch her," said Andie Waltz, holding her two-year-old daughter's hand.
Rev. Paul Kruger said the day care at his church, which has 173 children on the waiting list, turned down funds to expand because it couldn't find potential workers a place to live.
Residents and city officials also say price-gouging has been prevalent since the flood among plumbers, electricians and builders. Jay Davis, a local radio-station owner, said bids to replace a water heater in his flooded home ranged as high as $1,600--double what he paid in 2008.
Dan Goins, an electrician who drove the eight hours to Minot from his Minneapolis home, said he charges a regular rate plus per-diem costs, but acknowledged he could ask for more. "Back home, you have to fight for the job," he said. "Here, the customers are fighting for you."
Write to Jack Nicas at jack.nicas@wsj.com
Credit: By Jack Nicas
Subject: Real estate sales; Floods; Labor shortages; Housing prices; Homeowners
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 21, 2012
Section: US
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917942333
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917942333?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Refining Puts Lid on Big Oil's Profits
Author: Ordóñez, Isabel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 Jan 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Continued high oil prices are expected to boost fourth-quarter earnings of ExxonMobil Corp., Chevron Corp. and ConocoPhillips. However, profits of the three-largest U.S. oil companies by market value will be capped by sluggish results from their refining arms and depressed prices for natural gas.
The three oil giants will post billions more in profits than they did in the fourth quarter of 2010, thanks to higher oil prices. But their "downstream operations"--which purchase crude to process into petroleum products such as gasoline and diesel--are likely to report a significant drop in gains. While oil prices rose steadily during the quarter, fuel demand was flat, which eroded refining margins.
West Texas Intermediate--which is the U.S. crude benchmark that determines the price of the oil some large refineries process--rose 10.44% to an average of $93.99 a barrel in the three-month period ended Dec. 31, compared with the same quarter a year earlier.
Chevron warned investors Jan. 11 that its refining segment could post zero profit in the fourth quarter, compared with the prior quarter, when its refining operations posted $1.5 billion in profit. The San Ramon, Calif.-based company is scheduled to report earnings on Friday. ConocoPhillips precedes Chevron with an earnings report slated for Wednesday. Exxon is scheduled to release its earnings on Jan. 31.
Fourth-quarter results will be a reminder that higher oil prices can be a double-edged sword for major U.S. oil companies, said Stacey Hudson, an analyst with Raymond James. Soaring commodity prices can swell companies' exploration-and-production segment, but at the same time their huge refining arms can be hit. Exxon, Chevron and ConocoPhillips are some the largest refiners in the U.S.
Exxon, Chevron and ConocoPhillips's results are also expected to be hit by low natural-gas prices, which in the fourth quarter traded at an average of $3.50 per million British thermal units, below the $4/MMbtu it traded at in the same period of 2010.
Natural-gas prices have continued to fall as domestic supplies rise, driven by the development of shale resources across the U.S. The three companies have recently made large investments in shale natural-gas resources, betting that natural-gas prices will eventually rebound. Their earnings, however, haven't yet benefited from these investments, said Fadel Gheit, an analyst with Oppenheimer & Co. For example, Exxon paid $25 billion for natural-gas producer XTO Energy in 2010, but has seen its bottom line suffer because of persistently low natural-gas prices.
Other factors may also damp profits. UBS analyst William Featherston estimated that fourth-quarter production for Exxon, Chevron and ConocoPhillips will drop an average of 6% from the same quarter in 2010, mainly due to the lower productivity of aging fields and rig maintenance.
ConocoPhillips's fourth-quarter production will be especially hit by the curtailment of its production in Libya due to political unrest, Mr. Featherston said.
Despite the drop in output,Exxon, Chevron and ConocoPhillips are expected to see their exploration-and-production segment boosted by a jump in the price of Brent crude, the European benchmark. These companies used Brent to price the bulk of their massive international production. In the fourth quarter, Brent climbed 28% to an average of $109.06 a barrel from the same quarter of 2010.
The Week Ahead looks at coming corporate events.
Write to Isabel Ordonez at Isabel.ordonez@dowjones.com
Credit: By Isabel Ordóñez
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 22, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917086419
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917086419?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Can Big Oil Repeat Its Big Year?
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Jan 2012: n/a.
ProQuest document link
Abstract:
First and foremost: security. Chevron, Exxon and Shell likely all delivered cash flow per share growth of 30% in 2011, well ahead of the traditional growth stocks of the exploration and production sector, according to Credit Suisse.
Full text: Even today, $1.67 trillion is a lot of money. That is the amount wiped off the combined market capitalization of the top 50 energy companies between the end of 2007 and the end of 2011. Breaking it down offers big clues on Big Oil's prospects for 2012.
Every year, PFC Energy, a Washington, D.C.-based consultancy, ranks the top 50 listed energy companies in the world by market value. The latest, due Monday, has a surprise. The biggest gainers in 2011 were the dinosaurs of oil and gas: the supermajors. Their collective value increased by 8%, compared with a 7% decline for the PFC Energy 50 overall. It is only the second time they have led the field in the ranking's 13-year history.
Conventional wisdom holds this shouldn't be the case. Faith in the supermajors--Exxon Mobil, Chevron, Royal Dutch Shell, BP, ConocoPhillips and Total--has waned as state-backed rivals like PetroChina have emerged and smaller competitors have opened up new frontiers like U.S. shale. Seemingly too big to grow but too small to offset the power of petro-states, the supermajors have been priced for decline.
Why did investors fall in love with them again in 2011? First and foremost: security. The S&P 500 ended 2011 down slightly after wild swings. In choppy markets, scale and cash payouts provide comfort. And the supermajors, with a collective value of $1.2 trillion at year end, provide it in spades. The three U.S. ones alone paid out 9% of all S&P 500 dividends and buybacks in the year ended September 2011, according to data from Standard & Poor's and Capital IQ.
So how about that missing $1.67 trillion? It is gone despite the average price of Brent crude being 53% higher in 2011 than in 2007 (and 13% higher than in 2008, year of the super-spike). About half of that market value was lost by listed state-controlled national oil companies, or NOCs, like PetroChina. State support has its advantages, but it also means NOCs serve two masters: markets and mandarins. That makes them riskier investments.
While the NOCs in the ranking lost 44% of their value between 2007 and 2011, the supermajors declined by just 22%.
But it isn't just safety that helped the supermajors lead the charge in 2011. Chevron, Exxon and Shell likely all delivered cash flow per share growth of 30% in 2011, well ahead of the traditional growth stocks of the exploration and production sector, according to Credit Suisse.
Ed Westlake, analyst at Credit Suisse, says the oil majors are more sensitive to oil prices than many investors think. In part, that is because much of their global natural-gas production is sold at prices linked to oil, rather than at the depressed, de-linked levels that prevail in the U.S.
This year, the supermajors are forecast to make $67 billion in free cash flow, according to FactSet Research Systems. That is down slightly from 2011's expectation but still equates to a healthy free cash flow yield of 5.6%.
Goldman Sachs points out, however, that unlike a year ago, supermajor stocks enter 2012 trading at a slight premium to their smaller integrated oil peers. That, coupled with the fact that 2011's cash-flow surge is unlikely to be repeated, means some investors' gains may be redeployed into other energy stocks.
It seems unlikely that the supermajors will register the biggest gains in the PFC Energy 50 2012. That doesn't make them a bad investment. With markets still unsettled--Europe, in particular, remains unpredictable--Big Oil will likely remain a safe haven. Stocks don't always have to be the biggest winners to be reliable repositories of value.
Write to Liam Denning at liam.denning@wsj.com
Credit: By Liam Denning
Subject: Petroleum industry; Stock prices; Investments; Growth stocks
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 23, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917091944
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917091944?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
China's Oil Imports from Iran Jump
Author: Ma, Wayne
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Jan 2012: n/a.
ProQuest document link
Abstract:
China's imports from Iran could decline in the months ahead due to a dispute over commercial issues between China International United Petroleum & Chemicals Co., known as Unipec, and National Iranian Oil Co. Unipec has skipped imports of about 220,000 barrels a day from Iran in January and further delays could affect February orders as well.
Full text: BEIJING--China's crude-oil imports from Iran last year were up 30% from 2010, to 27.76 million metric tons, China's General Administration of Customs reported Saturday. That works out to about 557,000 barrels a day.
China's overall crude imports were up just 6.1%.
Beijing has steadfastly defended its relationship with Iran, the No. 3 supplier of crude to its energy-hungry economy, as the U.S. and Europe try to increase pressure on Iran over its nuclear activities.
China's imports from Iran could decline in the months ahead due to a dispute over commercial issues between China International United Petroleum & Chemicals Co., known as Unipec, and National Iranian Oil Co. Unipec has skipped imports of about 220,000 barrels a day from Iran in January and further delays could affect February orders as well.
For December, China's overall crude imports came to to 21.92 million tons, up 5.1% from a year earlier, customs data showed. At 5.18 million barrels a day, that was still short of analysts' estimates of between 5.5 million and 6 million barrels a day.
High refinery runs had led analysts to forecast higher imports: Refinery throughput in December was the highest ever, likely due to the stockpiling of refined oil products ahead of the Lunar New Year holiday. One reason for the mismatch between imports and throughput could be that more crude was drawn from storage in December, analysts said. China's commercial crude stocks fell for a third consecutive month in December, the official Xinhua news agency said Thursday in its fortnightly OGP energy newsletter.
China's imports of refined oil products in December were underpinned by fuel oil imports, up 30% to 2.64 million tons. Diesel imports were down 41% to 270,822 tons, while diesel exports were down 65% to 60,861 tons. Kerosene imports were down 22% to 669,079 tons.
China's full-year crude imports totaled 253.78 million tons, the data showed. At 6.1%, the growth rate was down sharply from 2010's 18%, which may be related to China's slowing economy. Gross domestic product in the third quarter was up 9.1% from a year earlier, easing from the 9.5% pace of the second quarter and 9.7% of the first quarter. Some economists have warned of further deceleration to 8% this year.
Write to Wayne Ma at wayne.ma@dowjones.com
Credit: By Wayne Ma
Subject: Petroleum industry; Economic growth; Petroleum refineries; Gross Domestic Product--GDP
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 23, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917091972
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917091972?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Refining Puts Lid on Big Oil's Profits
Author: Ordóñez, Isabel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Jan 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Continued high oil prices are expected to boost fourth-quarter earnings of ExxonMobil Corp., Chevron Corp. and ConocoPhillips. However, profits of the three-largest U.S. oil companies by market value will be capped by sluggish results from their refining arms and depressed prices for natural gas.
The three oil giants will post billions more in profits than they did in the fourth quarter of 2010, thanks to higher oil prices. But their "downstream operations"--which purchase crude to process into petroleum products such as gasoline and diesel--are likely to report a significant drop in gains. While oil prices rose steadily during the quarter, fuel demand was flat, which eroded refining margins.
West Texas Intermediate--which is the U.S. crude benchmark that determines the price of the oil some large refineries process--rose 10.44% to an average of $93.99 a barrel in the three-month period ended Dec. 31, compared with the same quarter a year earlier.
Chevron warned investors Jan. 11 that its refining segment could post zero profit in the fourth quarter, compared with the prior quarter, when its refining operations posted $1.5 billion in profit. The San Ramon, Calif.-based company is scheduled to report earnings on Friday. ConocoPhillips precedes Chevron with an earnings report slated for Wednesday. Exxon is scheduled to release its earnings on Jan. 31.
Fourth-quarter results will be a reminder that higher oil prices can be a double-edged sword for major U.S. oil companies, said Stacey Hudson, an analyst with Raymond James. Soaring commodity prices can swell companies' exploration-and-production segment, but at the same time their huge refining arms can be hit. Exxon, Chevron and ConocoPhillips are some the largest refiners in the U.S.
Exxon, Chevron and ConocoPhillips's results are also expected to be hit by low natural-gas prices, which in the fourth quarter traded at an average of $3.50 per million British thermal units, below the $4/MMbtu it traded at in the same period of 2010.
Natural-gas prices have continued to fall as domestic supplies rise, driven by the development of shale resources across the U.S. The three companies have recently made large investments in shale natural-gas resources, betting that natural-gas prices will eventually rebound. Their earnings, however, haven't yet benefited from these investments, said Fadel Gheit, an analyst with Oppenheimer & Co. For example, Exxon paid $25 billion for natural-gas producer XTO Energy in 2010, but has seen its bottom line suffer because of persistently low natural-gas prices.
Other factors may also damp profits. UBS analyst William Featherston estimated that fourth-quarter production for Exxon, Chevron and ConocoPhillips will drop an average of 6% from the same quarter in 2010, mainly due to the lower productivity of aging fields.
ConocoPhillips's fourth-quarter production will be especially hit by the curtailment of its production in Libya due to political unrest, Mr. Featherston said.
Despite the drop in output,Exxon, Chevron and ConocoPhillips are expected to see their exploration-and-production segment boosted by a jump in the price of Brent crude, the European benchmark. These companies used Brent to price the bulk of their massive international production. In the fourth quarter, Brent climbed 28% to an average of $109.06 a barrel from the same quarter of 2010.
The Week Ahead looks at coming corporate events.
Write to Isabel Ordonez at Isabel.ordonez@dowjones.com
Credit: By Isabel Ordóñez
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 23, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917091984
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917091984?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Fields Gushing in the U.S.
Author: Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Jan 2012: n/a.
ProQuest document link
Abstract:
[...] U.S. oil production grew faster than in any other country over the last three years and will continue to surge as drillers move away from natural gas due to a growing gas glut, experts say.
Full text: Federal forecasters are expected to confirm on Monday what the energy industry already knows: Oil production is surging in the U.S.
The U.S. Energy Information Administration is likely to raise by a substantial amount its existing estimate that U.S. oil production will grow by 550,000 barrels per day by 2020, to just over six million barrels daily.
The forecast will include new production data from developing oil fields, including the Bakken shale area in North Dakota, which could hold as much of 4.3 billion barrels of recoverable oil. North Dakota's output of oil and related liquids topped 500,000 barrels per day in November, meaning that the state pumped more oil than Ecuador. In fact, U.S. oil production grew faster than in any other country over the last three years and will continue to surge as drillers move away from natural gas due to a growing gas glut, experts say. The glut has sent natural-gas prices to a 10-year low.
The combination of techniques that fueled the recent rise in natural-gas production--horizontal drilling and hydraulic fracturing, or "fracking"--has been expanded to U.S. oil fields.
This rising tide of oil and related liquids such as condensate that also are used as fuel could reduce U.S. dependence on oil imports and help ease the country's trade deficit. But it may have limited impact on U.S. gasoline prices, which increasingly are set by global supply-and-demand trends.
The increased domestic production also isn't enough to help the U.S. achieve the elusive ideal of energy independence--the country is expected to consume more than 19 million barrels of oil and liquids a day by 2020.
From 2008 through 2011, U.S. production of a broader category of oil and related liquids grew by 1.3 million barrels per day, or more than 17 percent, to 8.9 million barrels, according to the research firm IHS-CERA. That outpaced Russia, which saw production grow about 480,000 barrels per day; China, where it grew about 380,000 barrels per day; and Brazil, where output was up by more than 340,000 barrels daily.
IHS-CERA predicts that U.S. production could grow by another 1.3 million barrels per day by 2020, to 10.2 million barrels.
"I don't think it's widely appreciated how dramatic it's been," Jim Burkhard, managing director of IHS CERA's Global Oil Group, said of U.S. growth. "Deep-water production has contributed to the growth in recent years, and more biofuels has helped, but the really dramatic improvement has been in onshore oil and liquids--and that is what will continue to drive growth in coming years."
The surge is big reversal from just a few years ago. U.S. production of oil and other liquids peaked at 11.3 million barrels a day in 1970 and began to decline. The decline bottomed out at 7.6 million barrels a day in 2008 as the new drilling techniques emerged.
Credit: By Tom Fowler
Subject: Petroleum industry; Petroleum production; Hydraulic fracturing; Oil fields
Location: United States--US North Dakota
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 23, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917092351
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917092351?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Apache Reaches Oil Deal on Home Turf
Author: Gilbert, Daniel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Jan 2012: n/a.
ProQuest document link
Abstract:
Energy companies are unlocking enormous deposits of fossil fuels from dense rock by drilling through it horizontally and breaking it up with a mixture of water, sand and chemicals, allowing oil and natural gas to flow through the cracks.
Full text: HOUSTON--Apache Corp., one of the biggest U.S. energy explorers, is buying privately held Cordillera Energy Partners III LLC for $2.85 billion in a deal that underscores how new drilling techniques are remaking the U.S. oil business.
The cash-and-stock deal gives Apache 254,000 acres atop a deeply buried layer of rock in what is known as the Granite Wash, which straddles the Texas-Oklahoma border. Apache has been drilling in the area for 35 years, but new methods of recovering oil and natural gas, including horizontal drilling and hydraulic fracturing, or fracking, have transformed its potential.
The deal marks only the second time in the past 16 years that Apache has purchased a company for more than $500 million. Apache has been buying into mature and still-profitable oil fields around the globe, a strategy that is leading the company back into the region where it was formed 57 years ago.
"It's where the opportunity is," G. Steven Farris, Apache's chief executive, said during an interview Sunday.
Apache will double its acreage in the Granite Wash, which the company expects to hold a high proportion of lucrative oil and petroleum liquids, and acquire Denver-based Cordillera's existing production there.
High oil prices and new drilling technologies have breathed new life into thoroughly drilled oil fields such as those in the Texas Panhandle and across the Oklahoma border. Energy companies are unlocking enormous deposits of fossil fuels from dense rock by drilling through it horizontally and breaking it up with a mixture of water, sand and chemicals, allowing oil and natural gas to flow through the cracks.
These innovations have sparked a boom in U.S. energy production, with companies supplying so much natural gas that prices last week fell to 10-year lows. With oil hovering around $100 a barrel, Apache and larger rivals such as Exxon Mobil Corp. and Chevron Corp. are now applying the same techniques to target oil in fields that had been considered past their prime.
The Granite Wash is the "hot emerging opportunity" in an oil and natural-gas reservoir that spills into Texas, Oklahoma and Kansas, Sanford C. Bernstein & Co. said in a research report on Friday.
Apache, whose operations stretch from Egypt to Australia, has been hunting for a chance to increase its onshore oil production in the U.S. It was an unsuccessful suitor for privately held oil and natural-gas explorer Samson Investment Co., which in November was purchased for $7.2 billion by private-equity firm Kohlberg Kravis Roberts & Co. and other investors.
Apache has spent more than $15 billion in the past two years to acquire a series of assets in Egypt, the North Sea, West Texas and the Gulf of Mexico. The deals have been weighted toward North America, mitigating the risk of operating in Egypt, where turmoil has pressured the company's stock price.
Apache will pay for Cordillera with $600 million of common stock and the rest in cash, which Apache plans to raise by selling long-term debt before the deal closes. Shares in Apache fell 36 cents to $96.80 at 4 p.m. Friday in composite trading on the New York Stock Exchange.
The deal is a coup for Cordillera Chief Executive George Solich, who began his career in the industry as a leasing agent for Apache in 1984. Mr. Solich and his team, backed by private-equity group EnCap Investments LP and other institutional investors, have twice before sold companies at healthy profits, but the deal with Apache is by far the largest.
Mr. Solich said he learned the strategy of acquiring assets at a bargain and squeezing them for greater production from Apache, and that his relationship with the company was instrumental in reaching a deal.
Mr. Solich is examining opportunities to use the same strategy in oil fields in South Texas, North Dakota and Pennsylvania.
Apache was advised by Goldman, Sachs Group Inc. and Tudor, Pickering, Holt & Co. Cordillera was advised by Jefferies & Co., J.P. Morgan Securities LLC, Andrew Kurth LLP and Thompson & Knight LLP.
Credit: By Daniel Gilbert
Subject: Natural gas; Petroleum industry; Private equity; Hydraulic fracturing; Institutional investments; Stone; Petroleum production
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 23, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917104363
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917104363?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
EU Embargoes Iranian Oil
Author: John M. Biers Laurence Norman; Faucon, Benoit
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Jan 2012: n/a.
ProQuest document link
Abstract:
BRUSSELS--The European Union intends to finalize additional sanctions on Iran Monday over its nuclear program, focusing on its oil exports and central bank, EU foreign policy chief Catherine Ashton said.
Full text: BRUSSELS--European Union foreign ministers approved an embargo on oil imports from Iran, moving past an internal debate over the economic burden on some members and imposing the bloc's strongest measures yet to press the Islamic Republic over its nuclear program.
Citing "serious and deepening concerns," the EU agreed on Monday to impose a full embargo on Iranian oil imports, including existing contracts, by July 1.
The EU also placed sanctions on Iran's central bank and petrochemical industry, according to a statement by the Council of the European Union.
"Our message is clear. We have no quarrel with the Iranian people," the leaders of France, Germany and the U.K. said in a statement. "But the Iranian leadership has failed to restore international confidence in the exclusively peaceful nature of its nuclear program. We will not accept Iran acquiring a nuclear weapon."
Adding to efforts by the U.S. and the EU to starve Iran's government of revenue, the U.S. on Monday sanctioned Iran's third-largest bank, Bank Tejarat, closing off one of Tehran's few remaining conduits for trade with the West.
Treasury Department officials said they sanctioned the bank for its alleged role in financing Iran's nuclear program and for helping other banks and companies evade international sanctions.
The move follows President Barack Obama's move last month to ban any American dealings with Iran's central bank.
The Obama administration welcomed the EU's decision Monday in a joint statement by Treasury Secretary Timothy Geithner and Secretary of State Hillary Clinton.
The EU and U.S. each said they were continuing with a "dual track" approach in which sanctions are intended to put pressure on Iran to engage in talks with the international community on its nuclear program.
Tehran has yet to respond to an offer made in October to return to talks, the U.S. statement said.
The EU's move is already causing adjustments in the oil market. Refiners in Spain and Italy have already begun to phase out some Iranian oil purchases in anticipation of the embargo. Some European countries said they have contacted Saudi Arabia to replace the Iranian oil.
Although the embargo was largely in line with expectations, oil prices rose slightly at news the EU had agreed to the policy--and rose again as Iran reiterated a threat to retaliate by blocking the Strait of Hormuz, the vital shipping lane through which one-fifth of the world's traded oil passes. Crude for March delivery closed at $99.58 per barrel in New York trading Monday, up $1.25, or 1.27%.
The EU decision is likely to further squeeze an Iranian economy already under pressure from the effect of Western sanctions. Iran's currency, the rial, fell 10% to a record low on Monday following the EU decision, Reuters reported.
Iran's Foreign Ministry spokesman Ramin Mehmanparastdeemed the ban "unfair" and "doomed to fail."
An Iranian official acknowledged the embargo will hinder the country's largest revenue source. "It will make things tougher at this end" by restricting the choice of crude buyers, the official said.
The embargo could cost Iran $5 billion to $10 billion in oil revenue for 2012, and more in subsequent years, said Trevor Houser, a partner at New York-based economic-research firm Rhodium Group.
The sanctions put a freeze on the assets within the EU of Iran's central bank, which clears the country's oil sales. The EU also barred imports of petrochemical products, the export of equipment and technology transfer in the sector to Iran, and new investment in Iranian petrochemical companies and joint ventures.
The International Energy Agency said Monday that consumers of Iranian oil in the EU will have time to find replacement crude supplies, since the embargo wouldn't affect supplies until the middle of the year.
The EU imports about 600,000 barrels of Iranian oil daily--close to a quarter of Tehran's exports of 2.6 million barrels a day--according to the IEA. But those imports fall unevenly, with some of Europe's most-stressed economies--Greece, Italy and Spain--among the biggest customers.
Greece has been particularly critical of the embargo, arguing that a slower implementation was needed to ensure that its economy wouldn't be excessively burdened.
Under Monday's agreement, the EU said it will undertake a review of the policy's effects on member states by May 1, bowing to a condition sought by Greece. However, any move to reverse or delay the embargo would require the unanimous decision of the EU's 27 members, officials said.
Diplomats said EU foreign ministers would promise to take all necessary measures to ensure member states would continue to have access to oil supplies.
EU foreign-policy chief Catherine Ashton said the May review would ensure that the embargo won't have an "adverse" impact on the European economy.
Italian Foreign Minister Giulio Terzi said the impact of the oil embargo on the Italian economy will "be negligible, almost zero."
Greek Foreign Minister Stavros Demas said Greece benefited from favorable financing terms in its Iran purchases, and that it will need help not only to find new suppliers but to also get the favorable financial terms they enjoyed from Iran. Greece has been buying 35% of its oil from Iran. Mr. Demas said Greece has held talks with Saudi Arabia to replace the Iranian supply.
Spanish Foreign Minister José Manuel Garcia-Margallo also said Saudi Arabia and other Gulf producers had guaranteed supply to offset Iranian oil "at the same price."
The move comes as U.S. officials also apply pressure on consumers of Iranian oil, including China, India and other Asian countries, to trim Iranian imports.
The effectiveness of an oil embargo will be limited as long as Iran is still able to sell some oil on the international market, says Joseph Nye, a Harvard University political scientist.
China has rejected calls to halt its consumption of Iranian oil. India's Oil Minister Jaipal Reddy said Monday that his country will keep buying crude oil from Iran and is trying to find a mechanism to settle payments despite new restrictions on financial transactions with Iran,
French Minister of Foreign Affairs Alain Juppé acknowledged some of the skepticism about the effectiveness of the sanctions, but said the EU package would meaningfully hit Iran. "We will paralyze the economic activity of Iran and deprive the country of part of its resources. I know you can be skeptical about sanctions...but it avoids going to war," he said.
Jay Solomon and James Herron contributed to this article.
Write to Laurence Norman at laurence.norman@dowjones.com
Credit: By John M. Biers , Laurence Norman and Benoit Faucon
Subject: Sanctions; Embargoes & blockades
People: Ashton, Catherine (Baroness)
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 23, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917138496
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917138496?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
China's Oil Imports From Iran Soar
Author: Ma, Wayne
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]23 Jan 2012: C.8.
ProQuest document link
Abstract:
China's imports from Iran could decline in the months ahead due to a dispute over commercial issues between China International United Petroleum & Chemicals Co., known as Unipec, and National Iranian Oil Co. Unipec has skipped imports of about 220,000 barrels a day from Iran in January and further delays could affect February orders as well.
Full text: BEIJING -- China's crude-oil imports from Iran last year were up 30% from 2010, to 27.76 million metric tons, China's General Administration of Customs reported Saturday. That works out to about 557,000 barrels a day.
China's overall crude imports were up just 6.1%.
Beijing has steadfastly defended its relationship with Iran, the No. 3 supplier of crude to its energy-hungry economy, as the U.S. and Europe try to increase pressure on Iran over its nuclear activities.
China's imports from Iran could decline in the months ahead due to a dispute over commercial issues between China International United Petroleum & Chemicals Co., known as Unipec, and National Iranian Oil Co. Unipec has skipped imports of about 220,000 barrels a day from Iran in January and further delays could affect February orders as well.
For December, China's overall crude imports came to to 21.92 million tons, up 5.1% from a year earlier, customs data showed. At 5.18 million barrels a day, that was still short of analysts' estimates of between 5.5 million and 6 million barrels a day.
High refinery runs had led analysts to forecast higher imports: Refinery throughput in December was the highest ever, likely due to the stockpiling of refined oil products ahead of the Lunar New Year holiday. One reason for the mismatch between imports and throughput could be that more crude was drawn from storage in December, analysts said. China's commercial crude stocks fell for a third consecutive month in December, the official Xinhua news agency said Thursday in its fortnightly OGP energy newsletter.
China's imports of refined oil products in December were underpinned by fuel oil imports, up 30% to 2.64 million tons. Diesel imports were down 41% to 270,822 tons, while diesel exports were down 65% to 60,861 tons. Kerosene imports were down 22% to 669,079 tons.
China's full-year crude imports totaled 253.78 million tons, the data showed. At 6.1%, the growth rate was down sharply from 2010's 18%, which may be related to China's slowing economy. Gross domestic product in the third quarter was up 9.1% from a year earlier, easing from the 9.5% pace of the second quarter and 9.7% of the first quarter. Some economists have warned of further deceleration to 8% this year.
Credit: By Wayne Ma
Subject: International trade; Crude oil; Imports
Location: China Iran
Company / organization: Name: National Iranian Oil Co; NAICS: 324110; Name: China International United Petroleum & Chemicals Co; NAICS: 324110
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.8
Publication year: 2012
Publication date: Jan 23, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917138497
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917138497?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Oil Fields Gushing In the U.S.
Author: Fowler, Tom
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]23 Jan 2012: A.2. [Duplicate]
ProQuest document link
Abstract:
[...] U.S. oil production grew faster than in any other country over the past three years and will continue to surge as drillers move away from natural gas due to a growing gas glut, experts say.
Full text: Federal forecasters are expected to confirm on Monday what the energy industry already knows: Oil production is surging in the U.S.
The U.S. Energy Information Administration is likely to raise by a substantial amount its existing estimate that U.S. oil production will grow by 550,000 barrels per day by 2020, to just over six million barrels daily.
The forecast will include new production data from developing oil fields, including the Bakken shale area in North Dakota, which could hold as much of 4.3 billion barrels of recoverable oil. North Dakota's output of oil and related liquids topped 500,000 barrels per day in November, meaning that the state pumped more oil than Ecuador. In fact, U.S. oil production grew faster than in any other country over the past three years and will continue to surge as drillers move away from natural gas due to a growing gas glut, experts say.
The combination of techniques that fueled the recent rise in natural-gas production -- horizontal drilling and hydraulic fracturing, or "fracking" -- has been expanded to U.S. oil fields.
This rising tide of oil and related liquids such as condensate that also are used as fuel could reduce U.S. dependence on oil imports and help ease the country's trade deficit. But it may have limited impact on U.S. gasoline prices, which increasingly are set by global supply-and-demand trends.
The increased domestic production also isn't enough to help the U.S. achieve the elusive ideal of energy independence -- the country is expected to consume more than 19 million barrels of oil and liquids a day by 2020.
From 2008 through 2011, U.S. production of a broader category of oil and related liquids grew by 1.3 million barrels per day, or more than 17 percent, to 8.9 million barrels, according to the research firm IHS-CERA. That outpaced Russia, which saw production grow about 480,000 barrels per day; China, where it grew about 380,000 barrels per day; and Brazil, where output was up by more than 340,000 barrels daily.
IHS-CERA predicts that U.S. production could grow by another 1.3 million barrels per day by 2020, to 10.2 million barrels.
The surge is big reversal from just a few years ago. U.S. production of oil and other liquids peaked at 11.3 million barrels a day in 1970 and began to decline. The decline bottomed out at 7.6 million barrels a day in 2008 as new drilling techniques emerged.
Credit: By Tom Fowler
Subject: Petroleum industry; Hydraulic fracturing; Oil fields; Forecasts; Petroleum production
Location: United States--US
Classification: 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.2
Publication year: 2012
Publication date: Jan 23, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917138663
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917138663?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Corporate News -- The Week Ahead: Refining Puts Lid on Big Oil's Profits
Author: Ordonez, Isabel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]23 Jan 2012: B.2.
ProQuest document link
Abstract:
[...] profits of the three-largest U.S. oil companies by market value will be capped by sluggish results from their refining arms and depressed prices for natural gas.
Full text: Continued high oil prices are expected to boost fourth-quarter earnings of ExxonMobil Corp., Chevron Corp. and ConocoPhillips. However, profits of the three-largest U.S. oil companies by market value will be capped by sluggish results from their refining arms and depressed prices for natural gas.
The three oil giants will post billions more in profits than they did in the fourth quarter of 2010, thanks to higher oil prices. But their "downstream operations" -- which purchase crude to process into petroleum products such as gasoline and diesel -- are likely to report a significant drop in gains. While oil prices rose steadily during the quarter, fuel demand was flat, which eroded refining margins.
West Texas Intermediate -- which is the U.S. crude benchmark that determines the price of the oil some large refineries process -- rose 10.44% to an average of $93.99 a barrel in the three-month period ended Dec. 31, compared with the same quarter a year earlier.
Chevron warned investors Jan. 11 that its refining segment could post zero profit in the fourth quarter, compared with the prior quarter, when its refining operations posted $1.5 billion in profit. The San Ramon, Calif.-based company is scheduled to report earnings on Friday. ConocoPhillips precedes Chevron with an earnings report slated for Wednesday. Exxon is scheduled to release its earnings on Jan. 31.
Fourth-quarter results will be a reminder that higher oil prices can be a double-edged sword for major U.S. oil companies, said Stacey Hudson, an analyst with Raymond James. Soaring commodity prices can swell companies' exploration-and-production segment, but at the same time their huge refining arms can be hit. Exxon, Chevron and ConocoPhillips are some the largest refiners in the U.S.
Exxon, Chevron and ConocoPhillips's results are also expected to be hit by low natural-gas prices, which in the fourth quarter traded at an average of $3.50 per million British thermal units, below the $4/MMbtu it traded at in the same period of 2010.
Natural-gas prices have continued to fall as domestic supplies rise, driven by the development of shale resources across the U.S. The three companies have recently made large investments in shale natural-gas resources, betting that natural-gas prices will eventually rebound. Their earnings, however, haven't yet benefited from these investments, said Fadel Gheit, an analyst with Oppenheimer & Co. For example, Exxon paid $25 billion for natural-gas producer XTO Energy in 2010, but has seen its bottom line suffer because of persistently low natural-gas prices.
Other factors may also damp profits. UBS analyst William Featherston estimated that fourth-quarter production for Exxon, Chevron and ConocoPhillips will drop an average of 6% from the same quarter in 2010, mainly due to the lower productivity of aging fields.
ConocoPhillips's fourth-quarter production will be especially hit by the curtailment of its production in Libya due to political unrest, Mr. Featherston said.
Despite the drop in output,Exxon, Chevron and ConocoPhillips are expected to see their exploration-and-production segment boosted by a jump in the price of Brent crude, the European benchmark. These companies used Brent to price the bulk of their massive international production.
In the fourth quarter, Brent climbed 28% to an average of $109.06 a barrel from the same quarter of 2010.
---
The Week Ahead looks at coming corporate events.
---
Happening This Week
MONDAY
Chinese New Year begins.
NATPE television programming conference begins in Miami Beach, Fla.
FETC educational technology conference starts in Orlando, Fla.
Earnings: Halliburton
TUESDAY
Hollywood studios await Oscar nominations.
Unified Wine & Grape Symposium starts in Sacramento, Calif.
DistribuTECH conference in San Antonio.
Earnings: Apple, Coach, CSX, Johnson & Johnson, Kimberly-Clark, Yahoo.
WEDNESDAY
World Economic Forum in Davos opens, runs through Jan. 29.
CEO Ron Johnson will unveil the retail strategy for J.C. Penney at an invitation-only event in New York.
PGA Merchandise Show starts in Orlando, Fla.
Earnings: Boeing, Delta
THURSDAY
Macworld starts in San Francisco.
Earnings: Airgas, Alaska Air, AmerisourceBergen, Amgen, AT&T, AutoNation, Bristol-Myers Squibb, Caterpillar, Celgene, Colgate-Palmolive, DeVry, Eastman Chemical, JetBlue Airways, Lockheed Martin, Raytheon, Sherwin-Williams, Starbucks
FRIDAY
Earnings: Altria, Chevron, Dominion Resources, DR Horton, Ford, Honeywell, Legg Mason, Newell Rubbermaid, Procter & Gamble, T. Rowe Price.
Credit: By Isabel Ordonez
Subject: Petroleum industry; Earnings forecasting; Petroleum refineries; Crude oil prices
Location: United States--US
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: Chevron Corp; NAICS: 211111, 324110; Name: ConocoPhillips Co; NAICS: 211111
Classification: 9190: United States; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.2
Publication year: 2012
Publication date: Jan 23, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917138722
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917138722?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Apache Reaches Oil Deal on Home Turf
Author: Gilbert, Daniel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]23 Jan 2012: B.1. [Duplicate]
ProQuest document link
Abstract:
Energy companies are unlocking enormous deposits of fossil fuels from dense rock by drilling through it horizontally and breaking it up with a mixture of water, sand and chemicals, allowing oil and gas to flow through the cracks.
Full text: HOUSTON -- Apache Corp., one of the biggest U.S. energy explorers, is buying privately held Cordillera Energy Partners III LLC for $2.85 billion in a deal that underscores how new drilling techniques are remaking the U.S. oil business.
The cash-and-stock deal gives Apache 254,000 acres atop a deeply buried layer of rock in what is known as the Granite Wash, which straddles the Texas-Oklahoma border. Apache has been drilling in the area for 35 years, but new methods of recovering oil and natural gas, including horizontal drilling and hydraulic fracturing, or fracking, have transformed its potential.
The deal marks only the second time in the past 16 years that Apache has purchased a company for more than $500 million. Apache has been buying into mature and still-profitable oil fields around the globe, a strategy that is leading the company back into the region where it was formed 57 years ago.
"It's where the opportunity is," G. Steven Farris, Apache's chief executive, said during an interview Sunday.
Apache will double its acreage in the Granite Wash, which the company expects to hold a high proportion of lucrative oil and petroleum liquids, and acquire Denver-based Cordillera's existing production there.
High oil prices and new drilling technologies have breathed new life into thoroughly drilled oil fields such as those in the Texas Panhandle and across the Oklahoma border. Energy companies are unlocking enormous deposits of fossil fuels from dense rock by drilling through it horizontally and breaking it up with a mixture of water, sand and chemicals, allowing oil and gas to flow through the cracks.
These innovations have sparked a boom in U.S. energy production, with companies supplying so much natural gas that prices last week fell to 10-year lows. With oil hovering around $100 a barrel, Apache and larger rivals such as Exxon Mobil Corp. and Chevron Corp. are now applying the same techniques to target oil in fields that had been considered past their prime.
The Granite Wash is the "hot emerging opportunity" in an oil and gas reservoir that spills into Texas, Oklahoma and Kansas, Sanford C. Bernstein & Co. said in a research report on Friday.
Apache, whose operations stretch from Egypt to Australia, has been hunting for a chance to increase its onshore oil production in the U.S. It was an unsuccessful suitor for privately held oil and natural-gas explorer Samson Investment Co., which in November was purchased for $7.2 billion by private-equity firm Kohlberg Kravis Roberts & Co. and other investors.
Apache has spent more than $15 billion in the past two years to acquire a series of assets in Egypt, the North Sea, West Texas and the Gulf of Mexico. The deals have been weighted toward North America, mitigating the risk of operating in Egypt, where turmoil has pressured the company's stock price.
Apache will pay for Cordillera with $600 million of common stock and the rest in cash, which Apache plans to raise by selling long-term debt before the deal closes. Shares in Apache fell 36 cents to $96.80 at 4 p.m. Friday in composite trading on the New York Stock Exchange.
The deal is a coup for Cordillera Chief Executive George Solich, who began his career in the industry as a leasing agent for Apache in 1984. Mr. Solich and his team, backed by private-equity group EnCap Investments LP and other institutional investors, have twice before sold companies at healthy profits, but the deal with Apache is by far the largest.
Mr. Solich said he learned the strategy of acquiring assets at a bargain and squeezing them for greater production from Apache, and that his relationship with the company was instrumental in reaching a deal.
Mr. Solich is examining opportunities to use the same strategy in oil fields in South Texas, North Dakota and Pennsylvania.
Apache was advised by Goldman, Sachs Group Inc. and Tudor, Pickering, Holt & Co. Cordillera was advised by Jefferies & Co., J.P. Morgan Securities LLC, Andrew Kurth LLP and Thompson & Knight LLP.
Credit: By Daniel Gilbert
Subject: Petroleum industry; Hydraulic fracturing; Acquisitions & mergers; Oil recovery; Oil fields
Location: United States--US
Company / organization: Name: Apache Corp; NAICS: 211111, 213112, 324110; Name: Cordillera Energy Partners III LLC; NAICS: 211111
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.1
Publication year: 2012
Publication date: Jan 23, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917139630
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917139630?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
India Exploring Various Payment Options for Iran Oil
Author: Sharma, Rakesh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Jan 2012: n/a.
ProQuest document link
Abstract:
The decision by the EU will be another step in the intensification of efforts by the West against Tehran over its controversial nuclear program, including a U.S. ban on transactions with its central bank that could disrupt Iran's oil sales.
Full text: NEW DELHI - India's oil minister said Monday the country is exploring various options to make payments to Iran for crude oil purchases.
The minister's comments come as the European Union prepares to agree Monday on an embargo on Iran's oil exports. The decision by the EU will be another step in the intensification of efforts by the West against Tehran over its controversial nuclear program, including a U.S. ban on transactions with its central bank that could disrupt Iran's oil sales.
India imports three-quarters of the crude it needs. Officials from India -- Iran's second-largest oil market after China -- were in Tehran last week to discuss new ways to pay for crude imports.
"Iran's attitude to India is still very positive. We have made our best efforts to make the payments," Jaipal Reddy told reporters on the sidelines of a conference.
"In spite of difficulties, the government of Iran has put up with us. So, it will be our effort in future to tap the Iran source fully because the terms are fairly favorable," Mr. Reddy said, adding that India "will explore various options" for sourcing crude oil.
Write to Rakesh Sharma at rakesh.sharma@dowjones.com
Credit: By Rakesh Sharma
Subject: Petroleum industry
Location: United States--US
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 23, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917187292
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917187292?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Conoco's Oil Reserves Grow
Author: Ben Fox Rubin
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Jan 2012: n/a.
ProQuest document link
Abstract:
ConocoPhillips said Monday that it added about 738 million barrels of oil equivalent to its proved reserves in 2011, allowing the energy producer to more than replace oil reserves lost from production.
Full text: ConocoPhillips said Monday that it added about 738 million barrels of oil equivalent to its proved reserves in 2011, allowing the energy producer to more than replace oil reserves lost from production.
"Replacing our 2011 production with new reserves reflects the success of our strategic focus on organic growth," said Chief Executive Jim Mulva.
The reserve-replacement ratio is expected to be 112% of last year's production.
Reserves were added throughout the company's portfolio, including addition from its Canadian oil-sands projects, expansion work in the North Sea and growth in U.S. shale assets.
Acquisitions and dispositions are expected to reduce reserves by 45 million equivalent barrels, primarily from the dilution of the company's interest in an Australia Pacific liquefied-natural-gas project and sale of North American natural-gas assets.
The Houston-based company, which has large refineries in the nation's interior, last month boosted its 2012 capital program to $15.5 billion, higher than previously projected, in a sign of the company's confidence that oil prices will remain high and that its restructuring plan is advancing on schedule.
Conoco is in the midst of a three-year repositioning aimed at shoring up finances and making itself more attractive to investors. The plan includes the sale of $15 billion to $20 billion in assets, large-scale share buybacks and the spinoff of its refining arm, expected to be completed this year.
In October, the company said its third-quarter earnings declined, mainly due to charges related to asset-sale losses. Excluding those items, high oil prices and refining margins made the company's profit soar above Wall Street expectations.
Write to Ben Fox Rubin at ben.rubin@dowjones.com
Credit: By Ben Fox Rubin
Subject: Oil reserves; Petroleum industry
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 23, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917221150
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917221150?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
EIA Pegs Oil at $146 by 2035
Author: Tracy, Tennille
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Jan 2012: n/a.
ProQuest document link
Abstract:
WASHINGTON--The global price of oil is expected to climb in coming decades, reaching $146 a barrel in 2035, as developing economies in China, India and Middle East consume more energy, U.S. energy officials said.
Full text: WASHINGTON--The global price of oil is expected to climb in coming decades, reaching $146 a barrel in 2035, as developing economies in China, India and Middle East consume more energy, U.S. energy officials said.
In the U.S., meanwhile, domestic oil production is likely to become more robust. By 2020, the country will produce at least one million additional barrels of oil, allowing the country to rely less heavily on foreign imports.
The U.S. will also become particularly strong in the production of natural gas, which becomes more widely available with the use of new drilling technologies, officials said. The U.S. is expected to become a net exporter of natural gas by 2021.
The findings come from the annual report of the U.S. Energy Information Administration, which released a sneak peek Monday of price and production forecasts. While the EIA doesn't develop policies or rules, its estimates and predictions play a big role in shaping U.S. energy policy.
U.S. regulators are currently developing a nationwide oil-drilling plan for the next five years and are contemplating a number of regulations that are expected to tighten standards for power plants. Federal officials are also developing new fuel-economy standards for cars.
Chief among the EIA's findings is that the price of oil will rise in coming years as the global economy regains its footing. The demand for oil will grow more rapidly than available supplies of oil from producers outside the Organization of Petroleum Exporting Countries.
By 2016, the price of oil will rise to $120 a barrel (in 2010 dollars) and then continue its upward movement to reach $146 a barrel in 2035. Crude oil is currently trading around $100 a barrel.
The price of gasoline travels a similar trajectory higher, reaching $4.09 a gallon by 2035.
The U.S. will produce more oil as energy companies continue to tap the Gulf of Mexico. Between 2010 and 2020, daily production is expected to jump from 5.5 million barrels to 6.7 million, marking a 22% increase. Production levels are expected to taper off after 2020, but remain above 6.1 million barrels a day.
Heightened production levels allow the U.S. to rely less heavily on foreign imports. Net imports will account for 36% of the U.S. liquid fuel consumption in 2035, down from 49% in 2010.
A boom in natural-gas production, coming in large part from discoveries of shale gas, will mean the U.S. has more gas than it consumes. It is likely to become a net exporter of natural gas within the next nine years, the EIA said, in part because producers will look to liquefy the gas and ship it overseas.
The estimates released Monday reflect the baseline "reference case" in EIA's Annual Energy Outlook for 2012. The full report will be released later in the year. The reference case doesn't account for future rules or policies that could alter the supply or demand scenarios for global energy.
Write to Tennille Tracy at tennille.tracy@dowjones.com
Credit: By Tennille Tracy
Subject: Petroleum industry; Energy policy; Natural gas
Location: United States--US Middle East
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 23, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917221160
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917221160?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Climbs on EU Embargo
Author: Assis, Claudia; Harrison, Virginia
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Jan 2012: n/a.
ProQuest document link
Abstract:
Crude-oil futures moved higher Monday, vying to break a three-day losing streak as the European Union imposed an import ban on Iranian oil and as concerns about supplies arose.
Full text: Crude-oil futures moved higher Monday, vying to break a three-day losing streak as the European Union imposed an import ban on Iranian oil and as concerns about supplies arose.
Iranian authorities have threatened to close the Strait of Hormuz, a key shipping lane for the oil trade, and disrupt oil supplies in retaliation against the ban.
Crude for March delivery gained $1.11, or 1.1%, to $98.44 a barrel on the New York Mercantile Exchange. Crude lost 0.2% last week, with European debt worries, as well as a possibly deepening slowdown in China, discouraging investors.
The EU embargo capped off several weeks of talks about sanctions and retorts from Iran about closing down the Strait of Hormuz. The embargo also applies to imports of petrochemicals and bans the trade of gold and other commodities, and it froze Iranian central-bank assets within the EU.
Iranian authorities have denied they are making nuclear weapons, saying their goal is to provide energy.
Other energy products tracked oil higher on Monday, with February gasoline up 2 cents, or 0.8%, to $2.81 per gallon.
Natural gas kept trading higher after a string of losses took prices to their lowest in nearly a decade. February natural gas [recently traded 7 cents higher, or 3%, to $2.46 per million British thermal units. Chesapeake Energy Corp. said it will reduce drilling and curb production this year in response to the low prices. Chesapeake is the U.S.'s second-largest natural-gas producer after Exxon Mobil Corp.
Credit: By Claudia Assis And Virginia Harrison
Subject: Natural gas; Crude oil
Location: Strait of Hormuz
Company / organization: Name: European Union; NAICS: 926110, 928120; Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 23, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917221379
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917221379?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
South Sudan Starts Shutting Down Oil Production
Author: Kent, Sarah
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Jan 2012: n/a.
ProQuest document link
Abstract:
According to the U.S. State Department, the South has almost three quarters of the total oil production, which amounts to nearly 500,000 barrels a day.
Full text: LONDON--South Sudan has started the process of shutting down its oil production, a government spokesman said Monday, signaling a further escalation of a long-standing dispute with the North over oil transit fees.
The government spokesman, who confirmed the shutdown in an email, said he had no specific information about which oil fields would be affected.
South Sudan also said Monday that said it would launch an investigation into allegations that Sudan had diverted "enormous volumes" of the South's crude oil to its own domestic refineries.
The South began the investigation following reports that between Jan. 13 and Jan. 20 Sudan ordered three ships to be loaded with cargoes of southern crude, an official statement said Monday.
"In the last few days Khartoum has stolen approximately over $350 million worth of oil from South Sudan using force, while preventing over $400 million from being purchased and this is through restricting vessels from entering or leaving the port by using their security," according to a statement on the government of South Sudan's website, citing the minister for Information and Broadcasting, Barnaba Marial Benjamin.
When the South split from northern Sudan in July, the northern part of the country lost access to the majority of the oil output. According to the U.S. State Department, the South has almost three quarters of the total oil production, which amounts to nearly 500,000 barrels a day. However, it lacks the infrastructure to export the crude, leaving it dependent on piping its oil to Red Sea export terminals in Sudan.
The resulting dispute over how much the South should pay to use the infrastructure has caused significant disruption to exports.
A spokesman for the government of Sudan defended its actions. "We decided to take what we think is our right in kind," said Al-Obeid Murawih, government spokesman for Sudan, adding that as long as the south continues to use Sudan's infrastructure, Khartoum is entitled to some form of payment.
The escalating tensions between the two countries come amid meetings in Ethiopia between representatives from both sides and African Union intermediaries in an effort to end the dispute.
In early January the South declared force majeure after Sudan prevented ships carrying exports from the South from leaving port and requisitioned some of the South's oil as "payment in kind" for use of Khartoum's pipeline.
Write to Sarah Kent at sarah.kent@dowjones.com
Credit: By Sarah Kent
Subject: Petroleum industry; Petroleum production; Exports; Infrastructure
Location: South Sudan
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 23, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917236844
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917236844?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Obama to Spotlight Energy; State of the Union Speech Will Call for Expanding U.S. Oil and Gas Production
Author: Solomon, Deborah; Meckler, Laura
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Jan 2012: n/a.
ProQuest document link
Abstract:
President Barack Obama will use his State of the Union speech on Tuesday to call for an increase in domestic energy production and may set a target for natural gas production, said people familiar with the plans.
Full text: President Barack Obama will use his State of the Union speech on Tuesday to call for an increase in domestic energy production and may set a target for natural gas production, said people familiar with the plans.
Mr. Obama is expected to tout the economic and energy security benefits of increased U.S. oil and gas production, a message unlikely to sit well with some of the President's environmental supporters but which could blunt industry and Republican criticism of his energy policies.
Mr. Obama's speech is expected to call for increased oil and gas production, offshore and onshore, and he will highlight a drop in U.S. oil imports, although some of that decrease stems from reduced demand amid a weak economy.
One idea being discussed within the White House is to include a natural gas production goal. Such a move, if included in the final version of the speech, could help convey the message that the administration doesn't intend to slow production through regulations.
"This is sending a signal that the administration is in favor of gas production, which will be interpreted as a signal that they will not get in the way of gas production," said a person familiar with the White House plans.
The oil and gas industry does not view the administration's approach to natural gas as hands-off and said it expects additional regulation in the future.
"We hear positive statements about natural gas but the administration now has eight different departments and agencies reviewing, with the intent to regulate, the high-tech practice of hydraulic fracturing," said Jack Gerard, president of the industry trade group American Petroleum Institute. Production in the U.S. has increased "in spite of the administration," he said.
The president's focus on natural gas is part of a broad, but quiet, effort to hasten its production, including the use of a controversial technique known as hydraulic fracturing. The administration, while making gestures towards environmental concerns with fracking, has so far resisted overtures to impose sweeping new federal rules governing air and water quality, or to ban fracking outright.
Administration officials say the potential to tap the natural gas beneath U.S. soil is too attractive to ignore or hamper with potentially unnecessary rules, given that the practice is regulated by the states and is creating jobs. This summer the White House abandoned an air-quality rule that would have tightened standards for smog-forming ozone, a rule the oil and gas industry said would have limited natural-gas drilling.
Several administration efforts are underway to study the impact of fracking and the Environmental Protection Agency recently finalized a rule requiring more pollution controls at new wells. The EPA has intervened in some cases where residents say the drilling contaminated their water and recently issued a preliminary finding linking fracking with water contamination in a small Wyoming town.
The lighter regulatory touch stands in stark contrast to other areas, such as the controversial Keystone XL oil pipeline, which the administration rejected last week, and the energy focus could offer a political counterweight to that decision. In some ways, the administration's hands are tied given that fracking is largely exempt from many federal laws.
Write to Deborah Solomon at deborah.solomon@wsj.com and Laura Meckler at laura.meckler@wsj.com
Credit: By Deborah Solomon And Laura Meckler
Subject: Hydraulic fracturing; Energy policy; Natural gas; Petroleum industry
Location: United States--US
People: Obama, Barack
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 23, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917246168
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917246168?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Oil Stocks Cushion Risk of Hormuz
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 Jan 2012: n/a.
ProQuest document link
Abstract:
Back in the day, bulls spoke fondly of the "Greenspan put": the notion that any time markets fell, the former chief of the Federal Reserve would cut rates to pump them up.
Full text: Alan Greenspan and the Strait of Hormuz: One is an ancient feature of the global landscape and the other is a bottleneck in the Persian Gulf.
But there is a deeper link. Back in the day, bulls spoke fondly of the "Greenspan put": the notion that any time markets fell, the former chief of the Federal Reserve would cut rates to pump them up. These days, any time that a nuisance like weak demand from a slowing global economy threatens oil enthusiasm, Iranian officials and energy bulls talk up the chances of a conflict blocking the Strait and disrupting oil supplies, juicing prices.
Oil jumped again Monday after the European Union confirmed it would embargo Iranian oil imports. But there are big questions over whether Iran could block the Strait for long or would really want to risk the consequences anyway.
Even if Iran did, though, oil inventories in the Western world are now high.
U.S. net imports of oil have dropped on weaker demand and surging domestic production. So even though stocks have remained relatively flat since early 2009, the number of days of import cover has jumped. As of October, inventories covered 224 days of net imports, the highest level since early 1995.
In Europe, at the sharper end of the embargo, International Energy Agency data show a less benign, but hardly alarming picture. On a 12-month rolling average to take account of seasonal swings, stocks covered roughly 140 days of net imports in October. That is 10 days less than in mid 2010, but in-line with the average of the past five years.
Given that, depending on Hormuz to boost oil prices sustainably looks risky. You are probably better off hoping Mr. Greenspan's successor launches a few barrages of his own in the form of quantitative easing.
Write to Liam Denning at liam.denning@wsj.com
Credit: By Liam Denning
Subject: Petroleum industry
Location: Strait of Hormuz Persian Gulf
People: Greenspan, Alan
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 24, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917236842
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917236842?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
EU Bans Imports of Iran's Oil, Raising Pressure on Tehran
Author: Fassihi, Farnaz; Biers, John M
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 Jan 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: The European Union approved a ban on oil imports from Iran, overcoming misgivings about the economic hardship of its members to take its strongest measures yet to press Tehran into concessions on its nuclear program.
News of a coming embargo by Iran's largest oil-export market shocked the country's troubled economy. Iran's currency, the rial, fell 10% to a record low on Monday, while gold prices rose.
The ban is set to take effect on July 1, following a review to ensure the weaker EU economies can find, and afford, new sources of oil. The EU also agreed to freeze the assets of Iran's central bank, the conduit for the country's oil revenue, and ban trade with its petrochemical industry.
"Our message is clear. We have no quarrel with the Iranian people," the leaders of France, Germany and the U.K. said. "But the Iranian leadership has failed to restore international confidence in the exclusively peaceful nature of its nuclear program. We will not accept Iran acquiring a nuclear weapon."
Iran's Deputy Foreign Minister Abbas Araghchi said sanctions made Iran's conflict with the West tougher to resolve.
"The more they go down this path, the more obstacles we will have for reaching a final agreement," Mr. Araghchi told IRNA, Iran's official news agency.
The Obama administration applauded the EU decision on Monday and backed it up by blacklisting Iran's third-largest bank, Bank Tejarat, one of Tehran's few remaining conduits for trade with the West.
The move followed President Barack Obama's approval last month of sanctions on Iran's central bank that are due to take effect later this year.
The EU and U.S. see sanctions as a way to force Iran to engage in talks with the international community on its nuclear program.
Tehran has yet to respond to an request in October to return to negotiations, the U.S. and EU said, though the Iranian foreign minister said last week that his country was willing to talk.
Iranian officials have backed away from recent warnings that it would retaliate against sanctions by blocking the Strait of Hormuz, through which one-fifth of the world's traded oil passes, suggesting the threats were more about defiance than policy.
Oil prices rose slightly at news of the embargo. Crude for March delivery closed at $99.58 per barrel in New York trading Monday, up $1.25, or 1.3%.
Europe accounts for about 20% of oil revenue in Iran, the world's fourth-largest oil producer. The embargo could cost Iran $5 billion to $10 billion in oil revenue for 2012, and more in subsequent years, said Trevor Houser, a partner at New York-based economic-research firm Rhodium Group.
Iranians contacted Monday reacted with anger at news of the embargo, saying the people would suffer more than the government, amid rising inflation levels.
"These sanctions are affecting everyone's daily lives. I wish our government would put the good of 75 million people ahead of its pride and compromise," said an engineer in Tehran.
The economic pressure could fuel political dissent ahead of parliamentary elections on March 2, following the government's move last year to reduce public subsidies that had helped secure the support of rural and lower-income voters.
"The impact on Iran's economy is already here and it's hard to see how Iran can turn things back," said Fereydoun Khavand, a Paris-based economist and Iran expert.
Iranian officials have said they would seek to replace Europe's market with buyers in Asia, as U.S. officials call on consumers of Iranian oil in Asia and Africa to find other sources, with mixed success.
China, Iran's No. 2 buyer after the EU, has rejected calls to halt its consumption of Iranian oil. India said Monday it would keep buying crude oil from Iran and is working with Tehran to find a way to settle payments despite sanctions.
The EU imports about 600,000 barrels of Iranian oil daily, more than a quarter of Tehran's daily exports, according to the International Energy Agency. But those imports fall unevenly, with some of Europe's most-stressed economies--Greece, Italy and Spain--among the top customers.
Refiners in Spain and Italy have already begun to phase out Iranian oil purchases in anticipation of the embargo, and Saudi Arabia has offered to help fill the gap. But Greece has sought a slower implementation of the ban to protect its economy.
Under Monday's agreement, the EU said it will review the policy's effects on member states by May 1, a condition sought by Greece. However, any move to reverse or delay the embargo would require the unanimous decision of the EU's 27 members, officials said.
Italian Foreign Minister Giulio Terzi said the impact of the oil embargo on the Italian economy will "be negligible, almost zero."
Greek Foreign Minister Stavros Demas said Greece benefited from favorable financing terms in its Iran purchases, and that it will need help not only to find new suppliers but to also get the favorable financial terms they enjoyed from Iran. Greece has been buying 35% of its oil from Iran.
Mr. Demas said Greece has held talks with Saudi Arabia to replace the Iranian supply.
French Minister of Foreign Affairs Alain Juppé acknowledged some of the skepticism about the effectiveness of the sanctions, but said the EU package would meaningfully hit Iran. "We will paralyze the economic activity of Iran and deprive the country of part of its resources. I know you can be skeptical about sanctions...but it avoids going to war," he said.
Jay Solomon, Laurence Norman and Benoît Faucon contributed to this article.
Write to Laurence Norman at laurence.norman@dowjones.com
Credit: By Farnaz Fassihi and John M. Biers
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 24, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917246175
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917246175?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
We Don't Need More Foreign Oil and Gas; America is poised to be the world's clean energy leader.
Author: Steyer, Tom; Podesta, John
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 Jan 2012: n/a.
ProQuest document link
Abstract:
While conservatives have been fighting to build a pipeline to import more foreign oil and deepen U.S. dependence, the U.S. is poised to transform its energy portfolio by developing domestic resources--renewable and mineral--that will let it become a net exporter of clean energy and energy technology in this decade.
Full text: In the hubbub around the president's decision not to approve the proposed Keystone XL pipeline between Canada and the United States, Americans missed the big picture. While conservatives have been fighting to build a pipeline to import more foreign oil and deepen U.S. dependence, the U.S. is poised to transform its energy portfolio by developing domestic resources--renewable and mineral--that will let it become a net exporter of clean energy and energy technology in this decade.
Under President Obama's leadership, we appear to be at the beginning of a domestic gas and oil boom. After a four-decade decline in oil production, the U.S. is now producing more than half of our oil domestically. This can free us from our addiction to foreign-sourced barrels, particularly if we utilize our dramatically larger and cheaper natural gas reserves. Natural gas now costs the equivalent of less than $15 per barrel, versus the $100-plus barrels we import from the Middle East.
There are critical environmental questions associated with developing these resources, particularly concerning methane leakage and water pollution. Yet as long as we ensure high regulatory standards and stay away from the riskiest and most polluting of these activities, we can safely assemble a collection of lower-carbon, affordable and abundant domestic-energy assets that will dramatically improve our economy and our environment. Under President Obama's watch, increased domestic production from developing these reserves has already created 75,000 new gas and oil-production jobs since 2009. And we have much further to go.
At the same time, the U.S. is well on its way to becoming a global clean-energy leader. America is the largest clean-energy investor, after reclaiming this title from China last year. Our companies make over 75% of all venture investments in clean technologies world-wide. Overall, because of U.S. public and private investments in clean energy--including renewables, efficiency, transportation and infrastructure--the clean economy grew by 8.3% from 2008 to 2009, even during the depths of the recession.
Expanding these clean-energy investments is good economics. Several technologies, such as solar power, are already cost-competitive with fossil fuels, even without considering the health and other costs of pollution. And they will help preserve and expand America's middle class, because energy investments are a particularly effective method of "insourcing" manufacturing jobs, which in turn spur jobs in invention, installation and maintenance.
Such jobs provide a strong middle-class income to workers who have technical skills beyond high school but who lack a four-year college degree. What's more, U.S. clean-energy investment shows moral leadership, as we combine our advanced energy strategies with strong safeguards to protect our citizens and our planet from polluters and the worst impacts of global warming.
Our clean-technology edge is due in no small part to the business community's overwhelming response to specific policy tools--from government investment in research and development to targeted tax incentives to spur renewable energy manufacturing and installation. For instance, the Production Tax Credit, first passed in 1992, has generated massive amounts of new growth in the wind industry, a sector employing 85,000 Americans. But each time Congress allows this credit to expire after a mere two years, investment grinds to a halt, giving our global competitors the advantage in innovation, manufacturing and installation. The Production Tax Credit is set to expire again this year.
If we want to cement our status as a leader in the global marketplace, we must extend clean-energy programs like the Production Tax Credit and revive the Manufacturing Tax Credit, which helps factories retool for the clean-tech sector. Such programs will give clean-energy entrepreneurs the assurance they need to invest and expand their businesses.
The leadership that Americans are asking for is within our reach. Our economy can go from being weighed down by oil imports to soaring ahead, powered increasingly by domestically produced clean energy, and energy services and technology. The Obama administration has taken a smart approach, but Congress must now work with the president to secure our leadership position going forward.
Mr. Steyer is the founder of Farallon Capital Management LLC. Mr. Podesta, a former White House chief of staff for President Clinton, is chairman of the Center for American Progress.
Credit: By Tom Steyer And John Podesta
Subject: Leadership; Clean technology; Energy policy; Petroleum industry
Location: United States--US
People: Obama, Barack
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 24, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917246186
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917246186?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Obama to Spotlight Energy; State of the Union Speech Will Call for Expanding U.S. Oil and Gas Production
Author: Solomon, Deborah; Meckler, Laura
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 Jan 2012: n/a.
ProQuest document link
Abstract:
Mr. Obama is expected to tout the economic and energy security benefits of increased U.S. oil and gas production, a message unlikely to sit well with some of the President's environmental supporters but which could blunt industry and Republican criticism of his energy policies.
Full text: President Barack Obama will use his State of the Union speech on Tuesday to call for an increase in domestic energy production, said people familiar with the plans.
Mr. Obama is expected to tout the economic and energy security benefits of increased U.S. oil and gas production, a message unlikely to sit well with some of the President's environmental supporters but which could blunt industry and Republican criticism of his energy policies.
Mr. Obama's speech is expected to call for increased oil and gas production and highlight a drop in U.S. oil imports, although some of that decrease stems from reduced demand amid a weak economy.
One idea discussed and later dropped was to set a natural gas production goal, those people said. A decision was made not to include the goal in the speech, an administration official said.
The president's focus on natural gas is part of a broad, but quiet, effort to hasten its production, including the use of a controversial technique known as hydraulic fracturing. The administration, while making gestures towards environmental concerns with fracking, has so far resisted overtures to impose sweeping new federal rules governing air and water quality, or to ban fracking outright.
Administration officials say the potential to tap the natural gas beneath U.S. soil is too attractive to ignore or hamper with potentially unnecessary rules, given that the practice is regulated by the states and is creating jobs. This summer the White House abandoned an air-quality rule that would have tightened standards for smog-forming ozone, a rule the oil and gas industry said would have limited natural-gas drilling.
Several administration efforts are underway to study the impact of fracking and the Environmental Protection Agency recently finalized a rule requiring more pollution controls at new wells. The EPA has intervened in some cases where residents say the drilling contaminated their water and recently issued a preliminary finding linking fracking with water contamination in a small Wyoming town.
The mention of increased energy production contrasts the controversial Keystone XL oil pipeline, which the administration rejected last week. But in some ways, the administration's hands are tied given that fracking is largely exempt from many federal laws.
Corrections & Amplifications
This article has been revised to reflect the president's speech will not include setting a national target for natural-gas production. An earlier version said the speech may include such a goal.
Write to Deborah Solomon at deborah.solomon@wsj.com and Laura Meckler at laura.meckler@wsj.com
Credit: By Deborah Solomon And Laura Meckler
Subject: Natural gas; Petroleum industry; Energy policy; Hydraulic fracturing; Outdoor air quality; Speeches; Water quality
Location: United States--US
People: Obama, Barack
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 24, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Eco nomics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917246260
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917246260?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
World News: EU Bans Imports of Iran's Oil, Adding Pressure on Tehran
Author: Fassihi, Farnaz; Biers, John M
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]24 Jan 2012: A.11. [Duplicate]
ProQuest document link
Abstract:
The economic pressure could fuel political dissent ahead of parliamentary elections on March 2, following the government's move last year to reduce public subsidies that had helped secure the support of rural and lower-income voters.
Full text: The European Union approved a ban on oil imports from Iran, overcoming misgivings about the economic hardship of its members to take its strongest measures yet to press Tehran into concessions on its nuclear program.
News of a coming embargo by Iran's largest oil-export market shocked the country's troubled economy. Iran's currency, the rial, fell 10% to a record low on Monday, while gold prices rose.
The ban is set to take effect on July 1, following a review to ensure the weaker EU economies can find, and afford, new sources of oil. The EU also agreed to freeze the assets of Iran's central bank, the conduit for the country's oil revenue, and ban trade with its petrochemical industry.
"Our message is clear. We have no quarrel with the Iranian people," the leaders of France, Germany and the U.K. said. "But the Iranian leadership has failed to restore international confidence in the exclusively peaceful nature of its nuclear program. We will not accept Iran acquiring a nuclear weapon."
Iran's Deputy Foreign Minister Abbas Araghchi said sanctions made Iran's conflict with the West tougher to resolve.
"The more they go down this path, the more obstacles we will have for reaching a final agreement," Mr. Araghchi told IRNA, Iran's official news agency.
The Obama administration applauded the EU decision on Monday and backed it up by blacklisting Iran's third-largest bank, Bank Tejarat, one of Tehran's few remaining conduits for trade with the West.
The EU and U.S. see sanctions as a way to force Iran to engage in talks with the international community on its nuclear program.
Tehran has yet to respond to an request in October to return to negotiations, the U.S. and EU said, though the Iranian foreign minister said last week that his country was willing to talk.
Iranian officials have backed away from recent warnings that it would retaliate against sanctions by blocking the Strait of Hormuz, through which one-fifth of the world's traded oil passes, suggesting the threats were more about defiance than policy.
Oil prices rose slightly at news of the embargo. Crude for March delivery closed at $99.58 per barrel in New York trading Monday, up $1.25, or 1.3%.
Europe accounts for about 20% of oil revenue in Iran, the world's fourth-largest oil producer. The embargo could cost Iran $5 billion to $10 billion in oil revenue for 2012, and more in subsequent years, said Trevor Houser, a partner at New York-based economic-research firm Rhodium Group.
Iranians reacted with anger at news of the embargo, saying the people would suffer more than the government, amid rising inflation levels. The economic pressure could fuel political dissent ahead of parliamentary elections on March 2, following the government's move last year to reduce public subsidies that had helped secure the support of rural and lower-income voters.
"The impact on Iran's economy is already here and it's hard to see how Iran can turn things back," said Fereydoun Khavand, a Paris-based economist.
Iranian officials have said they would seek to replace Europe's market with buyers in Asia, as U.S. officials call on consumers of Iranian oil in Asia and Africa to find other sources, with mixed success. China, Iran's No. 2 buyer after the EU, has rejected calls to halt its consumption of Iranian oil. India said Monday it would keep buying crude oil from Iran and is working with Tehran to find a way to settle payments despite sanctions.
The EU imports about 600,000 barrels of Iranian oil daily, more than a quarter of Tehran's daily exports, according to the International Energy Agency. But those imports fall unevenly, with some of Europe's most-stressed economies -- Greece, Italy and Spain -- among the top customers.
Refiners in Spain and Italy have already begun to phase out Iranian oil purchases in anticipation of the embargo, and Saudi Arabia has offered to help fill the gap. But Greece has sought a slower implementation of the ban to protect its economy.
---
Jay Solomon, Laurence Norman and Benoit Faucon contributed to this article.
Credit: By Farnaz Fassihi and John M. Biers
Subject: Petroleum industry; Bans; Energy economics; Sanctions
Location: United States--US Iran
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.11
Publication year: 2012
Publication date: Jan 24, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917283861
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917283861?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Sudan Rift Prompts South to Curb Oil
Author: Kent, Sarah
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]24 Jan 2012: A.12.
ProQuest document link
Abstract:
According to the U.S. State Department, the South has almost three quarters of the total oil production, which amounts to nearly 500,000 barrels a day.
Full text: LONDON -- South Sudan has started the process of shutting down its oil production, a government spokesman said on Monday, signaling a further escalation of a longstanding dispute with the North over oil-transit fees.
The government spokesman, who confirmed the shutdown in an email, said he had no specific information about which oil fields would be affected.
South Sudan also said Monday that said it would launch an investigation into allegations that Sudan had diverted "enormous volumes" of the South's crude oil to its own domestic refineries.
The South began the investigation following reports that between Jan. 13 and Jan. 20 Sudan ordered three ships to be loaded with cargoes of southern crude, an official statement said Monday.
"In the last few days Khartoum has stolen approximately over $350 million worth of oil from South Sudan using force, while preventing over $400 million from being purchased and this is through restricting vessels from entering or leaving the port by using their security," according to a statement on the government of South Sudan's website, citing the minister for Information and Broadcasting, Barnaba Marial Benjamin.
When the South split from northern Sudan in July, the northern part of the country lost access to the majority of the oil output. According to the U.S. State Department, the South has almost three quarters of the total oil production, which amounts to nearly 500,000 barrels a day. However, it lacks the infrastructure to export the crude, leaving it dependent on piping its oil to Red Sea export terminals in Sudan.
The resulting dispute over how much the South should pay to use the infrastructure has caused significant disruption to exports.
Credit: By Sarah Kent
Subject: Petroleum industry; International relations; Petroleum production
Location: South Sudan Sudan
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.12
Publication year: 2012
Publication date: Jan 24, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917283998
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917283998?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
We Don't Need More Foreign Oil and Gas
Author: Steyer, Tom; Podesta, John
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]24 Jan 2012: A.17.
ProQuest document link
Abstract:
While conservatives have been fighting to build a pipeline to import more foreign oil and deepen U.S. dependence, the U.S. is poised to transform its energy portfolio by developing domestic resources -- renewable and mineral -- that will let it become a net exporter of clean energy and energy technology in this decade.
Full text: In the hubbub around the president's decision not to approve the proposed Keystone XL pipeline between Canada and the United States, Americans missed the big picture. While conservatives have been fighting to build a pipeline to import more foreign oil and deepen U.S. dependence, the U.S. is poised to transform its energy portfolio by developing domestic resources -- renewable and mineral -- that will let it become a net exporter of clean energy and energy technology in this decade.
Under President Obama's leadership, we appear to be at the beginning of a domestic gas and oil boom. After a four-decade decline in oil production, the U.S. is now producing more than half of our oil domestically. This can free us from our addiction to foreign-sourced barrels, particularly if we utilize our dramatically larger and cheaper natural gas reserves. Natural gas now costs the equivalent of less than $15 per barrel, versus the $100-plus barrels we import from the Middle East.
There are critical environmental questions associated with developing these resources, particularly concerning methane leakage and water pollution. Yet as long as we ensure high regulatory standards and stay away from the riskiest and most polluting of these activities, we can safely assemble a collection of lower-carbon, affordable and abundant domestic-energy assets that will dramatically improve our economy and our environment. Under President Obama's watch, increased domestic production from developing these reserves has already created 75,000 new gas and oil-production jobs since 2009. And we have much further to go.
At the same time, the U.S. is well on its way to becoming a global clean-energy leader. America is the largest clean-energy investor, after reclaiming this title from China last year. Our companies make over 75% of all venture investments in clean technologies world-wide. Overall, because of U.S. public and private investments in clean energy -- including renewables, efficiency, transportation and infrastructure -- the clean economy grew by 8.3% from 2008 to 2009, even during the depths of the recession.
Expanding these clean-energy investments is good economics. Several technologies, such as solar power, are already cost-competitive with fossil fuels, even without considering the health and other costs of pollution. And they will help preserve and expand America's middle class, because energy investments are a particularly effective method of "insourcing" manufacturing jobs, which in turn spur jobs in invention, installation and maintenance.
Such jobs provide a strong middle-class income to workers who have technical skills beyond high school but who lack a four-year college degree. What's more, U.S. clean-energy investment shows moral leadership, as we combine our advanced energy strategies with strong safeguards to protect our citizens and our planet from polluters and the worst impacts of global warming.
Our clean-technology edge is due in no small part to the business community's overwhelming response to specific policy tools -- from government investment in research and development to targeted tax incentives to spur renewable energy manufacturing and installation. For instance, the Production Tax Credit, first passed in 1992, has generated massive amounts of new growth in the wind industry, a sector employing 85,000 Americans. But each time Congress allows this credit to expire after a mere two years, investment grinds to a halt, giving our global competitors the advantage in innovation, manufacturing and installation. The Production Tax Credit is set to expire again this year.
If we want to cement our status as a leader in the global marketplace, we must extend clean-energy programs like the Production Tax Credit and revive the Manufacturing Tax Credit, which helps factories retool for the clean-tech sector. Such programs will give clean-energy entrepreneurs the assurance they need to invest and expand their businesses.
The leadership that Americans are asking for is within our reach. Our economy can go from being weighed down by oil imports to soaring ahead, powered increasingly by domestically produced clean energy, and energy services and technology. The Obama administration has taken a smart approach, but Congress must now work with the president to secure our leadership position going forward.
---
Mr. Steyer is the founder of Farallon Capital Management LLC. Mr. Podesta, a former White House chief of staff for President Clinton, is chairman of the Center for American Progress.
(See related letters: "Letters to the Editor: A Badly Distorted Discourse on of U.S. Energy Policy" -- WSJ January 27, 2012)
Credit: By Tom Steyer and John Podesta
Subject: Leadership; Clean technology; Energy policy; Petroleum industry; Pipelines
Location: United States--US
People: Obama, Barack
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.17
Publication year: 2012
Publication date: Jan 24, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917284028
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917284028?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Sudan Rift Prompts South to Curb Oil
Author: Kent, Sarah
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 Jan 2012: n/a. [Duplicate]
ProQuest document link
Abstract:
According to the U.S. State Department, the South has almost three quarters of the total oil production, which amounts to nearly 500,000 barrels a day.
Full text: LONDON--South Sudan has started the process of shutting down its oil production, a government spokesman said on Monday, signaling a further escalation of a longstanding dispute with the North over oil-transit fees.
The government spokesman, who confirmed the shutdown in an email, said he had no specific information about which oil fields would be affected.
South Sudan also said Monday that said it would launch an investigation into allegations that Sudan had diverted "enormous volumes" of the South's crude oil to its own domestic refineries.
The South began the investigation following reports that between Jan. 13 and Jan. 20 Sudan ordered three ships to be loaded with cargoes of southern crude, an official statement said Monday.
"In the last few days Khartoum has stolen approximately over $350 million worth of oil from South Sudan using force, while preventing over $400 million from being purchased and this is through restricting vessels from entering or leaving the port by using their security," according to a statement on the government of South Sudan's website, citing the minister for Information and Broadcasting, Barnaba Marial Benjamin.
When the South split from northern Sudan in July, the northern part of the country lost access to the majority of the oil output. According to the U.S. State Department, the South has almost three quarters of the total oil production, which amounts to nearly 500,000 barrels a day. However, it lacks the infrastructure to export the crude, leaving it dependent on piping its oil to Red Sea export terminals in Sudan.
The resulting dispute over how much the South should pay to use the infrastructure has caused significant disruption to exports.
A spokesman for the government of Sudan defended its actions. "We decided to take what we think is our right in kind," said Al-Obeid Murawih, government spokesman for Sudan, adding that as long as the south continues to use Sudan's infrastructure, Khartoum is entitled to some form of payment.
The escalating tensions between the two countries come amid meetings in Ethiopia between representatives from both sides and African Union intermediaries in an effort to end the dispute.
In early January the South declared force majeure after Sudan prevented ships carrying exports from the South from leaving port and requisitioned some of the South's oil as "payment in kind" for use of Khartoum's pipeline.
Write to Sarah Kent at sarah.kent@dowjones.com
Credit: By Sarah Kent
Subject: Petroleum industry; Petroleum production; Exports; Infrastructure
Location: South Sudan
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 24, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917328572
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917328572?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Dodo of the Year; A court throws out a fowl case of selective prosecution against oil and gas companies.
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 Jan 2012: n/a.
ProQuest document link
Abstract:
[...] every American could be an unwitting criminal bird killer.
Full text: Good news: It is not a felony if a bird happens to land on your property and dies. At least not yet. That's the ruling out of North Dakota, where a federal court last week dismissed a complaint by the Obama Justice Department against three oil companies under the Migratory Bird Act ( Sept. 29, 2011).
Continental Resources, Brigham Oil & Gas and Newfield Production Company were accused of causing the deaths of six Mallard ducks and one Say's Phoebe, which had waded in oil pits. The criminal charges carried fines and potential prison sentences.
In a ruling that can only be called withering, district Judge Daniel Hovland contrasted "incidental and unintended" deaths during "legal, commercially-useful activity" with "hunting and poaching." The court rejected U.S. Attorney Timothy Purdon's "expansive interpretation of the law" because it "would yield absurd results": If the government's case carried the day, "many everyday activities become unlawful--and subject to criminal sanctions--when they cause the death of pigeons, starlings, and other common birds."
The court wrote that among the potential felonious bird-killing habits are cutting brush and trees, planting and harvesting crops, driving a vehicle, owning a building with windows and . . . "owning a cat." The court noted that cats kill "hundreds of millions" of birds each year and cars kill 60 million, while windows kill 97 million to 976 million. In short, every American could be an unwitting criminal bird killer.
Even the Obama Administration isn't this "crazy"--to borrow White House spokesman Jay Carney's favorite word--so this selective prosecution was probably an expression of its political hostility to oil and gas companies. By the way, Judge Hovland also noted that windmills kill "roughly 39,000 birds annually," yet the Justice Department has indicted no wind power company under the Migratory Bird Act. Mr. Purdon takes the prize for dodo prosecutor of the year.
Subject: Birds; Natural gas utilities
Location: North Dakota
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 25, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917479536
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917479536?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
South Africa's Sasol to Avoid Iran Oil
Author: Maylie, Devon
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 Jan 2012: n/a.
ProQuest document link
Abstract:
Along with Sasol, which not only imports Iranian oil but also has a 50% share in a $900 million Iranian petrochemical project, South Africa's flagship telecommunications company MTN Group Ltd. has a joint venture in Iran.
Full text: JOHANNESBURG--South Africa's Sasol Ltd. is starting to diversify oil sources away from Iranian imports, it said Wednesday, as pressure from the U.S. and European Union mounts.
South Africa, which relies on Iranian crude for roughly 25% of its oil imports, is currently debating how to approach increased sanctions being imposed on Iran by the U.S. and EU, aimed at choking off a key source of revenue from the regime. This week the EU enacted new sanctions on Iran, including a planned oil ban effective July 1 and banking and shipping sanctions.
Sasol, the world's largest producer of motor fuels from coal, relies on Iranian oil imports for about 20% of its crude requirement, or 12,000 barrels a day, at its Natref refinery.
"In view of recent developments regarding trade restrictions and possible oil sanctions against Iran, Sasol Oil is diversifying its crude oil sourcing," a company spokeswoman said, declining to give further details.
The U.S. Deputy Secretary of Energy Daniel Poneman this month met with South Africa's energy minister to talk about oil sanctions and U.S. representatives have been meeting with South African companies to explain the impact new sanctions will have.
"South Africa has not made a decision," a spokesman for the Department of International Relations said, in regards to the country's position on sanctions against Iran. "The matter is currently under discussion."
Along with Sasol, which not only imports Iranian oil but also has a 50% share in a $900 million Iranian petrochemical project, South Africa's flagship telecommunications company MTN Group Ltd. has a joint venture in Iran.
MTN said Wednesday that it is "business as usual" at its 49% stake in Iran's second-largest mobile phone operator. MTN derives 21% of its subscriber base from Iran, according to its most recent figures.
"There is no change in our operation," an MTN spokesman said. "Sanctions in Iran have been going on for decades."
South Africa's Minister of Communications Dina Pule said her department wouldn't put pressure on MTN to pull out, even if countries from Europe or the U.S. tried to lean on the company.
Sasol, which has U.S. interests, announced late in 2011 that it started preliminary discussions to exit its venture in Iran on concerns U.S. sanctions could hurt its business. On Wednesday, the company reiterated that those talks are ongoing and are taking place with a number of business and government partners.
Write to Devon Maylie at devon.maylie@dowjones.com
Credit: By Devon Maylie
Subject: International relations
Location: United States--US South Africa
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 25, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917626125
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917626125?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Iran's Oil Pipedream
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 Jan 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: After being slapped with an oil ban by the European Union this week, Iran has suggested its petroleum could be simply displaced, not lost, in the fungible pool of global oil markets. But experts disagree, saying the sanctions are likely to be a boon to the world's two largest crude producers, Russia and Saudi Arabia, and push up the average price of oil charged globally.
"Some of the lost supply [to Europe] may be met by Saudi Arabia," Vienna-based consultancy JBC Energy said in a note Tuesday. But, "Russian Urals will no doubt [also] be the clear choice for regional refiners."
Both countries produce crudes that are of the same quality as Iran--relatively heavy and rich in sulfur--that makes them natural substitutes. Indeed, officials at three refiners in Italy, which relies on Iran for 13% of its oil imports, most frequently named Russian and Saudi oil as the replacements they were seeking for Tehran's crude.
When the EU announced on Monday an embargo on the 600,000 barrels a day it imports from Iran beginning July 1, the state-owned National Iranian Oil Co. said it "will replace easily European customers."
Yet as the West tightens the noose on the Islamic Republic over its controversial nuclear program, options for new customers are narrowing. On Dec. 31, the U.S. announced a ban on oil-related financial transactions with Iran's central bank starting in mid-2012. Although the U.S. already bans Iranian oil imports on its territory, the legislation could force foreign banks to choose between stopping Iran oil transactions and renouncing ties with the U.S. financial system.
Faced with this dilemma, Japan and Korea have said they may reduce their imports from Tehran and increase their purchases from other countries around the Persian Gulf. "Our customers are looking at options of cutting their dependence on Iran oil," a Saudi official acknowledged. And on Wednesday, South Africa's Sasol Ltd. said it was starting to diversify oil sources away from Iran.
According to Washington-based consultancy Eurasia, a total Iran-oil ban in the EU and import reductions in countries like Japan and Korea could leave about 1.3 million barrels a day of Iranian oil--half of the country's oil exports--looking for a new home.
Iran's largest oil buyers, India and China, which have so far resisted U.S. pressure, have been seen as natural replacements for the loss of European markets. That's because "by the end of the year, Iran's remaining buyers will be looking for at least a 10% to 15% price discount," said Trevor Houser, a partner at New York-based economic-research firm Rhodium Group.
But most experts say Iran may not be able to sell all the freed oil. That's because China and India are unlikely to swap the safety of Russian or Saudi oil for Iran's political risk. "While in theory China and India can absorb this rejected volume [from Europe], we believe both will be reluctant to reduce their intakes from other key countries such as Saudi Arabia," London broker Barclays Capital said in a recent note.
Mr. Houser estimates that Iran is likely to find buyers for only half of the 600,000 barrels a day it normally ships to the EU. In that case, "we'd expect to see upward pressure almost immediately on [prices of] other medium sour crudes," including those from Saudi Arabia and Russia, he said.
Sarah Kent and Konstantin Rozhnov in London and Summer Said in Riyadh contributed to this article.
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 25, 2012
column: Market Focus
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917634338
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917634338?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Higher Oil Prices Boost Conoco's Profit
Author: Ordonez, Isabel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 Jan 2012: n/a.
ProQuest document link
Abstract:
Conoco's fourth-quarter results marked the end of a year in which major oil companies' earnings soared, driven by high oil prices due to improved energy demand in emerging markets.
Full text: HOUSTON--ConocoPhillips said Wednesday its fourth-quarter earnings rose 66% thanks to higher oil prices and despite a drop in production and weak refining profits.
The Houston-based company reported a profit of $3.39 billion, or $2.56 a share, up from $2.04 billion, or $1.39 a share, a year earlier. Revenue rose 17% to $62.39 billion.
Excluding gains on asset sales and other items, earnings rose to $2.02 a share from $1.32 a share. Adjusted earnings beat analysts' expectations of $1.76 a share thanks to better-than-anticipated exploration-and-production results and a smaller-than-expected drop in refining profits, said Brian Youngberg, an analyst at Edward Jones.
Conoco's fourth-quarter results marked the end of a year in which major oil companies' earnings soared, driven by high oil prices due to improved energy demand in emerging markets. The average price at which Conoco, the third-largest U.S. oil company by market value, sold a barrel of oil in the fourth quarter jumped 22.4% to $96.42 from the same period a year earlier.
But Conoco's results also showed that high oil prices can be a double-edged sword for the majors--potentially weighing on profits of their huge refining arms at a time of weak demand for fuel. While Conoco's exploration-and-production arm's fourth-quarter adjusted earnings rose 27%, its downstream business--which purchases crude to process into petroleum products such as gasoline and diesel--posted a 2.9% drop in profit.
The trend of rising fourth-quarter earnings on the back of high oil prices and regardless of weak refining results is expected to be repeated by larger rivals Chevron Corp. and Exxon Mobil Corp. when they report earnings Friday and Tuesday, respectively.
Higher crude prices helped Conoco more than offset a 7.6% decline in fourth-quarter production to 1.6 million barrels of oil equivalent per day. The company said its total 2011 production was also 1.6 million barrels of oil equivalent per day, down 7.6% down from 2010.
Quarterly and annual production were hit by asset sales and the company's decision to limit its natural-gas production in the U.S. and Canada due to low commodity prices, and curtailment of its Libyan production due to political unrest. The decrease was partially offset by new production from major projects, the company said. Excluding the impact of dispositions and the suspension of operations in Libya, Conoco said fourth-quarter production fell 1%.
Conoco said it plans to curb only a small portion of its natural-gas production in Canada and the lower 48 states due to lower commodity prices.
"We will have some shut-ins of natural gas going forward," said Conoco Chief Financial Officer Jeff Sheets on a conference call with analysts. "It's going be on the order of 100 million cubic feet a day or something like 15,000 to 20,000 (barrels of oil equivalent) per day going forward."
Conoco's fourth-quarter natural-gas production for Canada and the lower 48 states was about 2.5 billion cubic feet per day, or about 410,000 barrels of oil equivalent per day.
Conoco said it was difficult to shut-in more natural-gas production because the bulk of its current output is linked to oil-liquids production, which is profitable, Mr. Sheets said. A significant part of Conoco's natural-gas production is also operated by partners who don't want to cut back and lose the cash flow associated with it, he said.
The company also said it expects to have a total oil and natural-gas production of 1.6 million barrels of oil equivalent per day this year, unchanged from 2011. It said it expects to sharply increase production in the Eagle Ford Shale and the Permian Basin in Texas and the Bakken Shale in North Dakota.
Conoco said some production from its Bohai Bay platform off China is still shut down despite a settlement with the Chinese government to pay damages over spills there. About 33,000 barrels of oil equivalent a day were still shut down in the fourth quarter due to spills from June; the company expects that figure to go down this quarter. Following the spill, Conoco initially shut down about 50,000 barrels per day when it closed the platform last year, the company said.
The company said its previously announced spinoff of its refining arm could happen as soon as May. Phillips 66, the new refining company, is likely to focus on spending its extra cash flow on reducing debt rather than in repurchasing shares, the company added.
Conoco is in the midst of a three-year restructuring plan that, in addition to splitting into two companies, comprises the sale of up to $20 billion in assets in order to shore up finances and make itself more attractive to investors.
The company said it ran its refineries nearly full-out in the fourth quarter, despite what is considered a stagnant fuel market in most of the world. The company said overseas refineries ran at 98% of their capacity during the quarter, while its U.S. refineries ran at 93%, well above the national average of 85% for the quarter. It expects to have a global-refining capacity in the low-90% range this year.
Separately Wednesday, Occidental Petroleum Corp. reported fourth-quarter earnings rose 35%.
Occidental reported a fourth-quarter profit of $1.63 billion, or $2.01 a share, up from $1.21 billion, or $1.49 a share, a year earlier. Per-share earnings from continuing operations rose to $2.02 from $1.47, as revenue improved 19% to $6.03 billion.
Revenue in the company's main oil and gas segment rose 27% as profit increased 52%. Chemical sales grew 9.8%, pushing profit up 30%.
Occidental's earnings have continued to improve on increased production in the U.S. and as the company has posted strong results in its chemicals business. The company in October took the first step toward restarting production at a Libyan oil field it partially owns, making it the first U.S. company to get some Libyan crude production going again since Moammar Gadhafi's overthrow.
Average daily oil and natural-gas production grew 4.8% from a year earlier to 748,000 barrels of oil equivalent per day on higher domestic volume, partially offsetting lower volume in the Middle East, North Africa and Colombia. Average prices increased 25% for oil, while natural-gas liquids prices rose 12% world-wide.
Meanwhile, Hess Corp. swung to an unexpected loss in the fourth quarter as the oil explorer reported wider losses at its marketing-and-refining business amid the closing of the Hovensa refinery.
Hess is among a number of large oil companies that have been increasing spending to fund exploration programs and the development of shale-gas properties in the U.S.
In September, Hess agreed to pay more than $1.34 billion in a pair of transactions that netted it 185,000 acres in the Utica Shale in Ohio, where appraisal activity was expected to begin during the latest quarter.
Hess recently unveiled plans to close the Hovensa LLC refinery in St. Croix, U.S. Virgin Islands, among the casualties in an industry beset by stagnant fuel demand and thinning profit margins. The refinery is a joint venture with Venezuelan state-owned oil company Petroleos de Venezuela SA and had racked up $1.3 billion in losses over the past three years amid weak demand for refined petroleum products.
Hess reported a loss of $131 million, or 39 cents a share, compared with year-earlier earnings of $58 million, or 18 cents a share. The latest period included losses of $598 million related to the closing of the Hovensa refinery.
Revenue increased 1.5% to $8.82 billion.
The exploration-and-production business, which accounts for most of the bottom line, reported earnings rose 25% thanks to higher prices and despite production falling 13%.
Tess Stynes, Ben Lefebvre and Ben Fox Rubin contributed to this article.
Write to Isabel Ordonez at Isabel.ordonez@dowjones.com
Corrections & Amplifications
Conoco's fourth-quarter natural-gas production for Canada and the lower 48 states was about 410,000 barrels of oil equivalent per day. An earlier version of this story incorrectly put the figure at 410 million barrels per day.
Credit: By Isabel Ordonez
Subject: Petroleum industry; Corporate profits; Crude oil prices; Natural gas
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 25, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917929695
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917929695?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Higher Oil Prices Boost Conoco's Profit by 66%
Author: Ordonez, Isabel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 Jan 2012: n/a.
ProQuest document link
Abstract:
Conoco's fourth-quarter results marked the end of a year in which major oil companies' earnings soared, driven by high oil prices due to improved energy demand in emerging markets.
Full text: HOUSTON--ConocoPhillips said Wednesday its fourth-quarter earnings rose 66% thanks to higher oil prices and despite a drop in production and weak refining profits.
The Houston-based company reported a profit of $3.39 billion, or $2.56 a share, up from $2.04 billion, or $1.39 a share, a year earlier. Revenue rose 17% to $62.39 billion.
Excluding gains on asset sales and other items, earnings rose to $2.02 a share from $1.32 a share. Adjusted earnings beat analysts' expectations of $1.76 a share thanks to better-than-anticipated exploration-and-production results and a smaller-than-expected drop in refining profits, said Brian Youngberg, an analyst at Edward Jones.
Conoco's fourth-quarter results marked the end of a year in which major oil companies' earnings soared, driven by high oil prices due to improved energy demand in emerging markets. The average price at which Conoco, the third-largest U.S. oil company by market value, sold a barrel of oil in the fourth quarter jumped 22.4% to $96.42 from the same period a year earlier.
But Conoco's results also showed that high oil prices can be a double-edged sword for the majors--potentially weighing on profits of their huge refining arms at a time of weak demand for fuel. While Conoco's exploration-and-production arm's fourth-quarter adjusted earnings rose 27%, its downstream business--which purchases crude to process into petroleum products such as gasoline and diesel--posted a 2.9% drop in profit.
The trend of rising fourth-quarter earnings on the back of high oil prices and regardless of weak refining results is expected to be repeated by larger rivals Chevron Corp. and Exxon Mobil Corp. when they report earnings Friday and Tuesday, respectively.
Higher crude prices helped Conoco more than offset a 7.6% decline in fourth-quarter production to 1.6 million barrels of oil equivalent per day. The company said its total 2011 production was also 1.6 million barrels of oil equivalent per day, down 7.6% down from 2010.
Quarterly and annual production were hit by asset sales and the company's decision to limit its natural-gas production in the U.S. and Canada due to low commodity prices, and curtailment of its Libyan production due to political unrest. The decrease was partially offset by new production from major projects, the company said. Excluding the impact of dispositions and the suspension of operations in Libya, Conoco said fourth-quarter production fell 1%.
Conoco said it plans to curb only a small portion of its natural-gas production in Canada and the lower 48 states due to lower commodity prices.
"We will have some shut-ins of natural gas going forward," said Conoco Chief Financial Officer Jeff Sheets on a conference call with analysts. "It's going be on the order of 100 million cubic feet a day or something like 15,000 to 20,000 (barrels of oil equivalent) per day going forward."
Conoco's fourth-quarter natural-gas production for Canada and the lower 48 states was about 2.5 billion cubic feet per day, or about 410,000 barrels of oil equivalent per day.
Conoco said it was difficult to shut-in more natural-gas production because the bulk of its current output is linked to oil-liquids production, which is profitable, Mr. Sheets said. A significant part of Conoco's natural-gas production is also operated by partners who don't want to cut back and lose the cash flow associated with it, he said.
The company also said it expects to have a total oil and natural-gas production of 1.6 million barrels of oil equivalent per day this year, unchanged from 2011. It said it expects to sharply increase production in the Eagle Ford Shale and the Permian Basin in Texas and the Bakken Shale in North Dakota.
Conoco said some production from its Bohai Bay platform off China is still shut down despite a settlement with the Chinese government to pay damages over spills there. About 33,000 barrels of oil equivalent a day were still shut down in the fourth quarter due to spills from June; the company expects that figure to go down this quarter. Following the spill, Conoco initially shut down about 50,000 barrels per day when it closed the platform last year, the company said.
The company said its previously announced spinoff of its refining arm could happen as soon as May. Phillips 66, the new refining company, is likely to focus on spending its extra cash flow on reducing debt rather than in repurchasing shares, the company added.
Conoco is in the midst of a three-year restructuring plan that, in addition to splitting into two companies, comprises the sale of up to $20 billion in assets in order to shore up finances and make itself more attractive to investors.
The company said it ran its refineries nearly full-out in the fourth quarter, despite what is considered a stagnant fuel market in most of the world. The company said overseas refineries ran at 98% of their capacity during the quarter, while its U.S. refineries ran at 93%, well above the national average of 85% for the quarter. It expects to have a global-refining capacity in the low-90% range this year.
Separately Wednesday, Occidental Petroleum Corp. reported fourth-quarter earnings rose 35%.
Occidental reported a fourth-quarter profit of $1.63 billion, or $2.01 a share, up from $1.21 billion, or $1.49 a share, a year earlier. Per-share earnings from continuing operations rose to $2.02 from $1.47, as revenue improved 19% to $6.03 billion.
Revenue in the company's main oil and gas segment rose 27% as profit increased 52%. Chemical sales grew 9.8%, pushing profit up 30%.
Occidental's earnings have continued to improve on increased production in the U.S. and as the company has posted strong results in its chemicals business. The company in October took the first step toward restarting production at a Libyan oil field it partially owns, making it the first U.S. company to get some Libyan crude production going again since Moammar Gadhafi's overthrow.
Average daily oil and natural-gas production grew 4.8% from a year earlier to 748,000 barrels of oil equivalent per day on higher domestic volume, partially offsetting lower volume in the Middle East, North Africa and Colombia. Average prices increased 25% for oil, while natural-gas liquids prices rose 12% world-wide.
Meanwhile, Hess Corp. swung to an unexpected loss in the fourth quarter as the oil explorer reported wider losses at its marketing-and-refining business amid the closing of the Hovensa refinery.
Hess is among a number of large oil companies that have been increasing spending to fund exploration programs and the development of shale-gas properties in the U.S.
In September, Hess agreed to pay more than $1.34 billion in a pair of transactions that netted it 185,000 acres in the Utica Shale in Ohio, where appraisal activity was expected to begin during the latest quarter.
Hess recently unveiled plans to close the Hovensa LLC refinery in St. Croix, U.S. Virgin Islands, among the casualties in an industry beset by stagnant fuel demand and thinning profit margins. The refinery is a joint venture with Venezuelan state-owned oil company Petroleos de Venezuela SA and had racked up $1.3 billion in losses over the past three years amid weak demand for refined petroleum products.
Hess reported a loss of $131 million, or 39 cents a share, compared with year-earlier earnings of $58 million, or 18 cents a share. The latest period included losses of $598 million related to the closing of the Hovensa refinery.
Revenue increased 1.5% to $8.82 billion.
The exploration-and-production business, which accounts for most of the bottom line, reported earnings rose 25% thanks to higher prices and despite production falling 13%.
Tess Stynes, Ben Lefebvre and Ben Fox Rubin contributed to this article.
Corrections & Amplifications
Conoco's fourth-quarter natural-gas production for Canada and the lower 48 states was about 410,000 barrels of oil equivalent per day. An earlier version of this story incorrectly put the figure at 410 million barrels per day.
Write to Isabel Ordonez at Isabel.ordonez@dowjones.com
Credit: By Isabel Ordonez
Subject: Petroleum industry; Corporate profits; Crude oil prices; Natural gas
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 26, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917826357
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917826357?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Earnings: Higher Oil Prices Boost Conoco's Profit by 66%
Author: Ordonez, Isabel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]26 Jan 2012: B.8. [Duplicate]
ProQuest document link
Abstract:
Conoco's fourth-quarter results marked the end of a year in which major oil companies' earnings soared, driven by high oil prices due to improved energy demand in emerging markets.
Full text: HOUSTON -- ConocoPhillips said Wednesday its fourth-quarter earnings rose 66% thanks to higher oil prices and despite a drop in production and weak refining profits.
The Houston-based company reported a profit of $3.39 billion, or $2.56 a share, up from $2.04 billion, or $1.39 a share, a year earlier. Revenue rose 17% to $62.39 billion.
Excluding gains on asset sales and other items, earnings rose to $2.02 a share from $1.32 a share. Adjusted earnings beat analysts' expectations of $1.76 a share thanks to better-than-anticipated exploration-and-production results and a smaller-than-expected drop in refining profits, said Brian Youngberg, an analyst at Edward Jones.
Conoco's fourth-quarter results marked the end of a year in which major oil companies' earnings soared, driven by high oil prices due to improved energy demand in emerging markets. The average price at which Conoco, the third-largest U.S. oil company by market value, sold a barrel of oil in the fourth quarter jumped 22.4% to $96.42 from the same period a year earlier.
But Conoco's results also showed that high oil prices can be a double-edged sword for the majors -- potentially weighing on profits of their huge refining arms at a time of weak demand for fuel. While Conoco's exploration-and-production arm's fourth-quarter adjusted earnings rose 27%, its downstream business -- which purchases crude to process into petroleum products such as gasoline and diesel -- posted a 2.9% drop in profit.
The trend of rising fourth-quarter earnings on the back of high oil prices and regardless of weak refining results is expected to be repeated by larger rivals Chevron Corp. and Exxon Mobil Corp. when they report earnings Friday and Tuesday, respectively.
Higher crude prices helped Conoco more than offset a 7.6% decline in fourth-quarter production to 1.6 million barrels of oil equivalent per day. The company said its total 2011 production was also 1.6 million barrels per day, down 7.6% down from 2010.
Quarterly and annual production were hit by asset sales and the company's decision to limit its natural-gas production in the U.S. and Canada because of low commodity prices, and curtailment of its Libyan production due to political unrest. The decrease was partially offset by new production from major projects, the company said. Excluding the impact of dispositions and Libyan unrest, Conoco said fourth-quarter production fell 1%.
---
Tess Stynes, Ben Lefebvre and Ben Fox Rubin contributed to this article.
Credit: By Isabel Ordonez
Subject: Corporate profits; Company reports; Financial performance; Earnings per share
Location: United States--US
Company / organization: Name: ConocoPhillips Co; NAICS: 211111
Classification: 9190: United States; 8510: Petroleum industry; 3100: Capital & debt management
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.8
Publication year: 2012
Publication date: Jan 26, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917861633
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917861633?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Iran Mulls Pre-empting EU Oil Embargo
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 Jan 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: LONDON--Iran said Thursday it was considering pre-empting a European Union oil embargo and called on the Organization of Petroleum Exporting Countries to intervene against a Saudi pledge to fill the supply gap, as its strongest response to date to the EU ban drove oil prices higher.
In remarks carried by Iran's parliament website Icana, Mohammad Karim Abedi, a member of the National Security and Foreign Policy Committee, said that at "the first open session of parliament [Sunday], we will pursue sanctions against Europe.
"It could happen next week, not in six months [the date when] Europe has claimed the boycott will begin," he said.
Monday, the EU agreed to ban Iranian oil imports--about 600,000 barrels a day--from July 1 as it ratchets up pressure over Tehran's controversial nuclear program. But Iranian lawmakers want an abrupt halt of the exports--accounting for 5.8% of EU needs in 2010--in order to push prices higher and hurt European economies.
The rhetoric worked, driving the Brent crude oil contract up over 1% Thursday to hit an intra-day high of $111.40 a barrel.
Iranian lawmakers are also stepping up pressure on Saudi Arabia, which has said it was ready to fill the gap, and called on OPEC to intervene.
Saudi Arabia, OPEC's largest producer, has said it was ready to supply additional oil to its customers without mentioning Iran. But Tehran, which has already cautioned the Saudis against such move, is now threatening to drag the producer group into the spat.
Nasser Soudani, deputy head of the Iranian parliament's Energy Commission, called on OPEC to hold an "urgent meeting" to condemn what he called a Saudi violation of its commitments and come up with a strategy for its expulsion, Iranian agency ISNA reported.
Saudi Arabia is producing about 1.5 million a barrels a day above its OPEC quota. But most OPEC members aren't respecting the allocations, which haven't been updated in three years.
The verbal escalation comes after the Saudis and Iranians in mid-December managed to patch up their differences, moving on from a cantankerous June OPEC meeting by agreeing to keep production unchanged. But tensions resumed soon after when Iran late last month warned it could block the Strait of Hormuz, an export route used for over half of OPEC's exports.
OPEC, however, has tried to stay away from the mounting confrontation. Abdel Karim al-Luaiby, Iraqi oil minister and OPEC president, said Sunday in Tehran that the group shouldn't dabble in politics.
Swiss-based consultancy Petromatrix said the Iranian response was likely to be ineffective in the medium term. A pre-emptive embargo will provide justification for the Arab countries in the Gulf to replace Iranian oil, it said. The International Energy Agency could also release some of its strategic stockpiles to make up for the loss, Petromatrix said.
In contrast with the vocal reaction of Iranian lawmakers, the country's President Mahmoud Ahmadinejad also brushed off the likely impact of the coming EU sanctions, with reports citing him as saying Thursday that "the Iranian nation won't be hurt."
Still, the country's central bank head said Thursday that Iran is devaluing its official currency rate from rials to dollars starting Saturday, possibly acknowledging a drop in the value of the rial on the informal market amid the mounting sanctions.
In televised remarks reported by state news agency IRNA, Mahmoud Bahmani said the rate would be reduced to 12,260 rials from 11,296 rials.
The rial has dropped sharply against the dollar on the black market in recent weeks as Iranians brace for the economic impact of the new sanctions, including the EU oil embargo.
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 26, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917931971
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917931971?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iranian Export Threat Sends Oil Higher
Author: Bird, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 Jan 2012: n/a.
ProQuest document link
Abstract:
The IEA, which coordinates emergency oil reserves held by members of the Organization for Economic Cooperation and Development, said Thursday it was closely monitoring the situation regarding Iran, but wouldn't comment further.
Full text: NEW YORK--Crude-oil futures climbed above $101 a barrel after Iran threatened to immediately halt sales to the European Union, and U.S. indicators showed an improving economy.
Iran said Thursday it was considering an immediate halt to oil exports to the European Union, in response to an EU embargo on its oil sales set to be fully in place by July 1. EU nations, which import about 600,000 barrels a day of Iranian oil, approved the embargo Monday to ratchet up pressure on Tehran to halt its nuclear program.
Traders said that, at least in the short term, the move could generate more revenue for Iran if it drives prices higher, increasing the prices Asian buyers, who consume most of its exports, have to pay. But the impact could be brief if Saudi Arabia, the world's biggest oil exporter, uses spare capacity to cover supplies, or if consumer nations release emergency stockpiles.
The Iran news came as oil also gained support from a weaker dollar and strong U.S. economic indicators. Initial U.S. claims for unemployment benefits rose by 21,000 last week, slightly below the expected increase of 23,000, according to the Labor Department. December orders for durable goods rose for a third straight month, according to the Commerce Department. The 3% rise topped economists' forecasts for a 2% gain.
The dollar was weaker in response to news that the Federal Reserve plans to keep U.S. interest rates at near zero to 2014. When the dollar weakens, oil becomes less expensive for those using foreign currencies to buy it.
Light, sweet crude oil for March delivery on the New York Mercantile Exchange was 1.7%, or $1.70 a barrel higher, at $101.10 a barrel, after hitting a one-week high of $101.39 a barrel. ICE North Sea Brent crude was $1.82 higher at $111.63 a barrel.
In remarks carried by Icana, the website of Iran's Parliament, Mohammad Karim Abedi, a member of the National Security and Foreign Policy Committee, said that at "the first open session of Parliament [Sunday], we will pursue sanctions against Europe."
Another Iran lawmaker called for an emergency meeting of the Organization of Petroleum Exporting Countries to prevent Saudi Arabia from fulfilling a pledge to boost production and fill any supply gap for its customers.
Ali Naimi, Saudi oil minister, said recently that the kingdom's oil output could quickly be increased to around 11.8 million barrels a day, while it would take about 90 days to bring production to capacity of 12.5 million barrels a day. Official data show Saudi output was slightly above 10 million barrels a day in November. The International Energy Agency, the oil-policy watchdog for the major industrialized nations, estimated December output at 9.85 million barrels a day.
After the EU embargo was agreed on, the IEA said the July 1 date would allow sufficient time to line up crude supplies from elsewhere. The IEA, which coordinates emergency oil reserves held by members of the Organization for Economic Cooperation and Development, said Thursday it was closely monitoring the situation regarding Iran, but wouldn't comment further.
At the same time, Iran's President Mahmoud Ahmadinejad said Thursday his nation is ready to sit down with world powers for talks on its nuclear program, the website of the state television broadcaster reported.
"Iran has succeeded in driving up prices by $5 to $10 higher than they normally would be" in recent weeks, with actions including threatening to close the Strait of Hormuz, the shipping outlet for about 20% of the world's oil, said Phil Flynn, an analyst at PFGBest in Chicago. "The market has to price in every possibility, even if 90% of the people don't believe it could happen."
With the latest statement, Iran has pushed up prices days before any potential action may be taken, Mr. Flynn noted. "They are trying to sell whatever they can now at a higher price."
Weak demand for petroleum products amid a near recession in Europe minimizes the impact of the Iranian threat somewhat, Mr. Flynn said. But prices could gain $2 to $3 per barrel in the short term if Iran agrees to cut off the EU and until the Saudis or the IEA repeat their assurances about replacement supplies.
Heating oil for February delivery was trading 4.3 cents higher at $3.0622 a gallon, while reformulated gasoline blendstock was 2.7 cents higher, at $2.8608 a gallon.
Write to David Bird at david.bird@dowjones.com
Credit: By David Bird
Subject: Economic indicators; Petroleum industry
Location: United States--US Saudi Arabia New York
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 26, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917941789
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917941789?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iran Blasts West Over Oil Embargo
Author: Fassihi, Farnaz
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 Jan 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: BEIRUT--Iran's president attacked Western powers for sanctions against Iran but offered no clear indication on whether his country would return to negotiations on its nuclear program, in his first public remarks since the European Union agreed to ban Iranian oil imports.
In a public rally on Thursday in the southeastern city of Kerman, President Mahmoud Ahmadinejad denied that Iran has been an obstacle to reviving negotiations, but stopped short of offering to restart talks, saying, "Why would we run away from negotiations? Why should the person who is in the right and has logic avoid talks?"
Iran's parliament echoed the defiant tone by saying it would consider an immediate halt of oil exports to Europe to pre-empt the oil embargo, which the EU set to begin on July 1 to give its members time to find alternative supply sources.
Mr. Ahmadinejad declared that the embargo wouldn't hurt Iran's economy, saying other export markets would easily compensate for the loss of sales to Europe, the destination of about a quarter of Iranian oil exports. The Chinese government, Iran's No. 2 oil buyer after the EU, on Thursday criticized use of sanctions to "blindly pressure" Iran.
But the expanding measures are already taking a toll. The value of Iran's currency, the rial, has fallen by nearly 50% against the dollar in the past month on the black market. The prices of basic food items and other goods are increasing daily, according to Iranian media reports and interviews with Tehran residents.
On Thursday, Iran's central bank devalued the rial by 8% against the dollar and ordered all currency-exchange shops to adhere to the official rate or be shut down, according to Iran's official media.
This week, Mr. Ahmadinejad approved an order that banks increase interest rates to 21%, from between 12.5% and 15%, to encourage Iranians to keep their capital in domestic banks, as Iranians hoard dollars and gold.
In his speech, he appeared to try to rally the public behind the government and against Western pressure, saying ordinary people would ultimately suffer the most from sanctions. The West is "the enemy of the Iranian people....The bigger the challenge, the stronger is our will," he said.
His statements come as Iran's government seeks a show of support in parliamentary elections on March 2 from a public besieged by economic hardships.
Iran has already conceded to allow nuclear inspectors to come to Iran before the end of January. Mr. Ahmadinejad doesn't ultimately hold the key to Iranian concessions: Such decisions are in the hands of Supreme Leader Ayatollah Ali Khamenei.
"Ahmadinejad isn't steering Iran's nuclear ship, Khamenei is," said Karim Sadjadpour, an Iran analyst with the Carnegie Endowment for International Peace.
European leaders, in announcing sanctions Monday, said they weren't targeting the people of Iran, but the country's leadership. The EU also agreed to freeze the assets of Iran's central bank, the conduit for the country's oil revenue, and ban trade with its petrochemical industry.
The U.S. and EU aim to put pressure Iran to return to negotiations on the country's nuclear program, which the West says is aimed at arms production and Iran contends is for peaceful purposes.
U.S. and EU officials have said Iran hasn't formally responded to a request in October to return to talks with the international community, represented by the five permanent members of the United Nations Security Council plus Germany.
Also on Thursday, Iranian lawmakers called on the Organization of Petroleum Exporting Countries to intervene against a pledge by Saudi Arabia that it would increase oil supply if needed. Mr. Ahmadinejad, without mentioning any countries, weighed in on the mounting confrontation with Saudi Arabia in his speech, saying those promising to boost oil output were tools of the West with a short view of history.
OPEC, which has so far tried to stay away from the Iranian-Saudi feud, hasn't received a formal request from Tehran for an emergency meeting, people familiar with the matter said on Thursday.
The International Energy Agency, which coordinates emergency oil stocks held by countries in the Organization for Economic Cooperation and Development, sees no need for an emergency supply release now, the agency's Executive Director Maria van der Hoeven said.
China's statement on Thursday underscored the difficulty the West faces in creating a wedge between Iran and one of the largest buyers of Iranian crude.
"To blindly pressure and impose sanctions on Iran aren't constructive approaches," China's Foreign Ministry said, according to the state-run Xinhua news agency. The statement said China hopes to solve such disputes through dialogue and consultation.
China's dependence on Iranian oil grew last year, with imports rising more than 30% to 27.8 million metric tons, or nearly 560,000 barrels a day, according to customs data. China consumes more than nine million barrels of oil a day, second only to the U.S.
China has joined previous U.N. efforts aimed at getting Tehran to curtail any nuclear-weapons ambitions, but has balked at the U.S. efforts to raise pressure on Iran outside U.N. auspices.
The EU ban could give China more leverage with Iran's state oil company.
People familiar with the contract talks between China United Petroleum & Chemicals Co., or Unipec, and the National Iranian Oil Co. have said the two sides are still haggling over economic terms, in a dispute these people have said is unrelated to the nuclear issue.
Carlos Tejada in Beijing and Benoît Faucon in London contributed to this article.
Write to Farnaz Fassihi at farnaz.fassihi@wsj.com
Credit: By Farnaz Fassihi
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 27, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 917951866
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/917951866?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Iran Blasts West Over Oil Embargo
Author: Fassihi, Farnaz
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]27 Jan 2012: A.8. [Duplicate]
ProQuest document link
Abstract:
Why should the person who is in the right and has logic avoid talks? Iran's parliament echoed the defiant tone by saying it would consider an immediate halt of oil exports to Europe to pre-empt the oil embargo, which the EU set to begin on July 1 to give its members time to find alternative supply sources.
Full text: BEIRUT -- Iran's president attacked Western powers for sanctions against Iran but offered no clear indication on whether his country would return to negotiations on its nuclear program, in his first public remarks since the European Union agreed to ban Iranian oil imports.
In a public rally on Thursday in the southeastern city of Kerman, President Mahmoud Ahmadinejad denied that Iran has been an obstacle to reviving negotiations, but stopped short of offering to restart talks, saying, "Why would we run away from negotiations? Why should the person who is in the right and has logic avoid talks?"
Iran's parliament echoed the defiant tone by saying it would consider an immediate halt of oil exports to Europe to pre-empt the oil embargo, which the EU set to begin on July 1 to give its members time to find alternative supply sources.
Mr. Ahmadinejad declared that the embargo wouldn't hurt Iran's economy, saying other export markets would easily compensate for the loss of sales to Europe, the destination of about a quarter of Iranian oil exports. The Chinese government, Iran's No. 2 oil buyer after the EU, on Thursday criticized use of sanctions to "blindly pressure" Iran.
But the expanding measures are already taking a toll. The value of Iran's currency, the rial, has fallen by nearly 50% against the dollar in the past month on the black market. The prices of basic food items and other goods are increasing daily, according to Iranian media reports and interviews with Tehran residents.
On Thursday, Iran's central bank devalued the rial by 8% against the dollar and ordered all currency-exchange shops to adhere to the official rate or be shut down, according to Iran's official media.
This week, Mr. Ahmadinejad approved an order that banks increase interest rates to 21%, from between 12.5% and 15%, to encourage Iranians to keep their capital in domestic banks, as Iranians hoard dollars and gold.
In his speech, he appeared to try to rally the public behind the government and against Western pressure, saying ordinary people would ultimately suffer the most from sanctions. The West is "the enemy of the Iranian people . . . . The bigger the challenge, the stronger is our will," he said.
His statements come as Iran's government seeks a show of support in parliamentary elections on March 2 from a public besieged by economic hardships.
Iran has already conceded to allow nuclear inspectors to come to Iran before the end of January. Mr. Ahmadinejad doesn't ultimately hold the key to Iranian concessions: Such decisions are in the hands of Supreme Leader Ayatollah Ali Khamenei.
The U.S. and EU aim to put pressure Iran to return to negotiations on the country's nuclear program, which the West says is aimed at arms production and Iran contends is for peaceful purposes.
U.S. and EU officials have said Iran hasn't formally responded to a request in October to return to talks with the international community, represented by the five permanent members of the United Nations Security Council plus Germany.
Also on Thursday, Iranian lawmakers called on the Organization of Petroleum Exporting Countries to intervene against a pledge by Saudi Arabia that it would increase oil supply if needed. Mr. Ahmadinejad, without mentioning any countries, weighed in on the mounting confrontation with Saudi Arabia in his speech, saying those promising to boost oil output were tools of the West with a short view of history.
OPEC, which has so far tried to stay away from the Iranian-Saudi feud, hasn't received a formal request from Tehran for an emergency meeting, people familiar with the matter said.
The International Energy Agency sees no need for an emergency supply release now, the agency's Executive Director Maria van der Hoeven said.
---
Carlos Tejada in Beijing and Benoit Faucon in London contributed to this article.
Credit: By Farnaz Fassihi
Subject: Petroleum industry; Sanctions; Nuclear weapons
Location: Iran
People: Ahmadinejad, Mahmoud
Company / organization: Name: European Union; NAICS: 926110, 928120
Classification: 9178: Middle East; 1210: Politics & political behavior; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.8
Publication year: 2012
Publication date: Jan 27, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 918022201
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/918022201?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with p ermission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Mobil to Sell Japan Arm
Author: Baylis, Paul
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Jan 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: TOKYO--TonenGeneral Sekiyu said Sunday it will acquire 99% of the issued shares in Exxon Mobil's Japanese subsidiary, Exxon Mobil Yugen Kaisha, in a deal valued at ¥300 billion ($3.91 billion).
The transaction means Exxon Mobil will give up its controlling stake in TonenGeneral, although it will still have a 22% voting share in the Japanese oil giant, according to the statement. The two companies aim to complete the transaction by June 2012, the statement said.
Exxon Mobil Yugen Kaisha is currently wholly owned by Exxon Mobil's Japanese arm, giving the U.S. company a controlling interest in TonenGeneral.
TonenGeneral, Japan's second-largest refiner after JX Holdings, said declining oil demand and tighter margins in the industry were significant factors behind the transaction.
Credit: By Paul Baylis
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 29, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 918480034
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/918480034?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Exxon Mobil to Unload Its Subsidiary in Japan
Author: Baylis, Paul; Frischkorn, Brad
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 Jan 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: TOKYO--Exxon Mobil Corp. said it would restructure its operations in Japan, announcing plans to sell its subsidiary there for ¥300 billion ($3.91 billion) and to give up control of refiner TonenGeneral Sekiyu KK.
Under the deal, TonenGeneral will acquire 99% of the issued shares of the Exxon arm, Exxon Mobil Yugen Kaisha. Currently, the subsidiary is wholly owned by the U.S.-based company.
Exxon Mobil also will give up its controlling interest in TonenGeneral, Japan's second-largest refiner, maintaining a 22% voting share instead.
The companies aim to complete the deal by June.
Exxon Mobil said Sunday's deal will result in "a single, integrated downstream business better positioned to meet Japan's energy needs."
The U.S. company has been distancing itself from the refining-and marketing, or downstream, business globally. Western energy companies have been repositioning to adapt to a boom in exploration for hydrocarbons, such as shale gas and oil sands, once considered too difficult and expensive to extract, but which are now being exploited on an unprecedented scale from Australia to Canada.
Japanese refiners temporarily cranked up output to meet a spike in demand after last year's earthquake and tsunami. But with the economy sluggish for the past several years and more energy-efficient technologies, such as gasoline-electric hybrid cars, becoming more popular, the country's refining business has been contracting.
That has created overcapacity, leading to costly refinery closures. Idemitsu Kosan Co. in November said it would close a 120,000-barrel-a-day crude-distillation unit at its Tokuyama refinery in western Japan in March 2014.
Overcapacity also has triggered consolidation. In April 2010 JX Holdings Inc. was created by the merger of Nippon Oil Corp., Japan's largest refiner by capacity, and copper smelter Nippon Mining Holdings Inc., which had oil-refining operations.
Sunday's deal "definitely represents a real fork in the road for TonenGeneral," said CLSA equity strategist Nicholas Smith. "There are still too many refiners in Japan and too much capacity," he said.
"While the company's chief rival, JX Holdings, has performed an admirable turnaround in terms of boosting efficiency and trimming capacity, we have seen no such signs from TonenGeneral thus far," Mr. Smith said.
Tastunori Kawai of kabu.com Securities said TonenGeneral will lose managerial expertise and that its dividends could be at risk if the Exxon Mobil deal depletes the company's finances.The company will need hefty loans to finance the purchase. "This latest news will still probably surprise investors, and will be a short-term negative that might trigger another fall in TonenGeneral's common stock," he said.
In the longer term, the deal could help foster needed industry consolidation. Mr. Kawai said.
TonenGeneral said it had no plans to change its forecast for a 2011 dividend of ¥38 (50 cents) a share and that it expects to maintain the same payout for 2012.
TonenGeneral's common shares offer a dividend of nearly 3.3%. But that pales in comparison with the 41% loss the shares have taken by closing down in five of the past six years. TonenGeneral's shares are off 11% this year.
Kenneth Maxwell and William Sposato contributed to this article.
Write to Brad Frischkorn at bradford.frischkorn@dowjones.com
Credit: By Paul Baylis and Brad Frischkorn
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 30, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 918548152
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/918548152?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Corporate News: Exxon Mobil to Unload Its Subsidiary in Japan
Author: Baylis, Paul; Frischkorn, Brad
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]30 Jan 2012: B.3. [Duplicate]
ProQuest document link
Abstract:
[...] with the economy sluggish for the past several years and more energy-efficient technologies, such as gasoline-electric hybrid cars, becoming more popular, the country's refining business has been contracting.
Full text: TOKYO -- Exxon Mobil Corp. said it would restructure its operations in Japan, announcing plans to sell its subsidiary there for 300 billion yen ($3.91 billion) and to give up control of refiner TonenGeneral Sekiyu KK.
Under the deal, TonenGeneral will acquire 99% of the issued shares of the Exxon arm, Exxon Mobil Yugen Kaisha. Currently, the subsidiary is wholly owned by the U.S.-based company.
Exxon Mobil also will give up its controlling interest in TonenGeneral, Japan's second-largest refiner, maintaining a 22% voting share instead.
The companies aim to complete the deal by June.
Exxon Mobil said Sunday's deal will result in "a single, integrated downstream business better positioned to meet Japan's energy needs."
The U.S. company has been distancing itself from the refining-and marketing, or downstream, business globally. Western energy companies have been repositioning to adapt to a boom in exploration for hydrocarbons, such as shale gas and oil sands, once considered too difficult and expensive to extract, but which are now being exploited from Australia to Canada.
Japanese refiners temporarily cranked up output to meet a spike in demand after last year's earthquake and tsunami. But with the economy sluggish for the past several years and more energy-efficient technologies, such as gasoline-electric hybrid cars, becoming more popular, the country's refining business has been contracting.
That has created overcapacity, leading to refinery closures. Idemitsu Kosan Co. in November said it would close a 120,000-barrel-a-day crude-distillation unit at its Tokuyama refinery in western Japan in March 2014.
Overcapacity also has triggered consolidation. In April 2010 JX Holdings Inc. was created by the merger of Nippon Oil Corp., Japan's largest refiner by capacity, and copper smelter Nippon Mining Holdings Inc., which had oil-refining operations.
Tastunori Kawai of kabu.com Securities said TonenGeneral will lose managerial expertise and that its dividends could be at risk if the Exxon Mobil deal depletes the company's finances.
TonenGeneral said it had no plans to change its forecast for a 2011 dividend of 38 yen (50 cents) a share and that it expects to maintain the same payout for 2012.
TonenGeneral's common shares offer a dividend of nearly 3.3%. But that pales in comparison with the 41% loss the shares have taken by closing down in five of the past six years. TonenGeneral's shares are off 11% this year.
---
Kenneth Maxwell and William Sposato contributed to this article.
Credit: By Paul Baylis and Brad Frischkorn
Subject: Petroleum industry; Divestiture; Foreign subsidiaries; Petroleum refineries
Location: United States--US Japan
Company / organization: Name: Exxon Mobil Yugen Kaisha; NAICS: 211111; Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: TonenGeneral Sekiyu KK; NAICS: 324110
Classification: 2330: Acquisitions & mergers; 8510: Petroleum industry; 9179: Asia & the Pacific
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.3
Publication year: 2012
Publication date: Jan 30, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 918568775
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/918568775?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Keystone Can Help the Gulf--and the Northeast; U.S. refiners could make great use of Canadian oil, if only Washington would let them.
Author: Pugliaresi, Lucian
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]31 Jan 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Opposition to the Keystone XL pipeline comes in many forms. Former House speaker and current Democratic Minority Leader Nancy Pelosi suggested at a press briefing this month that the pipeline would have no value to the U.S.: "This oil was always destined for overseas. It's just a question of whether it leaves Canada by way of Canada, or it leaves Canada by way of the United States."
Really? The refiners who would be at the end of the pipeline do not re-export crude oil. Instead they produce high-value petroleum products for U.S. and foreign markets such as Brazil, Mexico and Europe.
According to the federal Energy Information Administration, the U.S. exported three million barrels per day of finished petroleum products in October 2011, a new high (versus domestic sales of 19 million barrels per day from all sources, including imports). Yet the U.S. imports two million barrels per day of finished petroleum products thanks to transportation inefficiencies.
For example, increased production of refined products from Gulf Coast refiners could serve East Coast markets but doesn't, thanks to the 1920s Jones Act. This protectionist legislation requires that all goods transported by water between U.S. ports be carried in (high-cost, naturally) ships built, owned, operated and crewed by Americans--and the existing fleet is tied up in long-term charters.
Canadian crude is perfectly matched to the complex and expensive refinery technology of many Gulf Coast refineries. The production of refined petroleum products is a tough, low-margin business operating in an environment of stiff foreign competition, flat domestic demand, congressional mandates for exotic biofuels, and an avalanche of existing and proposed environmental regulations. U.S. Gulf Coast refiners are now well positioned because they have access to growing markets in Latin America, and have made multibillion dollar investments in advanced processing technology that permits them to run lower-cost crudes, such as blended bitumen from the oil sands in Alberta. At least that was the plan before President Obama's war on fossil fuels.
This bright spot in the domestic refining industry is important. High feedstock costs, declining demand, new fuel standards, expanding environmental regulations and foreign competition are now taking a heavy toll on older and less complex refineries. By summer 2012, with the closing of the ConocoPhillips and Sunoco plants in Pennsylvania, the Northeast will have lost over 700,000 barrels per day of capacity since 2008. The American integrated oil company Hess announced Jan. 18 that it would close its refinery in the U.S. Virgin Islands, which provides large volumes of gasoline, heating oil and jet fuel in the Northeast.
If the Gulf Coast refineries can expand access to Canadian crudes, the combination of low-cost refinery fuel in the form of natural gas and currently installed processing technologies will yield a world-class refining center with a competitive advantage in the production of refined products. U.S. refiners will be in a strong position to expand their access to markets throughout the Western hemisphere and into Europe.
President Obama's jobs council has called for an "all-in approach" to energy policy and expedited permitting for energy projects. Meeting these objectives requires open markets that capitalize on production and transportation efficiencies.
Admittedly, the production of refined products doesn't have the politically correct caché of electric cars and the failed, government-sponsored Solyndra solar plant. But the economic value and subsequent employment growth from producing petroleum products is large and long term.
We are at the leading edge of an American petroleum renaissance. The combination of lower costs for both crude oil and natural gas provides a great opportunity for U.S. refinery capacity to increase over the next decade. But this will require a predictable and sensible regulatory regime--a regime noticeably lacking during the Obama administration.
Mr. Pugliaresi is president of the Energy Policy Research Foundation.
Credit: By Lucian Pugliaresi
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 31, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 918696249
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/918696249?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Exxon Keeps Foot on the Gas Pedal
Author: Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]31 Jan 2012: n/a.
ProQuest document link
Abstract:
Bill Herbert, co-head of research at energy investment bank Simmons & Co. International, said it would take more than just a drop in natural-gas drilling to reduce the surplus of the fuel, but also a cut in oil drilling since oil wells often produce large amounts of natural gas at the same time.
Full text: Exxon Mobil Corp., the largest natural-gas producer in the U.S., said it has no intention of curtailing gas production even as analysts predict prices for the fuel could remain at a historically low level through next year.
The oil-and-gas giant, which reported a 1.6% rise in fourth-quarter profit Tuesday, said it has no plans to cut back on the number of drilling rigs active in North America. Its fourth-quarter U.S. gas production was up 3.5%, while its gas production globally was down 6.6%.
A growing percentage of the company's roughly 70 land-based drilling rigs in the U.S. are being shifted to explore underground formations believed to hold large quantities of liquid fuels that can fetch higher prices than gas, such as ethane, propane and butane. But these areas also contain gas, meaning Exxon will continue to contribute to the glut of the fuel in the U.S.
Exxon said it believed the fuel would continue to attract new consumers. "We remain bullish on the demand side of natural gas as an energy source in the U.S.," said David Rosenthal, vice president of investor relations.
Exxon's decision to continue producing natural gas is in stark contrast to smaller competitors, such as Chesapeake Energy Corp., which said last week it would slash its U.S. natural-gas drilling in half in response to low prices. And it helped send natural-gas futures prices down 21 cents, or 8%, to $2.503 per million British thermal units Tuesday in trading on the New York Mercantile Exchange.
Exxon, the world's largest publicly traded energy company, also reported a profit of $9.4 billion, or $1.97 a share, up from $9.25 billion, or $1.85 a share, in the fourth quarter of 2010. Revenue increased 16% to $121.61 billion.
The results narrowly beat analyst expectations of $1.96 a share, helped by stronger oil prices and higher-than-expected asset sales. Oil prices were over $100 a barrel in the fourth quarter.
Shares of Exxon fell 2.1% to $83.74 in New York Stock Exchange trading, largely in reaction to lower-than-expected global production figures. Quarterly output fell 9% to 4.53 million barrels of oil equivalent per day, mainly because of declining oil-field productivity.
U.S. natural-gas prices declined steeply over the past several years due to a boom in gas production. The successful marriage of two techniques--horizontal drilling and hydraulic fracturing, where millions of gallons of water, sand and chemicals are pumped at high pressure into formations--allowed companies to tap previously inaccessible oil and gas deposits.
The low prices have led producers to cut back on gas drilling. From 1,450 rigs drilling for gas in January 2008, the number has fallen to 777 rigs as of last week, according to Baker Hughes Inc., and is expected to continue to drop. Over that same time period the number of rigs drilling for oil grew from 316 to 1,225.
Bill Herbert, co-head of research at energy investment bank Simmons & Co. International, said it would take more than just a drop in natural-gas drilling to reduce the surplus of the fuel, but also a cut in oil drilling since oil wells often produce large amounts of natural gas at the same time.
"The quickest road-to-Rome, however, would be a sharp correction in oil prices. This would result in very sharp activity reductions in oil as well as gas directed activity," he said in an email.
Exxon's U.S. natural-gas production doubled in 2010 when it acquired XTO Energy for $31 billion. Mr. Rosenthal said the company has driven down operating costs on XTO drilling projects in the 18 months since the acquisition.
The company hopes to export its know-how to overseas unconventional oil and gas fields; it said it drilled two wells into a Polish shale in the fourth quarter, although neither had commercial quantities of natural gas.
Exxon sold $6.9 billion in assets in the quarter, far more than the $1 billion to $1.7 billion reported in recent quarters. Mr. Rosenthal said the figure didn't mark a change in the company's divestment plans but more likely represented the timing of deals which can take many months or even years to come together.
Isabel Ordonez contributed to this article.
Credit: By Tom Fowler
Subject: Natural gas; Petroleum industry; Corporate profits
Location: United States--US
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jan 31, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 918773316
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/918773316?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Comeback Kids: Corn, Oil, Tin; Battered Just Weeks Ago, Resources Shake Off Global Fears
Author: Pleven, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]01 Feb 2012: n/a.
ProQuest document link
Abstract:
Commodity prices are surging again, rebounding sharply from the steep declines late last year, as buyers gain confidence Europe's debt problems won't cascade out of control and destroy demand. Some investors are betting further gains lie ahead, believing the U.S. economy is gathering strength or that China and other fast-growing Asian economies will remain voracious consumers of the raw materials needed to build homes, cars, appliances and consumer electronics.
Full text: Commodity prices are surging again, rebounding sharply from the steep declines late last year, as buyers gain confidence Europe's debt problems won't cascade out of control and destroy demand.
Copper, aluminum and other industrial metals that can serve as manufacturing barometers shot up by double digits in percentage terms in January, led by tin's 29% gain.
Precious metals also have climbed sharply, with gold up 11% and silver 19% in 2012. And prices for vital crops are rising, with corn up 10% and wheat 15% since mid-December.
The gains are a striking reversal from last year's fourth quarter, when commodity prices tanked along with other risky assets as concern mounted about Europe's troubles. At their December lows, copper and corn had both fallen 12% from their peaks for the quarter, oil had dropped 9%, and gold was down 14%. Tin had shed 19% of its value.
The about-face is paying off for investors who held onto commodities despite the prior drops.
"Obviously, we felt a little pain toward the back end of last year, but it's come roaring back this year," said Carlton Neel, co-manager of the Virtus Alternatives Diversifier fund, a mutual fund with about $180 million in assets. Mr. Neel's economic outlook wasn't so gloomy, and the fund's allocation to commodities increased to 17.3% in October and November, above the 15% benchmark.
Amid the recent rally, Ric Deverell, global head of commodities research at Credit Suisse, dubbed 2012 the Year of the Rebound in a research note mid-month. "The fear of a really big macroeconomic event had not materialized," he said in an interview. "Prices had overshot."
To be sure, Europe and the rest of the world remain vulnerable to economy-rattling shocks that could curtail demand. Investors and traders also cut their bets on many commodities in 2011, and while wagers have started to rise this year, the number of outstanding contracts to buy or sell is in many cases still lower.
Energy commodities, moreover, have lagged behind during the recent rally, with natural gas dropping 7.7% Tuesday to put it down 16% this year, and U.S. oil prices down 0.4% in January, though up 5% from mid-December lows.
The Dow Jones-UBS Commodity Index, about a third of which is devoted to energy, is up 2.5% this year, after falling in 2011.
Commodities also are notoriously volatile, and some metals prices pulled back this week. While some goods that have gotten pricier are in tight supply, helping drive gains, others are relatively abundant, which could undercut rallies. Even some materials that have seen sharp increases recently remain far below 2011 highs, which included a number of records.
But for now, prices for many materials are benefiting as investors who entered the year bracing for the worst economic news weigh rosier outcomes.
Most of the recent gains came before the Federal Reserve's plan to keep interest rates low through 2014 became public last week, but that move could fuel the rally. Similar Fed moves in recent years have stirred buying interest in industrial building blocks.
"We definitely see an impact" from that announcement, said David Greely, chief commodities strategist at Goldman Sachs Group. It will particularly boost gold, which is often viewed as a hedge against the risk of inflation, but also encourage those who believe demand for oil, copper and other commodities will keep prices high, he said.
"It gives people more confidence in the economic recovery," Mr. Greely said.
Some investors are betting further gains lie ahead, believing the U.S. economy is gathering strength or that China and other fast-growing Asian economies will remain voracious consumers of the raw materials needed to build homes, cars, appliances and consumer electronics.
"We're still a big commodity bull," said Mark Iwamoto, president of Iwamoto, Kong Wealth Management Group, based in Irvine, Calif., which manages about $350 million for individual investors. Going into the fourth quarter of 2011, Mr. Iwamoto said the firm had about 5% to 6% of its assets in commodities, but it had increased that to 7% to 10% coming into 2012. Others are following suit, he added: "Investors are reinstating positions that they may have liquidated late last year."
Government figures bear that out. The number of open copper contracts is up 22% since the end of 2011, after declining 30% last year, according to data from the U.S. Commodity Futures Trading Commission. Open interest in gold, corn and cotton also declined last year but is up 6%, 8% and 11%, respectively, for those materials this year.
For those investors, fears appear to be receding that Europe's problems could lead to a wider crisis that cuts into the appetite for raw materials around the world. Late last year, Goldman Sachs described that risk as a "whirlpool," but now, Mr. Greely said, "the whirlpool seems to be at a greater distance."
Write to Liam Pleven at liam.pleven@wsj.com
Credit: By Liam Pleven
Subject: Commodity prices; Gold; Copper
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 1, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 918831330
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/918831330?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon to Keep Its Foot on Gas Pedal; Energy Giant Won't Curb Production Despite Natural-Gas Slump; Strong Crude Prices Bolster Quarterly Earnings
Author: Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]01 Feb 2012: n/a.
ProQuest document link
Abstract:
Bill Herbert, co-head of research at energy investment bank Simmons & Co. International, said it would take more than just a drop in natural-gas drilling to reduce the surplus of the fuel, but also a cut in oil drilling since oil wells often produce large amounts of natural gas at the same time.
Full text: Exxon Mobil Corp., the largest natural-gas producer in the U.S., said it has no intention of curtailing gas production even as analysts predict prices for the fuel could remain at a historically low level through next year.
The oil-and-gas giant, which reported a 1.6% rise in fourth-quarter profit Tuesday, said it has no plans to cut back on the number of drilling rigs active in North America. Its fourth-quarter U.S. gas production was up 3.5%, while its gas production globally was down 6.6%.
A growing percentage of the company's roughly 70 land-based drilling rigs in the U.S. are being shifted to explore underground formations believed to hold large quantities of liquid fuels that can fetch higher prices than gas, such as ethane, propane and butane. But these areas also contain gas, meaning Exxon will continue to contribute to the glut of the fuel in the U.S.
Exxon said it believed the fuel would continue to attract new consumers. "We remain bullish on the demand side of natural gas as an energy source in the U.S.," said David Rosenthal, vice president of investor relations.
Exxon's decision to continue producing natural gas is in stark contrast to smaller competitors, such as Chesapeake Energy Corp., which said last week it would slash its U.S. natural-gas drilling in half in response to low prices. And it helped send natural-gas futures prices down 21 cents, or 8%, to $2.503 per million British thermal units Tuesday in trading on the New York Mercantile Exchange.
Exxon, the world's largest publicly traded energy company, also reported a profit of $9.4 billion, or $1.97 a share, up from $9.25 billion, or $1.85 a share, in the fourth quarter of 2010. Revenue increased 16% to $121.61 billion.
The results narrowly beat analyst expectations of $1.96 a share, helped by stronger oil prices and higher-than-expected asset sales. Oil prices were over $100 a barrel in the fourth quarter.
Shares of Exxon fell 2.1% to $83.74 in New York Stock Exchange trading, largely in reaction to lower-than-expected global production figures. Quarterly output fell 9% to 4.53 million barrels of oil equivalent per day, mainly because of declining oil-field productivity.
U.S. natural-gas prices declined steeply over the past several years due to a boom in gas production. The successful marriage of two techniques--horizontal drilling and hydraulic fracturing, where millions of gallons of water, sand and chemicals are pumped at high pressure into formations--allowed companies to tap previously inaccessible oil and gas deposits.
The low prices have led producers to cut back on gas drilling. From 1,450 rigs drilling for gas in January 2008, the number has fallen to 777 rigs as of last week, according to Baker Hughes Inc., and is expected to continue to drop. Over that same time period the number of rigs drilling for oil grew from 316 to 1,225.
Bill Herbert, co-head of research at energy investment bank Simmons & Co. International, said it would take more than just a drop in natural-gas drilling to reduce the surplus of the fuel, but also a cut in oil drilling since oil wells often produce large amounts of natural gas at the same time.
"The quickest road-to-Rome, however, would be a sharp correction in oil prices. This would result in very sharp activity reductions in oil as well as gas directed activity," he said in an email.
Exxon's U.S. natural-gas production doubled in 2010 when it acquired XTO Energy for $31 billion. Mr. Rosenthal said the company has driven down operating costs on XTO drilling projects in the 18 months since the acquisition.
The company hopes to export its know-how to overseas unconventional oil and gas fields; it said it drilled two wells into a Polish shale in the fourth quarter, although neither had commercial quantities of natural gas.
Exxon sold $6.9 billion in assets in the quarter, far more than the $1 billion to $1.7 billion reported in recent quarters. Mr. Rosenthal said the figure didn't mark a change in the company's divestment plans but more likely represented the timing of deals which can take many months or even years to come together.
Isabel Ordonez contributed to this article.
Credit: By Tom Fowler
Subject: Natural gas; Petroleum industry; Corporate profits
Location: United States--US
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 1, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 918831496
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/918831496?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Comeback Kids: Corn, Oil, Tin --- Battered Just Weeks Ago, Resources Shake Off Global Fears
Author: Pleven, Liam
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]01 Feb 2012: C.1. [Duplicate]
ProQuest document link
Abstract:
Commodity prices are surging again, rebounding sharply from the steep declines late last year, as buyers gain confidence Europe's debt problems won't cascade out of control and destroy demand. Some investors are betting further gains lie ahead, believing the U.S. economy is gathering strength or that China and other fast-growing Asian economies will remain voracious consumers of the raw materials needed to build homes, cars, appliances and consumer electronics.
Full text: Commodity prices are surging again, rebounding sharply from the steep declines late last year, as buyers gain confidence Europe's debt problems won't cascade out of control and destroy demand.
Copper, aluminum and other industrial metals that can serve as manufacturing barometers shot up by double digits in percentage terms in January, led by tin's 29% gain.
Precious metals also have climbed sharply, with gold up 11% and silver 19% in 2012. And prices for vital crops are rising, with corn up 10% and wheat 15% since mid-December.
The gains are a striking reversal from last year's fourth quarter, when commodity prices tanked along with other risky assets as concern mounted about Europe's troubles. At their December lows, copper and corn had both fallen 12% from their peaks for the quarter, oil had dropped 9%, and gold was down 14%. Tin had shed 19% of its value.
The about-face is paying off for investors who held onto commodities despite the prior drops.
"Obviously, we felt a little pain toward the back end of last year, but it's come roaring back this year," said Carlton Neel, co-manager of the Virtus Alternatives Diversifier fund, a mutual fund with about $180 million in assets. Mr. Neel's economic outlook wasn't so gloomy, and the fund's allocation to commodities increased to 17.3% in October and November, above the 15% benchmark.
Amid the recent rally, Ric Deverell, global head of commodities research at Credit Suisse, dubbed 2012 the Year of the Rebound in a research note mid-month. "The fear of a really big macroeconomic event had not materialized," he said in an interview. "Prices had overshot."
To be sure, Europe and the rest of the world remain vulnerable to economy-rattling shocks that could curtail demand. Investors and traders also cut their bets on many commodities in 2011, and while wagers have started to rise this year, the number of outstanding contracts to buy or sell is in many cases still lower.
Energy commodities, moreover, have lagged behind during the recent rally, with natural gas dropping 7.7% Tuesday to put it down 16% this year, and U.S. oil prices down 0.4% in January, though up 5% from mid-December lows.
The Dow Jones-UBS Commodity Index, about a third of which is devoted to energy, is up 2.5% this year, after falling in 2011.
Commodities also are notoriously volatile, and some metals prices pulled back this week. While some goods that have gotten pricier are in tight supply, helping drive gains, others are relatively abundant, which could undercut rallies. Even some materials that have seen sharp increases recently remain far below 2011 highs, which included a number of records.
But for now, prices for many materials are benefiting as investors who entered the year bracing for the worst economic news weigh rosier outcomes.
Most of the recent gains came before the Federal Reserve's plan to keep interest rates low through 2014 became public last week, but that move could fuel the rally. Similar Fed moves in recent years have stirred buying interest in industrial building blocks.
"We definitely see an impact" from that announcement, said David Greely, chief commodities strategist at Goldman Sachs Group. It will particularly boost gold, which is often viewed as a hedge against the risk of inflation, but also encourage those who believe demand for oil, copper and other commodities will keep prices high, he said.
"It gives people more confidence in the economic recovery," Mr. Greely said.
Some investors are betting further gains lie ahead, believing the U.S. economy is gathering strength or that China and other fast-growing Asian economies will remain voracious consumers of the raw materials needed to build homes, cars, appliances and consumer electronics.
"We're still a big commodity bull," said Mark Iwamoto, president of Iwamoto, Kong Wealth Management Group, based in Irvine, Calif., which manages about $350 million for individual investors. Going into the fourth quarter of 2011, Mr. Iwamoto said the firm had about 5% to 6% of its assets in commodities, but it had increased that to 7% to 10% coming into 2012. Others are following suit, he added: "Investors are reinstating positions that they may have liquidated late last year."
Government figures bear that out. The number of open copper contracts is up 22% since the end of 2011, after declining 30% last year, according to data from the U.S. Commodity Futures Trading Commission. Open interest in gold, corn and cotton also declined last year but is up 6%, 8% and 11%, respectively, for those materials this year.
For those investors, fears appear to be receding that Europe's problems could lead to a wider crisis that cuts into the appetite for raw materials around the world. Late last year, Goldman Sachs described that risk as a "whirlpool," but now, Mr. Greely said, "the whirlpool seems to be at a greater distance."
Credit: By Liam Pleven
Subject: Commodity prices; Gold; Copper; Corn
Classification: 3400: Investment analysis & personal finance; 8400: Agriculture industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.1
Publication year: 2012
Publication date: Feb 1, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 918908290
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/918908290?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon to Keep Foot on Gas Pedal
Author: Fowler, Tom
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]01 Feb 2012: B.1.
ProQuest document link
Abstract:
Bill Herbert, co-head of research at energy investment bank Simmons & Co. International, said it would take more than just a drop in natural-gas drilling to reduce the surplus, but also a cut in oil drilling since oil wells often produce large amounts of natural gas at the same time.
Full text: Exxon Mobil Corp., the largest natural-gas producer in the U.S., said it has no intention of curtailing gas production even as analysts predict prices for the fuel could remain at a historically low level through next year.
The oil-and-gas giant, which reported a 1.6% rise in fourth-quarter profit Tuesday, said it has no plans to cut back on the number of drilling rigs active in North America. Its fourth-quarter U.S. gas production was up 3.5%, while its gas production globally was down 6.6%.
A growing percentage of the company's roughly 70 land-based drilling rigs in the U.S. are being shifted to explore underground formations believed to hold large quantities of liquid fuels that can fetch higher prices than gas, such as ethane, propane and butane. But these areas also contain gas, meaning Exxon will continue to contribute to the glut of the fuel in the U.S.
Exxon said it believed the fuel would continue to attract new consumers. "We remain bullish on the demand side of natural gas as an energy source in the U.S.," said David Rosenthal, vice president of investor relations.
Exxon's decision to continue producing natural gas is in stark contrast to smaller competitors, such as Chesapeake Energy Corp., which said last week it would slash its U.S. natural-gas drilling in half in response to low prices. And it helped send natural-gas futures prices down 21 cents, or 8%, to $2.503 per million British thermal units Tuesday in trading on the New York Mercantile Exchange.
Exxon, the world's largest publicly traded energy company, also reported a profit of $9.4 billion, or $1.97 a share, up from $9.25 billion, or $1.85 a share, a year earlier. Revenue increased 16% to $121.61 billion.
The results beat analyst expectations of $1.96 a share, helped by stronger oil prices and higher-than-expected asset sales. Oil prices were over $100 a barrel in the fourth quarter.
Shares of Exxon fell 2.1% to $83.74 in New York Stock Exchange trading, largely in reaction to lower-than-expected global production figures. Quarterly output fell 9% to 4.53 million barrels of oil equivalent per day, mainly because of declining oil-field productivity.
U.S. natural-gas prices declined steeply over the past several years due to a boom in gas production. The successful marriage of two techniques -- horizontal drilling and hydraulic fracturing, where millions of gallons of water, sand and chemicals are pumped at high pressure into formations -- allowed companies to tap previously inaccessible oil and gas.
The low prices have led producers to cut back on gas drilling. From 1,450 rigs drilling for gas in January 2008, the number has fallen to 777 rigs as of last week, according to Baker Hughes Inc., and is expected to continue to drop. Over that same time period the number of rigs drilling for oil grew from 316 to 1,225.
Bill Herbert, co-head of research at energy investment bank Simmons & Co. International, said it would take more than just a drop in natural-gas drilling to reduce the surplus, but also a cut in oil drilling since oil wells often produce large amounts of natural gas at the same time.
"The quickest road-to-Rome, however, would be a sharp correction in oil prices. This would result in very sharp activity reductions in oil as well as gas directed activity," he said.
Exxon's U.S. natural-gas production doubled in 2010 when it acquired XTO Energy.
The company hopes to export its know-how to overseas unconventional oil and gas fields; it said it drilled two wells into a Polish shale in the fourth quarter, although neither had commercial quantities of natural gas.
Exxon sold $6.9 billion in assets in the quarter, far more than the $1 billion to $1.7 billion reported in recent quarters. Mr. Rosenthal said the figure didn't mark a change in divestment plans but more likely represented the timing of deals, which can take many months or even years to come together.
---
Isabel Ordonez contributed to this article.
Credit: By Tom Fowler
Subject: Natural gas; Petroleum industry; Corporate profits; Petroleum production
Location: United States--US
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Classification: 9180: International; 9110: Company specific; 8510: Petroleum industry; 5310: Production planning & control
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.1
Publication year: 2012
Publication date: Feb 1, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 918908291
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/918908291?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Incomes Climb in Energy-Rich States; Manufacturing, Housing Pain Is Widespread, but Oil Lifts Some Areas
Author: Cronin, Brenda
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]01 Feb 2012: n/a.
ProQuest document link
Abstract:
The areas that got hit really got hit hard. [...] far into the recovery, "some metro areas are doing quite well, while others took it on the chin," Mr. Green said, noting that the bright spot among the findings "is very much an oil story."
Full text: Oil and gas propelled resource-rich states through the recession, while manufacturing losses and the housing bust ripped a hole in the Rust Belt that has yet to be repaired.
A new study reflects a stark divide in economic fortunes across the country, with 38 states seeing household income decline from recession to recovery, while 13 reported gains, propelled by petroleum, shale and other energy commodities.
The District of Columbia notched the greatest increase over the 2007-2010 period, with an 8.1% jump in income. That was more than double the pace of the next-highest gainer, Wyoming, where natural resources including oil and minerals lifted incomes 3.6%. The gains in the nation's capital, according to the report, are due in part to employment by the federal government.
Across the country, median annual household income--meaning the figure at the middle of the middle--fell by 3.5%, to $51,287 from $53,168 between 2007 and 2010. That's according to a comprehensive analysis of Census bureau data released Wednesday by former Census officials Gordon Green and John Coder.
"The magnitude of the declines is always bigger than the magnitude of the increases," Mr. Green said. "The areas that got hit really got hit hard."
Thus far into the recovery, "some metro areas are doing quite well, while others took it on the chin," Mr. Green said, noting that the bright spot among the findings "is very much an oil story."
The report examines pretax income levels, measured in 2010 dollars, not only for the nation's four broad geographic regions, but also all 50 states and 297 metropolitan areas, a category that is generally larger than a city and can encompass several surrounding counties.
The worst economic downturn since the Great Depression left no part of the country unscathed. All four regions saw incomes decline, with the Midwest sustaining the most significant drop--4.7%, to $49,710 from $52,177--and the South the mildest--2.5%, to $47,389 from $48,620.
Among the nine geographic divisions within the four regions, only one bucked the national trend and saw income climb during the three-year period. In Texas, Oklahoma, Arkansas and Louisiana, the four oil-patch states of the West South Central division, incomes rose 0.3% between 2007 and 2010.
At the other end of the spectrum, the five Midwest states of the East North Central division: Indiana, Illinois, Michigan, Ohio and Wisconsin, watched incomes decline 5.7%, the sharpest drop in the nation, as car makers and their suppliers saw business shrivel during and after the crisis.
"These regional shocks can last as long as several decades," said Michael Greenstone, professor of environmental economics at the Massachusetts Institute of Technology. "They don't just go away when the recession ends."
U.S. communities hardest hit by the recessions between 1980 and 1982 never joined the recovery elsewhere in the country, Mr. Greenstone said, findings documented in the 2010 paper, "An Economic Strategy to Renew American Communities," he co-authored for the Hamilton Project at the Brookings Institution.
The paper notes that average incomes in the 20% of the U.S. counties worst hit by the 1980-82 downturns grew at one-quarter the rate of the rest of the country during the subsequent 30 years.
Michigan, which led the nation with a nearly double-digit drop in income, registered pain that went beyond autos and manufacturing. Three of the state's metropolitan areas--Detroit, Flint and Ann Arbor--were among the nation's worst for income declines, but Ann Arbor's woes also stemmed from softness in the high-technology sector.
On the other hand, Texas, among the states with the greatest income gains, is home to seven of the top 10 metro areas for income gains. While many of those Texas metro areas, including Odessa and Longview-Marshall, owe their increases to energy, other industries figure in the Lone Star state's expansion, such as trade, transportation, prison management and meat-packing.
Beyond the state and regional level, the report details how metropolitan areas measure up according to standard economic benchmarks such as the number of new households created, as well as on a more recent metric: the dollar threshold for the top one-percent of earners.
The booming oil states of the West South Central division tied with the eight-state Mountain division (Arizona, Colorado, Idaho, New Mexico, Montana, Utah, Nevada and Wyoming) for the fastest pace of household formation, both notching 5.8% increases in numbers of new households between 2007 and 2010.
The brisk pace of household formation in the Mountain states of the West is due in part to two factors, according to Kenneth M. Johnson, senior demographer at the Carsey Institute and a professor of sociology at the University of New Hampshire. For one, the area's population is relatively young and forming new households. In addition, most--but not all--of the eight states in the division have seen a steady stream of migration, bringing in new people.
Like the cluster of energy-producing states, the areas with the highest-earning one-percenters tend to be neighbors. Among the top 10 of the the nation's almost 300 metropolitan areas with the highest one percentile of incomes, nine are in Connecticut, New York and New Jersey; California's Silicon Valley rounds out the list at number 10.
Stamford, Conn., has the highest level: $906,006; New York City and Northeastern New Jersey, at $616,468, took fourth place, while San Francisco and Silicon Valley's top one-percent threshold is $560,053. Consistent with Census bureau practice, the incomes reported don't include capital gains, which means the actual figures for the top one percent could well be higher than those in the report.
The study was prepared by Sentier Research, an Annapolis, Md., firm run by Messrs. Coder and Green. The analysts examined two batches of Census data, both encompassing interviews of 3.5 million households, during two three-year periods that span the onset of the recession and the subsequent recovery.
The first slate of figures covers the years 2005-2007 and the second 2008-2010. (The most recent recession dates from December 2007 to June 2009, according to the Bureau of Economic Research.) Sentier, which also makes software for interpreting Census data, advises clients on demographics, income forecasting and other areas.
Write to Brenda Cronin at brenda.cronin@wsj.com
Credit: By Brenda Cronin
Subject: Recessions; Studies; Environmental economics; Family income
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 1, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 919033559
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/919033559?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Patch Bucks Income Drop; Energy-Rich Areas Weather the Downturn, but Manufacturing Pain Is Widespread
Author: Cronin, Brenda
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 Feb 2012: n/a.
ProQuest document link
Abstract:
A new study reflects a stark divide in economic fortunes across the country, with 38 states seeing household income decline during the period from recession to recovery, while the remainder reported gains, propelled by petroleum, shale and other energy commodities.
Full text: Oil and gas propelled resource-rich states through the recession, while manufacturing losses and the housing bust ripped a hole in the Rust Belt that has yet to be repaired.
A new study reflects a stark divide in economic fortunes across the country, with 38 states seeing household income decline during the period from recession to recovery, while the remainder reported gains, propelled by petroleum, shale and other energy commodities.
The District of Columbia notched the greatest increase over the 2007-2010 period, with an 8.1% jump in income, in large part because of federal-government employment. Other states and regions suffered under a double burden of dwindling industries and a burst housing bubble.
From 2007 to 2010, median annual household income fell across the country by 3.5% to $51,287. That's according to an analysis of Census data released Wednesday by former Census Bureau officials Gordon Green and John Coder.
"The magnitude of the declines is always bigger than the magnitude of the increases," Mr. Green said, noting that the bright spot among the findings "is very much an oil story."
One place buoyed by oil is Lafayette, La., where income rose by 12% from 2007 to 2010, to $47,200. Lafayette, 140 miles west of New Orleans, had a 6% unemployment rate in 2010, compared with a national rate above 9% for that year.
Among those riding the energy boom there is Guy "Trey" Ellison III. The 34-year-old works as a go-between, buying the rights to drill for oil and gas from landowners on behalf of energy firms. Laid off at the end of last year, he received half a dozen job offers almost immediately, he said, and went to work for a land brokerage. He expects to make $125,000 this year.
"I found a lot of opportunities out there," Mr. Ellison said. "I just picked one of them."
But energy-fueled prosperity is far from widespread, as the worst downturn since the Great Depression left no part of the country unscathed. All four regions saw incomes decline, with the Midwest sustaining the most significant drop--4.7%, to $49,710--and the South the mildest--2.5%, to $47,389.
Wednesday's report examines pretax income levels, measured in 2010 dollars, not only for the nation's four broad geographic regions, but all 50 states and the District of Columbia. It also measures 297 metropolitan areas, a category generally that is larger than a city and can encompass several surrounding counties.
Of the nine geographic divisions within the four regions, only one bucked the national trend and saw incomes climb. In Texas, Oklahoma, Arkansas and Louisiana, the four oil-patch states of the West South Central division, incomes rose 0.3% from 2007 to 2010.
Incomes in the five Midwest states of the East North Central division--Indiana, Illinois, Michigan, Ohio and Wisconsin--fell 5.7%, the sharpest drop in the nation, as car makers and their suppliers saw business shrivel during and after the downturn.
"These regional shocks can last as long as several decades," said Michael Greenstone, 3M professor of environmental economics at the Massachusetts Institute of Technology. "They don't just go away when the recession ends."
The report details how areas measured up according to economic benchmarks such as how many new households are added, reflecting factors including migration and new families. The oil-patch states of West South Central tied with the eight-state Mountain division (Arizona, Colorado, Idaho, New Mexico, Montana, Utah, Nevada and Wyoming) for the fastest pace of household formation, both notching 5.8% increases in numbers of new households between 2007 and 2010.
The report also studied a more recent metric: the dollar threshold for the top 1% of earners. Among the top 10 of the metropolitan areas with the highest one percentile of incomes, nine are in Connecticut, New York and New Jersey. California's Silicon Valley rounds out the list at No. 10.
The study was prepared by Sentier Research, an Annapolis, Md., firm run by Messrs. Coder and Green. The analysts examined two batches of Census data both encompassing interviews of 3.5 million households, during two three-year periods--2005 to 2007 and 2008 to 2010--that span the onset of the recession and the subsequent recovery.
Daniel Gilbert contributed to this article.
Write to Brenda Cronin at brenda.cronin@wsj.com
Credit: By Brenda Cronin
Subject: Recessions; Studies; Economic conditions; Environmental economics; Households; Family income
Location: Washington DC
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 2, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 919085813
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/919085813?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Kurds Seize on Iraqi Crisis to Advance Bid for Oil, Land
Author: Dagher, Sam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 Feb 2012: n/a.
ProQuest document link
Abstract:
The Kurds' goals include redrawing internal boundaries in Iraq, holding a referendum in disputed areas to decide whether Kurdistan or Baghdad should control their territory, and passing a long-stalled national oil law that would recognize the Kurdish contracts and formalize revenue-sharing with the central government.
Full text: MOSUL, Iraq--Iraq's Kurds are using a contract with Exxon Mobil Corp. and a national political crisis to strengthen their region's control of resource-rich patches of disputed land, raising the stakes in a long-running standoff with the central government in Baghdad.
Exxon Mobil's oil exploration and production deal with the Kurdistan Regional Government, announced in November, was effectively an endorsement by a global energy giant of development in Kurdish-controlled areas of northern Iraq, until then the domain of second-tier companies and wildcatters.
Despite opposition from Baghdad, Exxon Mobil is moving ahead with the project. It is now preparing for seismic studies and securing office space and accommodation for its staff in the Kurdish region's capital Erbil, a Kurdistan official said Monday.
Exxon Mobil declined to comment on the contract.
Kurds, meanwhile, are pointing to the Exxon Mobil deal to convince other major oil companies such as Total SA to sign on for other concessions, according to Kurdistan officials. Total declined to comment on its discussions with Kurdistan.
The semiautonomous Kurdistan region has signed more than 45 oil and gas deals and has been at odds with Baghdad for years over whether it has the authority to do so.
But the prominence of Exxon Mobil, and the fact that three of six exploration blocks awarded to the company are in disputed land in the northern provinces of Nineveh and Kirkuk, have entangled Exxon Mobil in simmering national and local feuds.
Kurdish leaders, who in addition to running their own virtual state in the north participate in the central government in Baghdad, are now openly using a conflict between Shiite Prime Minister Nouri al-Maliki and a Sunni-dominated faction in his coalition government to exact concessions from Baghdad on oil and land.
Kurds say they want to use a coming national conference--intended to resolve the political crisis in Baghdad--to settle their own disputes with the central government.
The Sunni faction on Tuesday ended a nearly six-week-long boycott of parliament and signaled it was ready to lift a boycott of cabinet meetings if a list of its own demands are met at the conference.
With Mr. Maliki depending on Kurdish support to help hold his government together, Kurdish leaders are looking to get Baghdad to compromise in exchange for their cooperation.
The Kurds' goals include redrawing internal boundaries in Iraq, holding a referendum in disputed areas to decide whether Kurdistan or Baghdad should control their territory, and passing a long-stalled national oil law that would recognize the Kurdish contracts and formalize revenue-sharing with the central government.
The timing, venue and agenda for the conference haven't been set. Mr. Maliki is expected to try to use Sunni Arab hostility toward Kurdish land claims in the north to avoid making major concessions to the Kurds.
He has already warned the Kurdistan government that its deal with Exxon Mobil could trigger a war in the area. His ministers have also accused the Kurds of oil smuggling, and threatened to end a service contract with Exxon Mobil in Iraq's south in retaliation.
Kurds have brushed off the threats. "We are dealing with these areas as part of Kurdistan," said a senior Kurdish official.
Some residents in the disputed areas view the Exxon Mobil deal as infringing on their own claims.
"The owners of the land, oil and all resources in Nineveh province are the Iraqi people in general and the people of Nineveh in particular," said Abdullah Humeidi Ajeel al-Yawer, leader of a powerful Sunni Arab tribe, in an interview in the northern city of Mosul, seat of Nineveh province.
Mr. Yawer also heads a political party that controls almost one-third of seats on the provincial council. "The central and local [Nineveh] governments must fix the situation and if they both are unable to do so, then we'll have our say," he added.
Mr. Yawer declined to say what he would do should the central and local governments' efforts fail. He commands thousands of armed tribesmen in his Shammar tribe, a group that was on the brink of war with Kurdish forces in 2005.
The U.S. and the U.N. stepped in to mediate that conflict and also facilitated a reconciliation between Nineveh's Gov. Atheel Nujaifi and the Kurdistan government.
With the departure of all U.S. soldiers from Iraq in December, tensions have risen again. Mr. Nujaifi called the Exxon Mobil deal a new wedge for militants to exploit. Militants "want to put us in confrontation with the [Kurdistan] region," he said in an interview.
U.S. diplomats in Baghdad said they hope the situation will remain under control because of common economic interests, the promise of oil-fueled prosperity and development in the area and the moderating influence of Turkey, which shares borders, business and political ties with all actors in northern Iraq.
Turkey has a strategic interest in boosting oil and gas exports from Iraq's north through its territory, analysts say.
Turkey's involvement could pave the way for the Kurdish government to exchange fraying ties with Baghdad for Turkish protection, says Joost Hiltermann, a senior analyst with the International Crisis Group and expert on Iraq's land disputes.
"You could see the emergence of an oil-rich, Kurdish-run Turkish vassal state in Iraq," he says.
Write to Sam Dagher at sam.dagher@wsj.com
Credit: By Sam Dagher
Subject: Kurds; Iraq War-2003
Location: Iraq
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 2, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 919085884
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/919085884?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Kurds Seize on Iraqi Crisis to Advance Bid for Oil, Land
Author: Dagher, Sam
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]02 Feb 2012: A.7. [Duplicate]
ProQuest document link
Abstract:
The Kurds' goals include redrawing internal boundaries in Iraq, holding a referendum in disputed areas to decide whether Kurdistan or Baghdad should control their territory, and passing a long-stalled national oil law that would recognize the Kurdish contracts and formalize revenue-sharing with the central government.
Full text: MOSUL, Iraq -- Iraq's Kurds are using a contract with Exxon Mobil Corp. and a national political crisis to strengthen their region's control of resource-rich patches of disputed land, raising the stakes in a long-running standoff with the central government in Baghdad.
Exxon Mobil's oil exploration and production deal with the Kurdistan Regional Government, announced in November, was effectively an endorsement by a global energy giant of development in Kurdish-controlled areas of northern Iraq, until then the domain of second-tier companies and wildcatters.
Despite opposition from Baghdad, Exxon Mobil is moving ahead with the project. It is now preparing for seismic studies and securing office space and accommodation for its staff in the Kurdish region's capital Erbil, a Kurdistan official said Monday.
Exxon Mobil declined to comment on the contract.
Kurds, meanwhile, are pointing to the Exxon Mobil deal to convince other major oil companies such as Total SA to sign on for other concessions, according to Kurdistan officials. Total declined to comment on its discussions with Kurdistan.
The semiautonomous Kurdistan region has signed more than 45 oil and gas deals and has been at odds with Baghdad for years over whether it has the authority to do so.
But the prominence of Exxon Mobil, and the fact that three of six exploration blocks awarded to the company are in disputed land in the northern provinces of Nineveh and Kirkuk, have entangled Exxon Mobil in simmering national and local feuds.
Kurdish leaders, who in addition to running their own virtual state in the north participate in the central government in Baghdad, are now openly using a conflict between Shiite Prime Minister Nouri al-Maliki and a Sunni-dominated faction in his coalition government to exact concessions from Baghdad on oil and land.
Kurds say they want to use a coming national conference -- intended to resolve the political crisis in Baghdad -- to settle their own disputes with the central government.
The Sunni faction on Tuesday ended a nearly six-week-long boycott of parliament and signaled it was ready to lift a boycott of cabinet meetings if a list of its own demands are met at the conference.
With Mr. Maliki depending on Kurdish support to help hold his government together, Kurdish leaders are looking to get Baghdad to compromise in exchange for their cooperation.
The Kurds' goals include redrawing internal boundaries in Iraq, holding a referendum in disputed areas to decide whether Kurdistan or Baghdad should control their territory, and passing a long-stalled national oil law that would recognize the Kurdish contracts and formalize revenue-sharing with the central government.
The timing, venue and agenda for the conference haven't been set. Mr. Maliki is expected to try to use Sunni Arab hostility toward Kurdish land claims in the north to avoid making major concessions to the Kurds.
Some residents in the disputed areas view Exxon Mobil's deal as infringing on their own claims.
"The owners of the land, oil and all resources in Nineveh province are the Iraqi people in general and the people of Nineveh in particular," said Abdullah Humeidi Ajeel al-Yawer, leader of a powerful Sunni Arab tribe, in an interview in the northern city of Mosul, seat of Nineveh province.
Mr. Yawer also heads a political party that controls almost one-third of seats on the provincial council. "The central and local [Nineveh] governments must fix the situation and if they both are unable to do so, then we'll have our say," he added.
Mr. Yawer declined to say what he would do should the central and local governments' efforts fail. He commands thousands of armed tribesmen in his Shammar tribe, a group that was on the brink of war with Kurdish forces in 2005.
The U.S. and the U.N. stepped in to mediate that conflict and also facilitated a reconciliation between Nineveh's Gov. Atheel Nujaifi and the Kurdistan government.
With the departure of all U.S. soldiers from Iraq in December, tensions have risen again. Mr. Nujaifi called the Exxon Mobil deal a new wedge for militants to exploit. Militants "want to put us in confrontation with the [Kurdistan] region," he said.
U.S. diplomats in Baghdad said they hope the situation will remain under control because of common economic interests, the promise of oil-fueled prosperity and development in the area and the moderating influence of Turkey, which shares borders, business and political ties with all actors in northern Iraq.
Turkey has a strategic interest in boosting oil and gas exports from Iraq's north through its territory, analysts say.
Turkey's involvement could pave the way for the Kurdish government to exchange fraying ties with Baghdad for Turkish protection, says Joost Hiltermann, a senior analyst with the International Crisis Group and expert on Iraq's land disputes.
"You could see the emergence of an oil-rich, Kurdish-run Turkish vassal state in Iraq," he says.
Credit: By Sam Dagher
Subject: Contracts; Politics; Kurds; Oil; Land
Location: Kurdistan Iraq
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Classification: 9180: International; 8510: Petroleum industry; 1530: Natural resources
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.7
Publication year: 2012
Publication date: Feb 2, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 919206700
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/919206700?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. News: Oil Patch Bucks Income Drop --- Energy-Rich Areas Weather the Downturn, but Manufacturing Pain Is Widespread
Author: Cronin, Brenda
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]02 Feb 2012: A.3.
ProQuest document link
Abstract:
A new study reflects a stark divide in economic fortunes across the country, with 38 states seeing household income decline during the period from recession to recovery, while the remainder reported gains, propelled by petroleum, shale and other energy commodities.
Full text: Oil and gas propelled resource-rich states through the recession, while manufacturing losses and the housing bust ripped a hole in the Rust Belt that has yet to be repaired.
A new study reflects a stark divide in economic fortunes across the country, with 38 states seeing household income decline during the period from recession to recovery, while the remainder reported gains, propelled by petroleum, shale and other energy commodities.
The District of Columbia notched the greatest increase over the 2007-2010 period, with an 8.1% jump in income, in large part because of federal-government employment. Other states and regions suffered under a double burden of dwindling industries and a burst housing bubble.
From 2007 to 2010, median annual household income fell across the country by 3.5% to $51,287. That's according to an analysis of Census data released Wednesday by former Census Bureau officials Gordon Green and John Coder.
"The magnitude of the declines is always bigger than the magnitude of the increases," Mr. Green said, noting that the bright spot among the findings "is very much an oil story."
One place buoyed by oil is Lafayette, La., where income rose by 12% from 2007 to 2010, to $47,200. Lafayette, 140 miles west of New Orleans, had a 6% unemployment rate in 2010, compared with a national rate above 9% for that year.
Among those riding the energy boom there is Guy "Trey" Ellison III. The 34-year-old works as a go-between, buying the rights to drill for oil and gas from landowners on behalf of energy firms. Laid off at the end of last year, he received half a dozen job offers almost immediately, he said, and went to work for a land brokerage. He expects to make $125,000 this year.
"I found a lot of opportunities out there," Mr. Ellison said. "I just picked one of them."
But energy-fueled prosperity is far from widespread, as the worst downturn since the Great Depression left no part of the country unscathed. All four regions saw incomes decline, with the Midwest sustaining the most significant drop -- 4.7%, to $49,710 -- and the South the mildest -- 2.5%, to $47,389.
Wednesday's report examines pretax income levels, measured in 2010 dollars, not only for the nation's four broad geographic regions, but all 50 states and the District of Columbia. It also measures 297 metropolitan areas, a category generally that is larger than a city and can encompass several surrounding counties.
Of the nine geographic divisions within the four regions, only one bucked the national trend and saw incomes climb. In Texas, Oklahoma, Arkansas and Louisiana, the four oil-patch states of the West South Central division, incomes rose 0.3% from 2007 to 2010.
Incomes in the five Midwest states of the East North Central division -- Indiana, Illinois, Michigan, Ohio and Wisconsin -- fell 5.7%, the sharpest drop in the nation, as car makers and their suppliers saw business shrivel during and after the downturn.
"These regional shocks can last as long as several decades," said Michael Greenstone, 3M professor of environmental economics at the Massachusetts Institute of Technology. "They don't just go away when the recession ends."
The report details how areas measured up according to economic benchmarks such as how many new households are added, reflecting factors including migration and new families. The oil-patch states of West South Central tied with the eight-state Mountain division (Arizona, Colorado, Idaho, New Mexico, Montana, Utah, Nevada and Wyoming) for the fastest pace of household formation, both notching 5.8% increases in numbers of new households between 2007 and 2010.
The report also studied a more recent metric: the dollar threshold for the top 1% of earners. Among the top 10 of the metropolitan areas with the highest one percentile of incomes, nine are in Connecticut, New York and New Jersey. California's Silicon Valley rounds out the list at No. 10.
The study was prepared by Sentier Research, an Annapolis, Md., firm run by Messrs. Coder and Green. The analysts examined two batches of Census data both encompassing interviews of 3.5 million households, during two three-year periods -- 2005 to 2007 and 2008 to 2010 -- that span the onset of the recession and the subsequent recovery.
---
Daniel Gilbert contributed to this article.
Credit: By Brenda Cronin
Subject: Studies; Households; Family income; Economic statistics; Economic conditions -- United States--US
Location: United States--US
Classification: 9190: United States; 1110: Economic conditions & forecasts
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.3
Publication year: 2012
Publication date: Feb 2, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 919209914
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/919209914?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Crude Oil Settles at Six-Week Low
Author: Bird, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 Feb 2012: n/a.
ProQuest document link
Abstract:
Data released Wednesday show U.S. refineries last week cut crude processing to a nine-month low of 14.2 million barrels a day, helping inventories rise by a higher-than-expected 4.2 million barrels.
Full text: Crude-oil prices tumbled to a six-week low, settling below $97 for the first time since Dec. 19 on weak demand and rising supplies.
Light, sweet crude for March delivery fell $1.25, or 1.3%, to settle at $96.36 a barrel on the New York Mercantile Exchange. The contract has shed 3.4% over the past five sessions.
U.S. oil demand, at a 13-year low last week, is "abysmal," said Kyle Cooper, managing partner at IAF Energy Advisors in Houston.
The combination of falling demand and resulting rising inventories in the world's biggest oil consumer is putting pressure on prices, which may make a further downward move toward $90 a barrel, last hit in October, he said.
Data released Wednesday show U.S. refineries last week cut crude processing to a nine-month low of 14.2 million barrels a day, helping inventories rise by a higher-than-expected 4.2 million barrels. At Cushing, Okla., the delivery point for the Nymex crude-oil contract, inventories rose to a six-week high.
Meanwhile, North Sea Brent crude, the European benchmark, advanced for a third day, up 51 cents, or 0.5%, to $112.07 a barrel.
Analysts said Brent is gaining as refiners line up alternatives to Iranian oil ahead of sanctions that include a European Union embargo. Brent's premium to U.S. crude at Cushing topped $15 a barrel, the highest level since November.
"The worries over Iran are supporting Brent" more than they are the U.S. benchmark, said Tom Bentz, director at BNP Paribas Prime Brokerage. "It almost looks as if they are two separate commodities. There is really not much they have in common at this point."
U.S. oil use posted the biggest single-week drop in 14 years to set a 13-year average daily low of 17.653 million barrels a day, according to the Energy Information Administration. Demand was 6% below a year ago as gasoline, the most widely used petroleum product, fell 1.6% from a week earlier and 6.8% from a year ago. The gasoline demand drop, to below eight million barrels a day, came as retail prices averaged their highest-ever January level. Most U.S. refiners buy crude oil that is priced nearer to Brent crude than to Nymex prices.
Gasoline stocks rose by three million barrels last week, far surpassing the rise of 200,000 barrels that was expected. Stocks now are sufficient to cover nearly 29 days of demand at current levels, the highest coverage in 13 years.
Reformulated gasoline blendstock for March delivery fell 2.33 cents, or 0.8%, to settle at $2.8689 a gallon, while March heating oil rose 0.74 cent, or 0.2%, to $3.0529 a gallon.
Write to David Bird at david.bird@dowjones.com
Credit: By David Bird
Subject: Petroleum industry
Location: United States--US
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 3, 2012
Section: Marke ts
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 919560282
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/919560282?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Crude Oil Settles At Six-Week Low
Author: Bird, David
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]03 Feb 2012: C.4.
ProQuest document link
Abstract:
Data released Wednesday show U.S. refineries last week cut crude processing to a nine-month low of 14.2 million barrels a day, helping inventories rise by a higher-than-expected 4.2 million barrels.
Full text: Crude-oil prices tumbled to a six-week low, settling below $97 for the first time since Dec. 19 on weak demand and rising supplies.
Light, sweet crude for March delivery fell $1.25, or 1.3%, to settle at $96.36 a barrel on the New York Mercantile Exchange. The contract has shed 3.4% over the past five sessions.
U.S. oil demand, at a 13-year low last week, is "abysmal," said Kyle Cooper, managing partner at IAF Energy Advisors in Houston.
The combination of falling demand and resulting rising inventories in the world's biggest oil consumer is putting pressure on prices, which may make a further downward move toward $90 a barrel, last hit in October, he said.
Data released Wednesday show U.S. refineries last week cut crude processing to a nine-month low of 14.2 million barrels a day, helping inventories rise by a higher-than-expected 4.2 million barrels. At Cushing, Okla., the delivery point for the Nymex crude-oil contract, inventories rose to a six-week high.
Meanwhile, North Sea Brent crude, the European benchmark, advanced for a third day, up 51 cents, or 0.5%, to $112.07 a barrel.
Analysts said Brent is gaining as refiners line up alternatives to Iranian oil ahead of sanctions that include a European Union embargo. Brent's premium to U.S. crude at Cushing topped $15 a barrel, the highest level since November.
"The worries over Iran are supporting Brent" more than they are the U.S. benchmark, said Tom Bentz, director at BNP Paribas Prime Brokerage. "It almost looks as if they are two separate commodities. There is really not much they have in common at this point."
U.S. oil use posted the biggest single-week drop in 14 years to set a 13-year average daily low of 17.653 million barrels a day, according to the Energy Information Administration. Demand was 6% below a year ago as gasoline, the most widely used petroleum product, fell 1.6% from a week earlier and 6.8% from a year ago.
The gasoline demand drop, to below eight million barrels a day, came as retail prices averaged their highest-ever January level. Most U.S. refiners buy crude oil that is priced nearer to Brent crude than to Nymex prices.
Gasoline stocks rose by three million barrels last week, far surpassing the rise of 200,000 barrels that was expected. Stocks now are sufficient to cover nearly 29 days of demand at current levels, the highest coverage in 13 years.
Reformulated gasoline blendstock for March delivery fell 2.33 cents, or 0.8%, to settle at $2.8689 a gallon.
March heating oil rose 0.74 cent, or 0.2%, to $3.0529 a gallon.
Credit: By David Bird
Subject: Crude oil; Commodity prices
Location: United States--US
Classification: 8510: Petroleum industry; 3400: Investment analysis & personal finance; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Feb 3, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 919627711
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/919627711?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Partnerships Keep Rolling
Author: Hough, Jack
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]04 Feb 2012: n/a.
ProQuest document link
Abstract:
MLPs come with risks. Because they often borrow money to pay for new projects, a sharp rise in interest rates could eat into their income.
Full text: A quirky and complex investment class called master limited partnerships has been one of the market's best performers of late. The widely followed Alerian MLP index of 50 energy MLPs returned 14% in 2011, including dividends, versus 2.1% for the Standard & Poor's 500-stock index.
While MLPs can be risky, there is reason to believe they still hold appeal.
MLPs are partnerships that trade like stocks and pass their income directly to investors.
The yields, paid in the form of "distributions" rather than dividends, can be juicy. The Alerian index yields about 6%--triple that of the S&P 500 and about double what investors can get from 10-year, A-rated corporate bonds.
While the income from MLPs is taxable at rates up to 35%, investors often can defer taxes on the bulk of it. That is because MLPs distribute not only cash income but also paper write-offs for their asset depreciation. Investors pay current taxes only on the income that exceeds depreciation. The rest--often 80% or more of the total--serves to reduce the investor's "cost basis," and is taxed only when the investment is sold.
Regular dividends, by contrast, are taxed in the year they are received, currently at a top rate of 15%.
MLPs have their complications. Some, such as pipeline MLPs, can draw income from many different states. A wealthy investor with a portfolio of MLPs can end up having to fill out many extra forms.
Also, MLP positions held in retirement accounts can produce something called "unrelated business taxable income." Large amounts of that can require investors to file additional tax returns and make extra payments.
There are fewer than 100 MLPs that trade on major exchanges, and together they have a stock-market value smaller than that of Exxon Mobil. Many operate in the stable "midstream" part of the energy business, merely collecting a toll for transporting and storing oil and gas. That typically is steadier than exploration or refining operations.
John Edwards, an analyst at investment bank Morgan Keegan, estimates that the amount that MLPs will pay to investors as income will rise 5% to 8% this year. With investors having snapped up many of the larger MLPs last year, he thinks the best opportunities lie in smaller players. Among them: EV Energy Partners, which yields 4.6%; Crosstex Energy, 7.6%; and Genesis Energy, 6.3%. He predicts that each of these three will offer double-digit total returns over the next 12 months.
Jerry Swank, founder of Swank Capital, an MLP investment firm, favors players in the natural-gas-liquids business. He likes Enterprise Products Partners, which yields 5.1%; Oneok (an MLP-owning corporation), 2.9%; and Targa Resources Partners, 6.1%. Even though natural-gas prices are slumping, drilling for gas also yields valuable liquids such as butane and propane. That keeps production high, says Mr. Swank.
MLPs come with risks. Because they often borrow money to pay for new projects, a sharp rise in interest rates could eat into their income.
The biggest threat might be a plunge in energy prices, which could lead to less demand for pipeline services. But as this column discussed a month ago, U.S. production is booming as new technologies unlock vast deposits of oil and gas trapped in porous shale, and oil prices remain strong.
There are pros and cons for investors looking for MLP exposure via mutual funds. The pros: Funds provide easy diversification without requiring extra paperwork come tax time, even in retirement accounts.
The cons vary by vehicle. Exchange-traded notes like JP Morgan Alerian MLP Index (annual expenses: 0.85%) use derivatives to mimic MLP performance. But investors must pay regular taxes on the income they receive, and because the notes are issued by financial firms, investors could lose if the issuer goes belly up.
Exchange-traded funds, such as Alerian MLP (also 0.85% in expenses), preserve the tax breaks on income, but must themselves pay corporate taxes--a drag on returns in good years. In 2011, while the underlying index returned 17%, the ETF returned 10%. (When the index falls, the ETF does better because its tax bill shrinks.)
Traditional mutual funds like Cushing MLP Premier and Steelpath MLP Income have upfront sales charges that can top 5%, on top of ongoing expenses. Kinder Morgan Management and Enbridge Energy Management are what is known as I-shares. They distribute shares rather than cash, so investors don't get spendable income, but pay taxes only when they sell.
Sure, MLPs are high-maintenance, but for many investors they are worth the bother. If getting a tax-advantaged 6% in income were simple these days, the opportunity probably wouldn't last for long.
Jack Hough is a columnist at . Email:
Credit: By Jack Hough
Subject: Master limited partnerships; Pipelines; Natural gas; Investments; Retirement; Athletic drafts & trades
Company / organization: Name: Standard & Poors Corp; NAICS: 511120, 523999, 541519, 561450
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 4, 2012
column: Upside
Section: Personal Finance
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 919710527
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/919710527?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Crude Falls 1% as Oil Contracts Diverge
Author: DiColo, Jerry A; Kent, Sarah
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 Feb 2012: n/a.
ProQuest document link
Abstract:
A glut of oil is re-emerging in the U.S. at the same time supply issues are cropping up in Europe, said Andy Lipow, president of Lipow Oil Associates, an energy consulting firm. Because of pipeline bottlenecks in the U.S. Midwest, U.S. and Canadian oil aren't able to reach areas that are paying more for overseas crude.
Full text: NEW YORK--The world's two most important crude contracts headed in different directions, with the price premium for European crude over U.S. crude growing to the largest level in three months due to rising domestic supplies and concerns of shortages overseas.
The premium for Europe's Brent crude over U.S.-traded West Texas Intermediate oil futures rose to $19.02, the widest gap since November. As recently as Jan. 3, the gap was under $10.
The sharp widening over the last few weeks highlights that the deep divisions between U.S. and global oil markets that appeared last year remain in place.
On Monday, light, sweet crude for March delivery settled 93 cents, or 1%, lower at $96.91 a barrel on the Nymex. Brent crude on the ICE futures exchange settled $1.35 higher at $115.93 a barrel.
A glut of oil is re-emerging in the U.S. at the same time supply issues are cropping up in Europe, said Andy Lipow, president of Lipow Oil Associates, an energy consulting firm. Because of pipeline bottlenecks in the U.S. Midwest, U.S. and Canadian oil aren't able to reach areas that are paying more for overseas crude.
"I call it a tale of two cities," said Mr. Lipow.
A confluence of factors has led to the widening spread. In part, it is due to rising supplies in the U.S. Stockpiles of crude oil last week rose to the highest level since mid-December. But the supply concerns overseas have been more important. An impending embargo of Iranian oil from the European Union has led to worries that Europe's oil prices will increase as supplies become tighter. South Sudan also has decided to shut down its oil production amid a furious dispute with Sudan over oil-transit fees--further tightening the European market.
And at the same time, demand in Asia for Europe's oil is also rising.
According to shipping fixtures examined by The Wall Street Journal, at least 12 million barrels of North Sea Forties crude were booked to travel to Asia between December and February, a trading move virtually unheard of before late last year.
Forties crude is the largest component of Dated Brent, the physical oil benchmark that typically trades in line with Brent futures.
"In this way, Dated Brent is acting as a true global benchmark," JBC Energy said in a note published last week.
The situation has motivated traders to return to one of last year's most profitable trades: betting against New York Mercantile Exchange-traded WTI, while betting on a rise in the price of Brent crude traded on the IntercontinentalExchange, or ICE.
"People are foreseeing a move back into the $20s, so there's been some buying of Brent, selling of WTI," said Tony Rosado, a broker at GA Global Markets.
The divide between Brent and Nymex-traded WTI narrowed sharply at the end of 2011 after a decision to reverse the Seaway pipeline from Cushing, Okla., to the U.S. Gulf Coast promised to relieve a supply glut in the middle of the country.
The pipeline is due to begin shipping crude June 1, but more oil is flowing toward Cushing in anticipation of the reversal.
Front-month March reformulated gasoline blendstock, or RBOB, settled 1.35 cents, or 0.5%, higher at $2.9279 a gallon, the highest price since August. March heating oil settled 5.63 cents higher at $3.1707 a gallon.
Write to Jerry A. DiColo at jerry.dicolo@dowjones.com
Credit: By Jerry A. DiColo And Sarah Kent
Subject: Pipelines; Petroleum industry; Futures; Supplies
Location: United States--US New York
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 6, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 919988998
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/919988998?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Oil and Gas Boom Lifts U.S. Economy
Author: Gold, Russell
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 Feb 2012: n/a.
ProQuest document link
Abstract:
The use of new drilling techniques to tap oil and gas in shale rocks far underground helped add about 158,500 new oil and gas jobs over the past five years, and economists think it has created even more jobs in companies supplying the energy industry and in the broader service industry. For every new job working in the oil and gas sector, another four are supported by the energy supply chain and by workers spending more money on goods and services, says Timothy Considine, an independent economist who has worked on estimating job creation in the natural resources sector.
Full text: NAMPA, Idaho--The staccato of nail guns echoes across a cavernous building here as workers piece together manufactured houses with easy-to-clean linoleum floors and rugged interiors for muddy oil-field workers.
There is no oil and gas production in Idaho, but that doesn't mean the U.S. energy boom has bypassed this bedroom community west of Boise. Fleetwood Homes of Idaho, a subsidiary of Cavco Industries Inc., has increased production by 25% since last fall at its Nampa factory, hiring 40 workers and adding hours for employees. It is building the extra-insulated "Dakota" model for shipment 1,000 miles east to the Bakken oil field in North Dakota.
Were it not for the new demand for oil-field housing, factory manager Jeff Chrisman says he would be handing out furloughs, not overtime. Instead, "We've been able to bring back people that we hated losing a couple of years ago," he says.
An energy boom is revving up the U.S. economy. The use of new drilling techniques to tap oil and gas in shale rocks far underground helped add about 158,500 new oil and gas jobs over the past five years, and economists think it has created even more jobs in companies supplying the energy industry and in the broader service industry. U.S. oil production is rising for the first time in decades. Natural gas has become so plentiful that prices recently plunged to a 10-year low.
The economic benefits of rising energy production are spreading far beyond the traditional oil patch, to Ohio and Pennsylvania, Nebraska and New York, North Carolina and Idaho. Truck drivers from pretty much anywhere can find work related to the surging energy business. Private-equity firms completed $24.8 billion of energy deals of all types last year, up from $8.5 billion in 2010, according to data tracker Preqin. Manufacturing plants are returning to the U.S. to take advantage of cheap natural gas, spurring major investments in petrochemical and steel production in the Gulf Coast and Midwest.
Landowners in huge swaths of the country where shale is found are raking in money for leasing their mineral rights. Consumers throughout the U.S. are paying lower bills for heating and electricity because of cheap natural gas. Even the U.S. balance of payments with other countries is improving because of the new energy economy.
"This is probably the biggest stimulus we have going," says Michael Lynch, president of Strategic Energy & Economic Research, a consultant based in Amherst, Mass. Some $145 billion will be spent drilling and completing U.S. wells this year, up from $13 billion in 2000, estimates Spears & Associates Inc., an oil-field market research firm.
Though the energy boom looks like a road to prosperity, it may be a bumpy one. Drilling is disrupting communities in ways that are still unfolding, creating concerns about the costs to local governments for things like road damage. It is also raising fears about potential water contamination, air pollution and even earthquakes from the effects of drilling thousands of new deep wells.
Skeptics warn that individual shale communities could experience an employment boom, followed by a painful bust. Rosy economic models "tell us nothing about what will happen when drilling ends," warns a May 2011 paper published by Cornell University's City and Regional Planning Department and funded in part by a foundation opposed to shale drilling.
Indeed, lower prices already have slowed new drilling for natural gas, causing jobs and investment to shrink in some communities. But energy companies have shifted their spending to shale wells that will provide oil, leading to rapid growth elsewhere. Even if gas prices stay low, overall employment is expected to continue rising, says John Larson, an economist with IHS Consulting.
Government officials are highlighting rising energy production as a bright spot in a still fragile economy. During his State of the Union speech, President Barack Obama said, "The development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper." He cited an industry study finding that development of shale gas will create more than 100,000 jobs by the end of the decade. For every new job working in the oil and gas sector, another four are supported by the energy supply chain and by workers spending more money on goods and services, says Timothy Considine, an independent economist who has worked on estimating job creation in the natural resources sector.
Even state officials in New York, which has blocked shale-gas development until an environmental review is completed, say the economic boost would be considerable. "There is potentially a very significant economic upside," says Joe Martens, the state's environmental commissioner. "There's an enormous job impact."
The growth in energy exploration and production is due to the widespread use of horizontal drilling and hydraulic fracturing, or fracking. Horizontal drilling allows energy companies to extract gas and oil up to a mile away from the actual well. Meanwhile, fracking--which involves pumping millions of gallons of water, sand and chemicals to break open dense rocks and release hydrocarbons--has enabled the industry to tap into energy-rich shale formations once overlooked by petroleum geologists.
Beyond simply adding jobs, communities from Pennsylvania and Ohio to Colorado and Texas that are home to this energy boom are experiencing a new emotion: optimism. Jeff Dahl, chief executive of MTR Gaming Group Inc., which operates a casino and resort in Chester, W.Va., says he is seeing consumer confidence rising as landowners get leasing bonuses of thousands of dollars and companies compete for workers.
"People are beginning to believe this is a game changer for the region," says Mr. Dahl. The result is more spending on dining out and entertainment.
Exactly how much money has been flowing from energy companies into landowners' bank accounts is unknown; the Internal Revenue Service doesn't track royalties or payments for leasing land for energy exploration. But the industry says it paid out $6 billion from 2008 to 2010 just in Pennsylvania, home to much of the Marcellus Shale, a formation of gas-bearing rock.
Scott Kingsley, chief financial officer of Community Bank Systems Inc., which operates 170 bank branches in rural New York and Pennsylvania, says it has seen a 20% growth in deposits in regions where there is shale drilling, versus about 5% elsewhere. Mr. Kingsley says the bank is adding monthly wealth-management seminars to advise customers unused to a sudden influx of money.
The increase in oil and gas well drilling is boosting Nance County, Neb., a rural area west of Omaha that has traditionally produced cattle, corn and hogs.
Now the energy industry is tapping another Nance County resource: two giant sand dunes. Decades of dredging the Loup River has created these dunes, each about a mile long and 60 feet tall. Sand is a critical ingredient in fracking operations because it props open cracks in the shale, allowing oil and gas to flow out.
In 2007, Preferred Sands LLC bought a struggling sand company that had supplied glass foundries, and began to target oil-field companies instead. Now the largest private employer in the county, it has expanded the local work force to 134 from 15 and plans to add another 10 workers by midyear.
"This deal here is like winning the lottery," says Clair Jones, a member of the county board of supervisors. The only downside is that the wages paid at the sand mine have made it tougher for local companies to compete for labor, he says. "It has raised the bar for everyone."
In rural western Wisconsin, state officials are losing count of all the new sand mines popping up. "We've created way over 1,000 jobs in this industry in the last four months," says Tom Woletz, who works for the state's Department of Natural Resources.
The energy industry has discovered so much new natural gas, causing gas prices to drop 39% over the past year, that it is breathing new life into energy-intensive manufacturing such as steel and plastics.
"We think lower natural gas prices are creating a structural economic advantage for the U.S.," says Chat Reynders, chairman and chief executive of Boston-based Reynders McVeigh Capital Management. "It's a new competitive strength for U.S. manufacturers." He points out that people who purchase energy supplies for companies in Asia pay up to six times as much for natural gas as their counterparts in Texas and Louisiana.
Steelmaker Nucor Corp. is among the companies investing in new U.S. manufacturing plants to take advantage of the abundant gas. In 2004, Nucor closed a facility located along the Mississippi River between New Orleans and Baton Rouge that enriched iron for use in steel mills. The company dismantled the facility and shipped it to Trinidad, where an offshore gas field offered a low-cost, long-term supply.
Last year, Nucor began construction on a new iron upgrader, just a few hundred feet away from the old facility in St. James Parish, La. It will cost $750 million to build and create 150 permanent jobs, which the company says will pay an average of $75,000 a year.
What changed? "Shale gas allows that natural gas to be more competitive, and more competitive natural gas enabled us to build this facility in Louisiana instead of building a second facility in Trinidad," says John Ferriola, Nucor's president.
Petrochemical makers are also adding capacity because of the low-cost energy. Several companies, including Dow Chemical Co., have announced plans to either restart or build new facilities along the Gulf Coast that will churn out basic ingredients for plastic packaging and car bumpers. Royal Dutch Shell PLC has plans for a similar facility near Pittsburgh.
Other parts of the country are looking for ways to take advantage of the cheap gas. In Maine, Kennebec Valley Gas Company LLC is seeking financing to build a gas pipeline into Augusta. The $85 million pipeline, which will create an estimated 500 construction jobs, will allow companies and consumers to switch to lower-cost gas from expensive heating oil--and, backers say, knock $1,200 off the average Augusta homeowner's $4,400 winter home-heating bill.
"That is money people can put in their pocket," says Rich Silkman, a company principal.
The gas will lower fuel costs and help three local paper mills, which employ 1,700 people, stay competitive, says John Williams, head of the Maine Pulp & Paper Association.
Gas now fuels about one-quarter of U.S. electricity production, a figure expected to rise as proposed environment regulations force more coal-fired power plants to close. Last year, Siemens AG opened a $350 million facility in Charlotte, N.C., to build giant turbines that generate electricity from natural gas that has hired 700 workers so far.
Randy Zwirn, global head of Siemens's energy service business, says it made the investment because it predicts a growing demand for gas-powered electricity. "Shale provides almost an insurance, a hedge, to keep gas prices low," he says.
At Fleetwood Home's factory in Idaho, Mr. Chrisman, the plant manager, had no clue about the energy boom until he received a call from a planned 300-unit housing development in Williston, N.D. He traveled there in 2010 and saw well-paid workers sleeping in their cars in a local Wal-Mart parking lot during winter because of the lack of housing.
As the factory's pace of production began picking up last summer, Mr. Chrisman rehired workers he had let go amid the housing downturn. Shannon Smith returned to her job caulking tiles and cleaning up the houses before they are loaded onto trucks.
"In the two years I was laid off, we lost our house" and racked up a lot of credit-card debt, says Ms. Smith, a mother of two. "There was no money and nothing to do. This is chance to buy groceries again and keep paying the bills."
Though she has never seen an oil well, Ms. Smith says, "I hope it keeps coming."
Ryan Dezember and Gregory Zuckerman contributed to this article.
Write to Russell Gold at russell.gold@wsj.com
Corrections & Amplifications
MTR Gaming Group Inc. operates a casino and resort in Chester, W.Va. An earlier version of this article incorrectly said it is in Wheeling, W.Va.
Credit: By Russell Gold
Subject: Petroleum industry; Natural gas; Energy policy; Energy industry; Manufacturing; Petroleum production; Factories; Steel production; Mineral rights
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 8, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 920196430
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/920196430?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil and Gas Boom Lifts U.S. Economy
Author: Gold, Russell
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]08 Feb 2012: A.1. [Duplicate]
ProQuest document link
Abstract:
The use of new drilling techniques to tap oil and gas in shale rocks far underground helped add about 158,500 new oil and gas jobs over the past five years, and economists think it has created even more jobs in companies supplying the energy industry and in the broader service industry. For every new job working in the oil and gas sector, another four are supported by the energy supply chain and by workers spending more money on goods and services, says Timothy Considine, an independent economist who has worked on estimating job creation in the natural resources sector.
Full text: Corrections & Amplifications
MTR Gaming Group Inc. operates a casino and resort in Chester, W.Va. A front-page article on shale Wednesday incorrectly said the resort is in Wheeling, W.Va.
(WSJ January 11, 2012)
NAMPA, Idaho -- The staccato of nail guns echoes across a cavernous building here as workers piece together manufactured houses with easy-to-clean linoleum floors and rugged interiors for muddy oil-field workers.
There is no oil and gas production in Idaho, but that doesn't mean the U.S. energy boom has bypassed this bedroom community west of Boise. Fleetwood Homes of Idaho, a subsidiary of Cavco Industries Inc., has increased production by 25% since last fall at its Nampa factory, hiring 40 workers and adding hours for employees. It is building the extra-insulated "Dakota" model for shipment 1,000 miles east to the Bakken oil field in North Dakota.
Were it not for the new demand for oil-field housing, factory manager Jeff Chrisman says he would be handing out furloughs, not overtime. Instead, "We've been able to bring back people that we hated losing a couple of years ago," he says.
An energy boom is revving up the U.S. economy. The use of new drilling techniques to tap oil and gas in shale rocks far underground helped add about 158,500 new oil and gas jobs over the past five years, and economists think it has created even more jobs in companies supplying the energy industry and in the broader service industry. U.S. oil production is rising for the first time in decades. Natural gas has become so plentiful that prices recently plunged to a 10-year low.
The economic benefits of rising energy production are spreading far beyond the traditional oil patch, to Ohio and Pennsylvania, Nebraska and New York, North Carolina and Idaho. Truck drivers from pretty much anywhere can find work related to the surging energy business. Private-equity firms completed $24.8 billion of energy deals of all types last year, up from $8.5 billion in 2010, according to data tracker Preqin. Manufacturing plants are returning to the U.S. to take advantage of cheap natural gas, spurring major investments in petrochemical and steel production in the Gulf Coast and Midwest.
Landowners in huge swaths of the country where shale is found are raking in money for leasing their mineral rights. Consumers throughout the U.S. are paying lower bills for heating and electricity because of cheap natural gas. Even the U.S. balance of payments with other countries is improving because of the new energy economy.
"This is probably the biggest stimulus we have going," says Michael Lynch, president of Strategic Energy & Economic Research, a consultant based in Amherst, Mass. Some $145 billion will be spent drilling and completing U.S. wells this year, up from $13 billion in 2000, estimates Spears & Associates Inc., an oil-field market research firm.
Though the energy boom looks like a road to prosperity, it may be a bumpy one. Drilling is disrupting communities in ways that are still unfolding, creating concerns about the costs to local governments for things like road damage. It is also raising fears about potential water contamination, air pollution and even earthquakes from the effects of drilling thousands of new deep wells.
Skeptics warn that individual shale communities could experience an employment boom, followed by a painful bust. Rosy economic models "tell us nothing about what will happen when drilling ends," warns a May 2011 paper published by Cornell University's City and Regional Planning Department and funded in part by a foundation opposed to shale drilling.
Indeed, lower prices already have slowed new drilling for natural gas, causing jobs and investment to shrink in some communities. But energy companies have shifted their spending to shale wells that will provide oil, leading to rapid growth elsewhere. Even if gas prices stay low, overall employment is expected to continue rising, says John Larson, an economist with IHS Consulting.
Government officials are highlighting rising energy production as a bright spot in a still fragile economy. During his State of the Union speech, President Barack Obama said, "The development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper." He cited an industry study finding that development of shale gas will create more than 100,000 jobs by the end of the decade. For every new job working in the oil and gas sector, another four are supported by the energy supply chain and by workers spending more money on goods and services, says Timothy Considine, an independent economist who has worked on estimating job creation in the natural resources sector.
Even state officials in New York, which has blocked shale-gas development until an environmental review is completed, say the economic boost would be considerable. "There is potentially a very significant economic upside," says Joe Martens, the state's environmental commissioner. "There's an enormous job impact."
The growth in energy exploration and production is due to the widespread use of horizontal drilling and hydraulic fracturing, or fracking. Horizontal drilling allows energy companies to extract gas and oil up to a mile away from the actual well. Meanwhile, fracking -- which involves pumping millions of gallons of water, sand and chemicals to break open dense rocks and release hydrocarbons -- has enabled the industry to tap into energy-rich shale formations once overlooked by petroleum geologists.
Beyond simply adding jobs, communities from Pennsylvania and Ohio to Colorado and Texas that are home to this energy boom are experiencing a new emotion: optimism. Jeff Dahl, chief executive of MTR Gaming Group Inc., which operates a casino and resort in Wheeling, W.Va., says he is seeing consumer confidence rising as landowners get leasing bonuses of thousands of dollars and companies compete for workers.
"People are beginning to believe this is a game changer for the region," says Mr. Dahl. The result is more spending on dining out and entertainment.
Exactly how much money has been flowing from energy companies into landowners' bank accounts is unknown; the Internal Revenue Service doesn't track royalties or payments for leasing land for energy exploration. But the industry says it paid out $6 billion from 2008 to 2010 just in Pennsylvania, home to much of the Marcellus Shale, a formation of gas-bearing rock.
Scott Kingsley, chief financial officer of Community Bank Systems Inc., which operates 170 bank branches in rural New York and Pennsylvania, says it has seen a 20% growth in deposits in regions where there is shale drilling, versus about 5% elsewhere. Mr. Kingsley says the bank is adding monthly wealth-management seminars to advise customers unused to a sudden influx of money.
The increase in oil and gas well drilling is boosting Nance County, Neb., a rural area west of Omaha that has traditionally produced cattle, corn and hogs.
Now the energy industry is tapping another Nance County resource: two giant sand dunes. Decades of dredging the Loup River has created these dunes, each about a mile long and 60 feet tall. Sand is a critical ingredient in fracking operations because it props open cracks in the shale, allowing oil and gas to flow out.
In 2007, Preferred Sands LLC bought a struggling sand company that had supplied glass foundries, and began to target oil-field companies instead. Now the largest private employer in the county, it has expanded the local work force to 134 from 15 and plans to add another 10 workers by midyear.
"This deal here is like winning the lottery," says Clair Jones, a member of the county board of supervisors. The only downside is that the wages paid at the sand mine has made it tougher for local companies to compete for labor, he says. "It has raised the bar for everyone."
In rural western Wisconsin, state officials are losing count of all the new sand mines popping up. "We've created way over 1,000 jobs in this industry in the last four months," says Tom Woletz, who works for the state's Department of Natural Resources.
The energy industry has discovered so much new natural gas, causing gas prices to drop 39% over the past year, that it is breathing new life into energy-intensive manufacturing such as steel and plastics.
"We think lower natural gas prices are creating a structural economic advantage for the U.S.," says Chat Reynders, chairman and chief executive of Boston-based Reynders McVeigh Capital Management. "It's a new competitive strength for U.S. manufacturers." He points out that people who purchase energy supplies for companies in Asia pay up to six times as much for natural gas as their counterparts in Texas and Louisiana.
Steelmaker Nucor Corp. is among the companies investing in new U.S. manufacturing plants to take advantage of the abundant gas. In 2004, Nucor closed a facility located along the Mississippi River between New Orleans and Baton Rouge that enriched iron for use in steel mills. The company dismantled the facility and shipped it to Trinidad, where an offshore gas field offered a low-cost, long-term supply.
Last year, Nucor began construction on a new iron upgrader, just a few hundred feet away from the old facility in St. James Parish, La. It will cost $750 million to build and create 150 permanent jobs, which the company says will pay an average of $75,000 a year.
What changed? "Shale gas allows that natural gas to be more competitive, and more competitive natural gas enabled us to build this facility in Louisiana instead of building a second facility in Trinidad," says John Ferriola, Nucor's president.
Petrochemical makers are also adding capacity because of the low-cost energy. Several companies, including Dow Chemical Co., have announced plans to either restart or build new facilities along the Gulf Coast that will churn out basic ingredients for plastic packaging and car bumpers. Royal Dutch Shell PLC has plans for a similar facility near Pittsburgh.
Other parts of the country are looking for ways to take advantage of the cheap gas. In Maine, Kennebec Valley Gas Company LLC is seeking financing to build a gas pipeline into Augusta. The $85 million pipeline, which will create an estimated 500 construction jobs, will allow companies and consumers to switch to lower-cost gas from expensive heating oil -- and, backers say, knock $1,200 off the average Augusta homeowner's $4,400 winter home-heating bill.
"That is money people can put in their pocket," says Rich Silkman, a company principal.
The gas will lower fuel costs and help three local paper mills, which employ 1,700 people, stay competitive, says John Williams, head of the Maine Pulp & Paper Association.
Gas now fuels about one-quarter of U.S. electricity production, a figure expected to rise as proposed environment regulations force more coal-fired power plants to close. Last year, Siemens AG opened a $350 million facility in Charlotte, N.C., to build giant turbines that generate electricity from natural gas that has hired 700 workers so far.
Randy Zwirn, global head of Siemens's energy service business, says it made the investment because it predicts a growing demand for gas-powered electricity. "Shale provides almost an insurance, a hedge, to keep gas prices low," he says.
At Fleetwood Home's factory in Idaho, Mr. Chrisman, the plant manager, had no clue about the energy boom until he received a call from a planned 300-unit housing development in Williston, N.D. He traveled there in 2010 and saw well-paid workers sleeping in their cars in a local Wal-Mart parking lot during winter because of the lack of housing.
As the factory's pace of production began picking up last summer, Mr. Chrisman rehired workers he had let go amid the housing downturn. Shannon Smith returned to her job caulking tiles and cleaning up the houses before they are loaded onto trucks.
"In the two years I was laid off, we lost our house" and racked up a lot of credit-card debt, says Ms. Smith, a mother of two. "There was no money and nothing to do. This is chance to buy groceries again and keep paying the bills."
Though she has never seen an oil well, Ms. Smith says, "I hope it keeps coming."
---
Ryan Dezember and Gregory Zuckerman contributed to this article.
Credit: By Russell Gold
Subject: Petroleum industry; Natural gas; Energy policy; Energy industry; Manufacturing; Petroleum production; Factories; Steel production; Mineral rights; Economic conditions -- United States--US
Location: United States--US
Classification: 9190: United States; 1110: Economic conditions & forecasts; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.1
Publication year: 2012
Publication date: Feb 8, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 920216707
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/920216707?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
India Increases Iran Oil Imports
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 Feb 2012: n/a.
ProQuest document link
Abstract:
India has boosted its imports of Iranian oil, becoming the Islamic Republic's largest customer last month and largely offsetting a cut in Chinese purchases as sanctions fail to dent Tehran's sales for now, people within the oil industry said this week.
Full text: LONDON--India increased its imports of Iran's oil to become the Islamic Republic's largest customer last month, largely offsetting a cut in Chinese purchases as sanctions fail to significantly dent Tehran's sales for now, people within the oil industry said this week.
Final numbers suggest that movement of Iranian crude to Europe slightly eased last month as some refiners cut spot purchases ahead of a European Union ban on Iranian oil set to take effect on July 1.
"India scooped much of the crude the Chinese didn't want," one person said, noting that Iranian crude exports to India rose to 550,000 barrels a day in January, up 37.5% from December.
That partly offset a 50% cut in crude exports to China, the result of a pricing dispute. China now imports around 250,000 barrels a day from Iran.
Some analysts question, however, whether India can keep Iranian oil imports at such levels.
"I don't think India is insulated at all" from sanctions, said Trevor Houser, a partner at New York-based economic-research firm Rhodium Group. "So the question is just how long Tehran is willing to sell on credit and how long Tehran can go without hard currency."
Iran has been more flexible than other suppliers to India when it comes to payments, and accepted a delay on billion of dollars of arrears after sanctions disrupted payments last year.
Many Indian refineries are geared toward Iranian oil, making it more straightforward and cheaper to refine. There is no sign India is getting Iranian oil at a discount.
Overall Iranian crude exports remained broadly unchanged at 2.10 million barrels a day, compared with 2.14 million barrels a day in December, amid easing seasonal demand in the first half of the year, preliminary data show.
That comes despite rising financial pressure on Iran and on other nations to stop buying its oil. The U.S. has sanctioned Iran's central bank and is working to cut the country off from the network of international financial transfers, the conduit for oil revenue, and pressured Asian and African nations to reduce their Iranian oil imports alongside the EU embargo.
But sanctions haven't yet deterred India. Iran's ambassador to India, Sayed Mehdi Nabizadeh, said on Tuesday that India had agreed to pay for some purchases of Iranian oil in Indian rupees, a route that would avoid the risk of an interruption in banking transfers. Officials in India's oil and external ministries declined to comment on reports of a deal.
Despite a pledge to find alternatives, South Africa has also increased its Iranian oil imports to 100,000 barrels a day, a person familiar with the situation said. South African officials declined to comment.
Final figures for shipments to Europe--which include the EU and Turkey--fell by 7% in January to 650,000 barrels a day, according to a person in the oil industry familiar with the matter. Earlier, preliminary numbers pointed to a steady 700,000 barrels a day last month.
But direct deliveries--outside the SuMed pipeline--to Greece fell by 25,000 barrels a day to 85,000 barrels a day, the person said.
Rakesh Sharma in New Delhi and Devon Maylie in Johannesburg contributed to this article.
Write to Benoît Faucon at benoit.faucon@dowjones.com
Credit: By Benoît Faucon
Subject: Petroleum industry; Exports
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 8, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 920247492
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/920247492?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Argentina's YPF Boosts Shale-Oil Estimate
Author: Turner, Taos
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 Feb 2012: n/a.
ProQuest document link
Abstract:
Independent energy consultant Daniel Montamat, a former energy secretary and onetime YPF president, cautioned that unpredictable government regulations and price controls could discourage production.
Full text: BUENOS AIRES--Argentina's largest oil-and-gas company, YPF SA, has sharply raised its estimate for its unconventional oil-and-gas resources to 22.8 billion barrels from 927 million barrels.
The shale-oil finds have the potential to dramatically boost Argentina's status as an oil producer and exporter, as well as providing a new source of economic growth. They should also catapult YPF, which is majority-owned by Spain's Repsol YPF SA, into the ranks of the world's premier publicly traded oil producers in terms of total reserves.
YPF said the new estimate of shale oil and gas was based on work done by Ryder Scott, a Houston-based reservoir evaluation firm, which audited the company's fields in an area known as Vaca Muerta in the province of Neuquen. Ryder Stott classified the bulk of the unconventional finds as "prospective."
If they pan out to be economically viable, that would position YPF just behind Exxon Mobil Corp., which reported 24.8 billion barrels of oil equivalent in 2010, the latest figure available. It would also place YPF well ahead of Brazil's Petroleo Brasileiro SA, or Petrobras, which had global reserves of 16.4 billion barrels, and Chevron Corp., which reported a total of about 10.5 billion barrels in 2010.
News of the data, which was first reported by Bloomberg and confirmed by YPF, sent the company's New York-traded shares up nearly 11% to $35.90.
Independent energy consultant Daniel Montamat, a former energy secretary and onetime YPF president, cautioned that unpredictable government regulations and price controls could discourage production.
The report also comes amid speculation that Argentina's government could expropriate the company. The government has blamed the country's oil industry, and especially YPF, for not doing enough to boost output. The industry currently produces about 570,000 barrels of oil a day, with YPF accounting for around 200,000 barrels, according to government figures.
YPF officials couldn't be reached for comment.
Last week, the government stopped offering tax breaks totaling about $460 million a year to big companies investing in oil exploration, production and refining.
Planning Minister Julio De Vido said Saturday the government plans to force oil-and-gas companies to produce at full capacity and follow new operating guidelines. And on Thursday governors from Argentina's top 10 oil-producing provinces will meet in a bid to force oil companies to raise output in their provinces.
Both Mr. De Vido and Argentine President Cristina Kirchner have recently highlighted the governors' plans.
Among other things, the governors will consider revoking concessions held by oil companies that have, in their view, failed to meet production pledges.
On Wednesday, YPF said it had spent about $3 billion last year in exploration and production, among other things. In 2010, YPF said it found an estimated 4.5 trillion cubic feet of unconventional shale gas.
Write to Taos Turner at taos.turner@dowjones.com
Credit: By Taos Turner
Subject: Petroleum industry; Natural gas utilities; Governors; Wage & price controls
Company / organization: Name: YPF SA; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 8, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 920320019
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/920320019?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
The Real Trouble With the Birth-Control Mandate; Critics are missing the main point. There are good reasons that your car-insurance company doesn't add $100 to your premium and then cover oil changes.
Author: Cochrane, John H
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 Feb 2012: n/a.
ProQuest document link
Abstract:
Why did HHS add this birth-control insurance mandate--along with "well-woman visits, breast-feeding support and domestic-violence screening," and "all without charging a co-payment, co-insurance or a deductible"--to its implementation of a provision of the new health-care reform law? "Because it promotes maternal and child health by allowing women to space their pregnancies," says the HHS advisory panel. Because these "historic new guidelines" will make sure "women have access to a full range of recommended preventive services," says the original HHS announcement.
Full text: When the administration affirmed last month that church-affiliated employers must buy health insurance that covers birth control, the outcry was instant. Critics complained that certain institutions should be exempt as a matter of religious freedom. Although the ruling was meant to be final, presidential advisers said this week that the administration might look for a compromise.
Critics are missing the larger point. Why should the Department of Health and Human Services (HHS) decree that any of us must pay for "insurance" that covers contraceptives?
I put "insurance" in quotes for a reason. Insurance is supposed to mean a contract, by which a company pays for large, unanticipated expenses in return for a premium: expenses like your house burning down, your car getting stolen or a big medical bill.
Insurance is a bad idea for small, regular and predictable expenses. There are good reasons that your car insurance company doesn't add $100 per year to your premium and then cover oil changes, and that your health insurance doesn't charge $50 more per year and cover toothpaste. You'd have to fill out mountains of paperwork, the oil-change and toothpaste markets would become much less competitive, and you'd end up spending more.
How did we get to this point? It all leads back to the elephant in the room: the tax deductibility of employer-provided group insurance.
If your employer pays you $100 less in salary and buys $100 of group insurance for you, you don't pay taxes on that amount. Hence, the more insurance costs and covers, the less in taxes you seem to pay. (Even that savings is an illusion: The government still needs money and raises overall tax rates to make up the difference.)
To add insult to injury, this tax deduction does not apply to portable, guaranteed-renewable individual insurance. You don't get the tax break if your employer gives you the $100 and you buy a policy--a policy that will stay with you if you get sick, leave employment or get divorced. The pre-existing conditions crisis is largely a creature of tax law. You don't lose your car insurance when you change jobs.
Why did HHS add this birth-control insurance mandate--along with "well-woman visits, breast-feeding support and domestic-violence screening," and "all without charging a co-payment, co-insurance or a deductible"--to its implementation of a provision of the new health-care reform law? "Because it promotes maternal and child health by allowing women to space their pregnancies," says the HHS advisory panel. Because these "historic new guidelines" will make sure "women have access to a full range of recommended preventive services," says the original HHS announcement. To "increase access to important preventive services," echoes White House Press Secretary Jay Carney.
Notice the doublespeak confusion of "access" and "cost." I have "access" to toothpaste because I have two bucks in my pocket and a competitive supplier. Anyone who can afford a cell phone can afford pills or condoms.
Poor women who can't afford birth control are a red herring in this debate. HHS isn't limiting this mandate to the poor anyway. We all have to pay. The very poor typically don't have employer-provided health insurance in the first place. "Allowing women to space their pregnancies"? Was there some sort of federal ban on birth control before this?
It's not about "access" and it's not about "insurance." It's because Americans, when paying even modest co-payments, choose to spend their money on other things. They prefer a new iPod to a "wellness visit" to the doctor. As the HHS unwittingly admits: "Often because of cost, Americans used preventive services at about half the recommended rate."
Remember, we're supposed to be worrying about skyrocketing health-care expenses. Doubling the number of wellness visits and free pills sounds great, but who's going to pay for it? There is a liberal dream that by mandating coverage the government can make something free.
Sorry. Every increase in coverage means an increase in premiums. If your employer is paying for your health insurance, he could be paying you more in salary instead. Or, he could be lowering prices and selling his product to you and all consumers more cheaply. Someone is paying. Not even HHS tries to claim that these "recommended preventive services" will lower overall costs.
Here's a good mandate: Let's mandate that every time a government official says that the government is going to "help" some category of voter, he or she has to say who they are going to hurt in the same sentence. Because it has to be someone.
But what about the fact, you may ask, that unwanted children are a burden on society as well as to their mothers? Perhaps there is a social interest in subsidizing birth control? Perhaps there is--but if so, this is an awful way to do it.
The minute pills are "free," under insurance, the incentive for drug companies to come up with cheaper versions vanishes. So does their incentive to develop safer, more convenient, male-centered or nonprescription birth control. And by making pills free but not condoms, the government may inadvertently be contributing to an increase in sexually transmitted diseases.
The taxes and spending we argue about are the tip of the iceberg. Salting mandated health insurance with birth control is exactly the same as a tax--on employers, on Catholics, on gay men and women, on couples trying to have children and on the elderly--to subsidize one form of birth control.
If the government wants to subsidize birth control, OK, pass an explicit tax, and sensibly subsidize all birth control. And face the voters on it. The tax rate and spending debates that occupy the media are a small part of the effective taxes and spending that the government achieves by these regulatory mandates.
There is also the issue of religious freedom. Our nation is divided on social issues. The natural compromise is simple: Birth control, abortion and other contentious practices are permitted. But those who object don't have to pay for them. The federal takeover of medicine prevents us from reaching these natural compromises and needlessly divides our society.
The critics fell for a trap. By focusing on an exemption for church-related institutions, critics effectively admit that it is right for the rest of us to be subjected to this sort of mandate. They accept the horribly misnamed Patient Protection and Affordable Care Act, and they resign themselves to chipping away at its edges. No, we should throw it out, and fix the terrible distortions in the health-insurance and health-care markets.
Sure, churches should be exempt. We should all be exempt.
Mr. Cochrane is a professor of finance at the University of Chicago Booth School of Business and an adjunct scholar at the Cato Institute.
Credit: By John H. Cochrane
Subject: Birth control; Health care policy; Cost control; Maternal & child health; Tax rates; Womens health; Group insurance
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 9, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 920320041
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/920320041?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
India Lifts Imports of Iran's Oil
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 Feb 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: India increased its imports of Iran's oil to become its largest customer last month, partly offsetting a cut in Chinese purchases, as sanctions failed to significantly dent Tehran's sales, people in the oil industry said.
Iranian crude exports to India rose to 550,000 barrels a day in January, up 37.5% from December. That coincided with a 50% cut in exports to China, the result of a pricing dispute. Indian officials declined to comment.China now imports around 250,000 barrels a day from Iran.
Some analysts question, however, whether India can keep Iranian oil imports at such levels.
"I don't think India is insulated at all" from sanctions, said Trevor Houser, a partner at New York-based economic-research firm Rhodium Group. "So the question is just how long Tehran is willing to sell on credit and how long Tehran can go without hard currency."
Iran has been more flexible than other suppliers to India when it comes to payments, and accepted a delay on billion of dollars of arrears after sanctions disrupted payments last year.
Many Indian refineries are geared toward Iranian oil, making it more straightforward and cheaper to refine. There is no sign India is getting Iranian oil at a discount.
Despite a pledge to find alternatives, South Africa has also increased its Iranian oil imports to 100,000 barrels a day, a person familiar with the situation said. South African officials declined to comment.
Overall Iranian crude exports remained steady in January, preliminary data show.
Iranian crude shipments to the European Union eased slightly, as refiners prepare for an embargo on Iran. Iranian officials say the embargo won't affect the country because they can find other buyers.
That comes despite rising financial pressure on Iran and on other nations to stop buying its oil. The U.S. has sanctioned Iran's central bank and is working to cut the country off from the network of international financial transfers, the conduit for oil revenue, and pressured Asian and African nations to reduce their Iranian oil imports alongside the EU embargo.
But sanctions haven't yet deterred India. Iran's ambassador to India, Sayed Mehdi Nabizadeh, said on Tuesday that India had agreed to pay for some purchases of Iranian oil in Indian rupees, a route that would avoid the risk of an interruption in banking transfers. Officials in India's oil and external ministries declined to comment on reports of a deal.
Final figures for shipments to Europe--which include the EU and Turkey--fell by 7% in January to 650,000 barrels a day, according to a person in the oil industry familiar with the matter. Earlier, preliminary numbers pointed to a steady 700,000 barrels a day last month.
But direct deliveries--outside the SuMed pipeline--to Greece fell by 25,000 barrels a day to 85,000 barrels a day, the person said.
Devon Maylie in Johannesburg contributed to this article.
Write to Benoît Faucon at benoit.faucon@dowjones.com
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 9, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 920346542
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/920346542?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: India Lifts Imports of Iran's Oil
Author: Faucon, Benoit
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]09 Feb 2012: A.7. [Duplicate]
ProQuest document link
Abstract:
India increased its imports of Iran's oil to become its largest customer last month, partly offsetting a cut in Chinese purchases, as sanctions failed to significantly dent Tehran's sales, people in the oil industry said.
Full text: India increased its imports of Iran's oil to become its largest customer last month, partly offsetting a cut in Chinese purchases, as sanctions failed to significantly dent Tehran's sales, people in the oil industry said.
Iranian crude exports to India rose to 550,000 barrels a day in January, up 37.5% from December. That coincided with a 50% cut in exports to China, the result of a pricing dispute. Indian officials declined to comment.
South Africa has also increased its Iranian oil imports to 100,000 barrels a day, a person familiar with the situation said. South African officials declined to comment.
Overall Iranian crude exports remained steady in January, preliminary data show.
Iranian crude shipments to the European Union eased slightly, as refiners prepare for an embargo on Iran. Iranian officials say the embargo won't affect the country because they can find other buyers.
---
Devon Maylie contributed to this article.
Credit: By Benoit Faucon
Subject: Petroleum industry; Exports; Sanctions
Location: South Africa India Iran
Classification: 9180: International; 8510: Petroleum industry; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.7
Publication year: 2012
Publication date: Feb 9, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 920356573
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/920356573?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Blackstone Adds Cash To Oil Play
Author: Dezember, Ryan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]09 Feb 2012: B.8.
ProQuest document link
Abstract:
The deal, involving GeoSouthern Energy Corp., shows the vast capital flowing into the U.S. oil patch, where some $145 billion is expected to be spent on drilling and completing onshore wells this year, nearly double the $73 billion spent in 2009, according to oil-field market researchers Spear & Associates Inc. Blackstone quietly invested last year in closely held GeoSouthern, based in The Woodlands, Texas, the people said.
Full text: Corrections & Amplifications
Blackstone Group LP invested in GeoSouthern Energy Corp. in 2010. A Marketplace article on Thursday about GeoSouthern raising funds from commercial banks incorrectly said the Blackstone investment was last year.
(WSJ January 11, 2012)
Blackstone Group LP is expected to announce Thursday that the firm and an energy company in which it invested raised $1 billion from commercial banks to develop south Texas oil fields, according to people familiar with the matter.
The deal, involving GeoSouthern Energy Corp., shows the vast capital flowing into the U.S. oil patch, where some $145 billion is expected to be spent on drilling and completing onshore wells this year, nearly double the $73 billion spent in 2009, according to oil-field market researchers Spear & Associates Inc.
Blackstone quietly invested last year in closely held GeoSouthern, based in The Woodlands, Texas, the people said. The investment gave the private-equity firm a position in the oil-rich Eagle Ford Shale in south Texas. Much of GeoSouthern's Eagle Ford land lies in the highly touted Black Hawk field.
GeoSouthern splits ownership of 173,000 acres there with BHP Billiton PLC, sharing costs and profits evenly. The Anglo-Australian mining giant heads drilling and well-completion operations, while GeoSouthern handles most of the work, including oil sales, once wells are producing, the people said.
BHP acquired its Black Hawk stake when it bought Petrohawk Energy last summer for more than $12 billion. The company said in November that it would increase drilling there this year, adding four rigs to the nine already operating there.
The cost of drilling and completing a single well in the Black Hawk field is about $9.9 million, according to BHP. J. Michael Yeager, BHP's oil-and-gas chief, told investors in November the field offers "the best economics in the United States because it produces the highest value product mix that you could have." The Black Hawk field's output is nearly 90% oil, according to the company
GeoSouthern helped pioneer the Eagle Ford, where one of the earliest wells bears its name.
Credit: By Ryan Dezember
Subject: Petroleum industry; Investments; Capital formation; Oil fields; Oil exploration
Location: United States--US
Company / organization: Name: Blackstone Group LP; NAICS: 523110
Classification: 9190: United States; 9110: Company specific; 8510: Petroleum industry; 3200: Credit management
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.8
Publication year: 2012
Publication date: Feb 9, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 920356880
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/920356880?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Trafigura Drawn Into Sudan Oil Dispute
Author: Kent, Sarah; Singh, Gurdeep; Gross, Jenny
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 Feb 2012: n/a.
ProQuest document link
Abstract:
According to two shipbrokers, Swiss-based Trafigura chartered the Ratna Shradha tanker, which loaded in mid-January.
Full text: LONDON--Oil trading firm Trafigura Group has chartered a ship that South Sudan believes is carrying oil stolen by neighboring Sudan, according to shipbrokers.
South Sudan's allegation could draw the Swiss-based commodity trader into a long-standing dispute between the two nations, as South Sudan seeks to resolve its differences with Khartoum over oil transit fees. The dispute has already caused severe disruptions to oil exports from South Sudan, most of which go to Asia.
Trafigura, one of the world's largest commodities traders by volume, last month chartered one of four tankers that South Sudan alleged contained crude oil that had been seized by Khartoum amid escalating tensions between the two countries over oil transit fees, according to shipbrokers.
Trafigura said in a statement that it had bought oil from South Sudan in the past, but denied it had knowingly bought stolen oil.
"In relation to our interests in recent shipments, given the ongoing political discussions with respect to Sudanese oil ownership, significant efforts have been made to confirm legal title, and that confirmation has been provided," Trafigura said in an e-mailed statement Wednesday.
Trafigura also said it had asked South Sudan to provide further information to support that country's claim to ownership of the oil in which Trafigura has an interest.
Land-locked South Sudan was producing about 350,000 barrels of oil a day before it halted its output in late January, amid the escalating dispute with Khartoum over oil transit fees. South Sudan said it had halted its oil output for fear of losing more oil to theft. Although South Sudan took the majority of Sudan's oil production with it when it gained independence from Khartoum in July, it remains dependent on pipelines through Sudan to export the crude, giving rise to a fierce dispute over how much South Sudan should pay to use Khartoum's infrastructure.
According to two shipbrokers, Swiss-based Trafigura chartered the Ratna Shradha tanker, which loaded in mid-January.
The Ratna Shradha tanker was one of three tankers the South Sudan government said were allegedly carrying "stolen" crude. The South Sudan government named those tankers in a letter to traders last month.
The tanker was off the coast of Singapore as of Feb. 5, according to ship-tracking data on the website MarineTraffic.com. The ship's final destination was unclear.
A government official in South Sudan said he was unable to confirm whether Trafigura had chartered the ship.
A spokesman for Sudan did not respond to calls for comment.
Write to Sarah Kent at sarah.kent@dowjones.com and Gurdeep Singh at gurdeep.singh@dowjones.com
Credit: By Sarah Kent, Gurdeep Singh and Jenny Gross
Subject: Robbery; Petroleum production
Location: South Sudan
Company / organization: Name: Trafigura Group; NAICS: 523120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 9, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 920359001
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/920359001?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
OPEC Cuts Oil Demand View but Still Pumps More
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 Feb 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: LONDON--OPEC on Thursday cut its oil-demand growth numbers for 2012 again as Asian economies slow, but the group kept pumping at levels not seen since 2008 amid Iranian disruptions fears.
In its closely watched monthly report, the Organization of Petroleum Exporting Countries knocked off about 120,000 barrels a day out of its global oil-demand growth estimate for 2012 to about 940,000 barrels a day.
So far, OPEC has slashed nearly a third of the projected oil-demand growth for 2012 compared with its initial forecasts for the year.
"Waning [developed] economies are negatively affecting the oil market and imposing a considerable range of uncertainty over the short term," the group said. It cited lingering questions on Europe's ability to survive its debt crisis and fizzling appetite for gasoline among U.S. motorists.
OPEC also warned the economies of India and China--the engines of global fossil-fuel demand--will now grow more slowly than it expected. Overall, the group cut its world economic growth estimate to 3.4% in 2012.
Analysts expect the International Energy Agency, which represents oil consumers, to follow suit when it releases its own report Friday. The IEA has also trimmed its demand forecasts in recent monthly reports.
But while demand growth is losing steam, OPEC, whose members pump over a third of the oil consumed each day world-wide, is producing at levels not seen since cuts decided during the 2008 recession.
The group said its own crude output increased by 56,200 barrels per day to 30.898 million barrels a day in January. That is almost a million barrels a day above a target agreed mid-December, and 1.3 million barrels a day over the needs it sees for its crude in the first quarter.
Gulf nations either pumped more barrels or at least higher than normal at a time when international pressure against Iran's nuclear program--including a planned European ban--are expected to dent Iran's exports.
Though OPEC is making a comfortable cushion of oil available, the trend could fuel mounting strife within the group's ranks.
Iran's own production has fallen by over 200,000 barrels a day in three years and continued declining in January, based on OPEC's numbers, as existing sanctions bite into investment.
The Islamic republic has warned its Gulf neighbors against any attempt to replace its oil on global markets. But though Gulf nations deny that is the case, analysts say they are keeping output high to as to signal their readiness to make up for any missing barrels.
OPEC said demand for Russian oil had also increased in January as a substitute to rival Middle East producers. Though the report didn't mention Iran, European refiners have said Russian could substitute for Iranian crude following the European oil embargo.
OPEC said the additional Russian crude has contributed to narrowing price differences between heavy crudes of the sort produced by both Iran and Russia and light oil, more widely available because of resurgent Libyan oil production.
Write to Benoît Faucon at benoit.faucon@dowjones.com
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 9, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 920488438
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/920488438?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
What's the Hold-Up on Alaskan Oil? My state's ANWR region could produce one million barrels of oil per day if only Washington let us.
Author: Parnell, Sean
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 Feb 2012: n/a.
ProQuest document link
Abstract:
[...] some welcome news from Washington:
Full text: Finally, some welcome news from Washington: With a bipartisan voice, the House Natural Resources Committee passed H.R. 7, the American Energy Infrastructure & Jobs Act.
This bill ties energy production to key projects that would generate well-paying jobs sorely needed for our economy and our energy security. It also enables us in Alaska to pursue production on a small section of the Arctic National Wildlife Reserve (ANWR).
This legislation opens 400,000 acres of the ANWR coastal plain's 1.5 million acres--land specifically set aside (by a 1980 federal law) for oil and natural-gas development. The 400,000 acres represents less than 3% of ANWR's 19 million total acres.
So what have we been waiting for?
Twenty-five years ago, the U.S. Department of the Interior recommended that Congress open up this area for oil and gas development. Yet year after year, Washington has blocked Alaska from delivering America's oil to Americans, even as the Energy Department calculates that for every barrel produced from ANWR, one less barrel of imports would be needed.
The federal government must drop these roadblocks. This should not be controversial: The vast majority of Alaskans favor the oil and gas development of this small portion of ANWR. Nor does this have to be a partisan issue: Three Democrats joined 26 Republicans in the 29-13 vote.
The essence of this long-standing argument is this: Greater oil and gas production means jobs and economic growth, which develop the stable communities that underpin a strong nation. Somehow this reasoning continues to fall flat.
Just last month, President Obama said in his State of the Union address that he had directed his administration to "open more than 75% of our potential offshore oil and gas resources." He should have said "redirected," for this simply repackaged his current position on the Outer Continental Shelf, which slowed Arctic development and did nothing to advance ANWR's potential.
ANWR oil--more than 10 billion barrels of it--is accessible. It's extractable. Yet we wait. Ignoring promising domestic production means willingly accepting a steady diet of foreign oil. That's exactly what's happening.
At peak production, ANWR could supply the U.S. with up to 1.45 million barrels of oil per day. Over 10 years, it could produce a sustained rate of one million barrels per day.
We have a world-class pipeline ready to assist with delivery. We currently ship slightly more than 600,000 barrels of oil a day through the Trans Alaska Pipeline, but that figure once stood at two million per day.
With oil from ANWR in the Trans Alaska Pipeline, oil producers could develop nearby fields that otherwise might not be economically feasible.
We have a chance to make this happen under a measure cowritten by House Natural Resources Committee Chairman Doc Hastings (R., Wash.) and Rep. Don Young (R., Alaska) within the American Energy Infrastructure & Jobs Act. It's the Alaska Energy for American Jobs Act, which will:
* Direct the secretary of the interior to hold lease sales on the North Slope of at least 50,000 acres within 22 months of enacting this legislation, then hold subsequent lease sales.
* Direct the secretary of the interior to ensure that this would result in no significant adverse impacts to fish, wildlife, habitat or environment, while the best available technology is employed.
* Ensure a minimal environmental footprint by requiring that land used for production and support facilities does not exceed 10,000 acres for every 100,000 leased acres.
Protecting our lands has long been a priority in Alaska. Prudhoe Bay, which sits 60 miles west of ANWR, has churned out 16 billion barrels of oil over more than 30 years. During that time, the central Arctic caribou herd in the Prudhoe Bay area has grown to nearly 70,000 in 2008 from 5,000 in 1975.
It's no coincidence that the states holding their own during this prolonged economic downturn include America's major energy producers, such as Alaska. Yet regulators keeping federal lands off-limits to oil and gas production also keep Alaska from contributing more affordable energy to other Americans.
For those who don't believe one state can make a difference in helping our nation, just look at the boom in North Dakota. The Bakken region is producing nearly 500,000 barrels of oil per day, pushing North Dakota's unemployment rate down to 3.5%, among the lowest nationally. If the Obama administration is serious about job creation, it can look to Alaska to boost America's work force. These are jobs Americans can do immediately. They are drillers, drivers and roustabouts, engineers, graphic designers and geologists, plumbers, painters and educators.
We don't have to make out-of-work Americans wait any longer.
Mr. Parnell is governor of Alaska.
Credit: By Sean Parnell
Subject: Pipelines; Energy policy; Natural resources; Coastal plains
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 10, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 920666077
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/920666077?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Overheard: Apple, MicroGoog, Exxon and Shellron
Author: Anonymous
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]10 Feb 2012: C.8.
ProQuest document link
Abstract:
[...] no discussion of Apple's sheer size is complete these days without a comparison to Exxon Mobil, the world's most valuable company until Apple displaced it late last month after reporting blowout first-quarter results.
Full text: [Financial Analysis and Commentary]
In its relentless march toward dominating the world -- or at least how you interact with it -- Apple reached another milestone Thursday. At just under $460 billion, its market capitalization surpassed the combined value of rivals Google and Microsoft, which weigh in at $457 billion, according to FactSet Research data. Only a year ago, Apple's market value was a staggering $109 billion less than MicroGoog's.
Of course, no discussion of Apple's sheer size is complete these days without a comparison to Exxon Mobil, the world's most valuable company until Apple displaced it late last month after reporting blowout first-quarter results.
Apple's market value is now $58 billion, or 14%, higher than Exxon's. Perhaps even more irritating for Big Oil's big guy, however, is another curious example of it trading places with Apple. About a year ago, Exxon was worth more than Chevron and Royal Dutch Shell, its two biggest listed rivals, combined. Today, it trails Shellron by almost $42 billion.
---
overheard@wsj.com
Subject: Stock prices
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.8
Publication year: 2012
Publication date: Feb 10, 2012
column: Heard on the Street
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 920779322
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/920779322?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Total's Profit Rises on High Oil Prices
Author: Amiel, Geraldine; Landauro, Inti
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 Feb 2012: n/a.
ProQuest document link
Abstract:
PARIS--French oil giant Total SA on Friday said 2012 has begun favorably and that it will step up investments over the next three years after it reported a 12.8% increase in fourth-quarter net income on high oil prices and in spite of weak downstream markets and stable output.
Full text: PARIS--French oil giant Total SA on Friday said 2012 has begun favorably and that it will step up investments over the next three years after it reported a 12.8% increase in fourth-quarter net income on high oil prices and in spite of weak downstream markets and stable output.
The group plans to invest a net $20 billion in 2012, after having invested $22.2 billion in 2011, which was 40% higher than 2010. The company's management forecast annual investment of $23 billion in 2012-2014 as it expects oil prices to remain elevated due to expected high demand levels and falling spare output capacity.
Total confirmed it targets a 2.5% increase in average annual output in 2012-2015, and Chairman and Chief Executive Christophe de Margerie told a press conference that the increase may be close to 3% in 2012, depending on the recovery in Libyan production.
Total reported fourth quarter net profit of [euro]2.29 billion ($3.04 billion), up from [euro]2.03 billion a year earlier. The group's adjusted net income, an earnings benchmark that strips out non-performance-related inputs that is closely watched by investors, came in slightly above expectations.
Total's quarterly revenue came in at [euro]47.49 billion, up 18.2% from the year-ago quarter.
"In a period of economic slowdown, ongoing tensions on the global oil supply supported the Brent price above $110 a barrel in 2011. This environment has been favorable for the upstream, but it was difficult for the downstream activities, notably in Europe," Mr. de Margerie said, adding that 2012 started favorably for the company.
Analyst Dominique Patry from Cheuvreux said the results were in line with expectations, as was the [euro]0.57 quarterly dividend. The exploration and production business performed better than expected, though the chemical business underperformed expectations, Mr. Patry said.
In the European afternoon, shares in Total were trading down 1.1% at [euro]40.71 while the CAC-40 benchmark index was down 1.3%.
The group's hydrocarbon output was stable in the last quarter of 2011 from a year earlier, at 2.384 million barrels of oil equivalent per day, from 2.387 mboe/d a year earlier.
Total had seen its 2011 oil output limited by the Libyan outages, but output from the North African country has been coming back and other big projects, such as the ramp-up of the Pazflor deep-offshore Angolan field, has also contributed to higher volumes.
In 2012, output is expected to grow 2%-3%, depending on evolution of the situations in Libya and Syria, Total said.
But the lack of further detail on output projections is a disappointment for investors, said Alphavalue trading firm's analysts, who rate the company at "reduce."
Total, Europe's third-largest oil company, said the year started favorably for the upstream business, due to continued high oil prices, while it noted that refining margins improved "appreciably" after a sharp fall in 2011. Earnings for European and U.S. oil majors have been badly hit by weak refining in the most recent quarter.
Around 80% of the group's investments will be focused in exploration and production, Chief Financial Officer Patrick de la Chevardiere said.
The company's efforts on exploration is paying off, as its replacement rate of proved reserves was 185% in 2011. Cheuvreux's Patry said this good replacement rate was reached mainly through acquisitions.
Global demand for oil rose by 600,000 barrels a day in 2011, while the spare oil output capacity fell to 3% of the global capacity, down from 5% in 2010 and 6% in 2009, Total said.
Write to Geraldine Amiel at geraldine.amiel@dowjones.com
Corrections & Amplifications
Over the 2012-2014 period, Total plans to invest an average net amount of $23 billion per year. An earlier version of this article incorrectly gave the figure in euros.
Credit: By Geraldine Amiel and Inti Landauro
Subject: Petroleum industry
Company / organization: Name: Total SA; NAICS: 211111, 324110, 447190
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 10, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 920781361
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/920781361?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
IEA Again Cuts Oil-Demand Forecast
Author: Herron, James
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 Feb 2012: n/a.
ProQuest document link
Abstract:
The IEA has cut half a million barrels a day from its 2012 oil-demand growth forecast since the start of this year, a change that it said leaves the oil market with enough flexibility to adjust to any loss of Iranian crude exports because of sanctions that will take effect in July.
Full text: LONDON--The International Energy Agency cut its 2012 oil-demand growth forecast for the second time in just a few weeks as Europe's economic outlook weakens. The cutback comes as crude production from the Organization of Petroleum Exporting Countries reached its highest level since October 2008.
The IEA has cut half a million barrels a day from its 2012 oil-demand growth forecast since the start of this year, a change that it said leaves the oil market with enough flexibility to adjust to any loss of Iranian crude exports because of sanctions that will take effect in July.
This shows that basic oil supply and demand figures don't support prices at their current level of about $118 a barrel for Brent crude, said analysts at Bernstein Research in a note to clients. The IEA, which represents the interests of some energy consuming countries, said the perception of the risk of a supply disruption in Iran or other trouble spots like Sudan is preventing high oil prices from falling.
"The big hit to demand numbers for 2012 is Europe's significantly weaker economic picture," David Fyfe, head of the IEA's oil markets division, said in an interview with Dow Jones Newswires. Demand in North America isn't quite as weak as expected, but still pretty muted, he said.
Crude-oil prices fell Friday after the IEA report. Light, sweet crude for March delivery fell $1.17, or 1.2%, to $98.67 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures U.S. exchange dropped $1.28, or 1.1%, to $117.31 a barrel.
The IEA said in its monthly market report that it expects oil demand to increase 800,000 barrels a day, to 89.9 million barrels, in 2012. That figure is 300,000 barrels a day lower than its January forecast, a cut that was widely expected after the International Monetary Fund reduced its global economic growth forecasts to 3.3% from 4% last month.
Asia is the source of almost all oil-demand growth in 2012, although the picture there is mixed. The IEA trimmed its forecast for China as economic growth slowed and oil demand nearly stagnated in December. However, there is the possibility that China could decide to add to its strategic petroleum reserve this year, which could boost its demand by 200,000 barrels a day, Mr. Fyfe said.
Japan's oil demand rose 9.5% in December from the year-ago month, as it uses fossil fuels to fill the gap left by shutdowns in its nuclear industry after the earthquake and tsunami last year.
The IEA estimated that OPEC produced 30.9 million barrels a day of crude oil in January, its highest level since October 2008 and one million barrels a day above the amount of crude the world needs from the cartel in 2012.
"The market looks reasonably well supplied for 2012," and should be able to handle without too much trouble the European Union embargo on 600,000 barrels a day of Iranian oil imports that will come into force in July, Mr. Fyfe said.
OPEC agreed in December to reduce its output to 30 million barrels a day for 2012, but Saudi Arabia, Kuwait and the United Arab Emirates didn't reduce output in January to make way for increasing Libyan production, the IEA said.
Write to James Herron at james.herron@dowjones.com
Credit: By James Herron
Subject: Crude oil prices; Petroleum industry; Strategic petroleum reserve
Company / organization: Name: International Energy Agency; NAICS: 928120; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 10, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 920823648
Document URL: https ://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/920823648?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Pipeline Deficit Clogs American Oil Dream
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 Feb 2012: n/a.
ProQuest document link
Abstract:
Logistical constraints have the potential to slow the renaissance in domestic energy production.
Full text: Welcome to Clearbrook, Minn.: America's cheapest gas station.
Want to lay your hands on some oil at just $70 a barrel? Turns out you can. Question is what you'll do with it once you own it. Such cheap oil also raises a worrying prospect: America's vaunted progress toward less reliance on energy imports may well get bogged down for want of a pipeline.
This cheap oil isn't the familiar West Texas Intermediate or Brent crude grades. They haven't been at $70 in almost two years (WTI now hovers around $98 and Brent at $117).
Instead, this oil is coming out of fields in the Bakken basin underlying North Dakota and Montana, as well as Canada. Much of it flows through pipelines that meet at Clearbrook, a Midwest oil hub like the bigger one at Cushing, Okla. In the past week or so, the price of oil delivered at Clearbrook has plummeted from about $95 a barrel to $70.
The reason for Clearbrook crude's big discount to WTI is much the same as for WTI's big discount to Brent: logistics. The volume of oil heading into Clearbrook has surged. North Dakota's output in 2005 was below 100,000 barrels per day. Today it's more than five times that level and rising as development of shale resources has exploded. Meanwhile, Canadian producers trying to move their oil south toward the Gulf coast are also filling local pipelines.
So the system around Clearbrook is straining to cope with the oil traffic heading through it. Cushing, Okla., is suffering similar problems as the provenance of U.S. oil shifts, leading to the wide price spread with Brent. Pipeline capacity of about 425,000 barrels per day coming out of the Bakken basin is full, says Anish Patel, an analyst at research firm ISI Group. Expansions are coming but not until mid-2012 at the earliest.
In the meantime, producers are relying on trains and trucks to move some of the excess crude toward refineries where it can be turned into useful products like gasoline. That's great for the likes of Burlington Northern Santa Fe, the railroad owned by Warren Buffett's Berkshire Hathaway. But it's also expensive. One way of thinking about the discount for oil sold at Clearbrook is that it covers the extra cost incurred by the buyer to move the stuff to market by unconventional means.
If the price of oil coming from the Bakken drops below $65 a barrel, that might force some producers there to scale back development, says Patel. Logistical constraints have the potential to slow the renaissance in domestic energy production.
Indeed, owning overworked pipeline operators such as Enbridge is a good way to cash in on these oil market anomalies. Alternatively, you could try filling your tank at Clearbrook. Bring a map.
Write to Liam Denning at liam.denning@wsj.com
Credit: By Liam Denning
Subject: Energy policy; Petroleum industry
Location: North Dakota
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 10, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 920844883
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/920844883?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Restoring Sudan's Oil Output Could Take Months
Author: Gross, Jenny
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 Feb 2012: n/a.
ProQuest document link
Abstract:
The dispute has already resulted in a halt of South Sudan's crude production and exports, further tightening supply in Asia, and is one of the factors helping to push up global oil prices.
Full text: LONDON--South Sudan's oil production, halted last month in an escalating dispute with neighboring Sudan over oil transit fees, could take several months to fully restore, according to South Sudan Oil Minister Stephen Dhieu Dau.
Mr. Dau's comment comes as Sudan and South Sudan are set to resume negotiations over the transit fees. The dispute has already resulted in a halt of South Sudan's crude production and exports, further tightening supply in Asia, and is one of the factors helping to push up global oil prices.
The loss of South Sudan's oil comes as Iran has threatened to cut its crude exports after the U.K. and European Union ratcheted up sanctions against Iran over its nuclear program.
"All oil fields in South Sudan have now been shut down. We are informed by the oil companies that it could take several months to bring oil production back on line to commercial levels," Mr. Dau said in an email late Thursday.
In late January, South Sudan said it was halting its 350,000 barrels a day oil production after it alleged neighboring Sudan had stolen $815 million worth of crude oil since December. Landlocked South Sudan said the oil had been taken from an oil export pipeline that crosses Sudan to reach an export outlet on the Red Sea.
A London-based spokesman for the Sudan government said they took the oil as payment for transit and other fees owing.
Earlier Friday, the International Energy Agency said that without a resolution, the dispute between the neighboring countries could lower oil production from South Sudan by around 200,000 barrels a day for the first quarter and 100,000 barrels a day lower for the whole year.
The IEA said in its monthly oil market report that South Sudan produced 260,000 barrels a day in December and Sudan produced 110,000 barrels a day.
The combined output has declined around 80,000 barrels a day since the two countries split last July, the report said.
The loss of skilled workers on South Sudan's oil fields following independence could have played a role as well as a natural decline in the fields' productivity, said IEA senior oil analyst Michael Cohen.
Separately, Mr. Dau said South Sudan was pressing ahead with plans to find alternative export routes for its crude oil--via neighboring Kenya or Ethiopia--and was working on raising the finance to build a new pipeline.
He said he expected at least one alternative pipeline to be completed within 12 to 18 months.
Credit: By Jenny Gross
Subject: Petroleum industry; Pipelines; Petroleum production
Location: South Sudan
Company / organization: Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 10, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 920877007
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/920877007?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
IEA Again Cuts Oil-Demand View
Author: Herron, James
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]11 Feb 2012: n/a.
ProQuest document link
Abstract:
The IEA has cut half a million barrels a day from its 2012 oil-demand growth forecast since the start of this year, a change that it said leaves the oil market with enough flexibility to adjust to any loss of Iranian crude exports because of sanctions that will take effect in July.
Full text: LONDON--The International Energy Agency cut its 2012 oil-demand growth forecast for the second time in just a few weeks as Europe's economic outlook weakens. The cutback comes as crude production from the Organization of Petroleum Exporting Countries reached its highest level since October 2008.
The IEA has cut half a million barrels a day from its 2012 oil-demand growth forecast since the start of this year, a change that it said leaves the oil market with enough flexibility to adjust to any loss of Iranian crude exports because of sanctions that will take effect in July.
This shows that basic oil supply and demand figures don't support prices at their current level of about $118 a barrel for Brent crude, said analysts at Bernstein Research in a note to clients. The IEA, which represents the interests of some energy consuming countries, said the perception of the risk of a supply disruption in Iran or other trouble spots like Sudan is preventing high oil prices from falling.
"The big hit to demand numbers for 2012 is Europe's significantly weaker economic picture," David Fyfe, head of the IEA's oil markets division, said in an interview with Dow Jones Newswires. Demand in North America isn't quite as weak as expected, but still pretty muted, he said.
Crude-oil prices fell Friday after the IEA report. Light, sweet crude for March delivery fell $1.17, or 1.2%, to $98.67 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures U.S. exchange dropped $1.28, or 1.1%, to $117.31 a barrel.
The IEA said in its monthly market report that it expects oil demand to increase 800,000 barrels a day, to 89.9 million barrels, in 2012. That figure is 300,000 barrels a day lower than its January forecast, a cut that was widely expected after the International Monetary Fund reduced its global economic growth forecasts to 3.3% from 4% last month.
Asia is the source of almost all oil-demand growth in 2012, although the picture there is mixed. The IEA trimmed its forecast for China as economic growth slowed and oil demand nearly stagnated in December. However, there is the possibility that China could decide to add to its strategic petroleum reserve this year, which could boost its demand by 200,000 barrels a day, Mr. Fyfe said.
Japan's oil demand rose 9.5% in December from the year-ago month, as it uses fossil fuels to fill the gap left by shutdowns in its nuclear industry after the earthquake and tsunami last year.
The IEA estimated that OPEC produced 30.9 million barrels a day of crude oil in January, its highest level since October 2008 and one million barrels a day above the amount of crude the world needs from the cartel in 2012.
"The market looks reasonably well supplied for 2012," and should be able to handle without too much trouble the European Union embargo on 600,000 barrels a day of Iranian oil imports that will come into force in July, Mr. Fyfe said.
OPEC agreed in December to reduce its output to 30 million barrels a day for 2012, but Saudi Arabia, Kuwait and the United Arab Emirates didn't reduce output in January to make way for increasing Libyan production, the IEA said.
Write to James Herron at james.herron@dowjones.com
Credit: By James Herron
Subject: Crude oil prices; Petroleum industry; Strategic petroleum reserve
Company / organization: Name: International Energy Agency; NAICS: 928120; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 11, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 920884478
Document URL: https://l ogin.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/920884478?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Total Partly Replaces Iran Oil With Saudi Crude
Author: Amiel, Geraldine
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]11 Feb 2012: n/a.
ProQuest document link
Abstract:
Total's acknowledgment that it has substituted some Iranian crude oil with Saudi oil is the first such public comment by a major European oil company since the European Union decided last month to embargo Iranian oil.
Full text: LONDON--French oil major Total SA stopped buying Iranian crude oil for its refineries and trading activities at the end of 2011, six months ahead of the effective implementation of a European embargo on Iran's oil, and has partly replaced it with oil from Saudi Arabia, Chief Financial Officer Patrick de la Chevardiere said Friday.
Total's acknowledgment that it has substituted some Iranian crude oil with Saudi oil is the first such public comment by a major European oil company since the European Union decided last month to embargo Iranian oil.
The company's previous Iranian crude-oil supply had been "some heavy oil that was well suited for our French refineries," and the substitution crude oil the group has found since it stopped buying from Iran is "a bit more complicated to process," Mr. de la Chevardiere said in an interview.
Total has acted early to remove its exposure to Iran as the U.S. and Europe have tightened sanctions on the Islamic republic over its nuclear activities, which they allege are aimed at developing nuclear weapons. Iran denies the claim and says its activities are designed to develop peaceful nuclear-power capabilities for the country.
Iran, meanwhile, has warned its oil-exporting neighbors in the Persian Gulf not to step in to make up any shortfall in Iranian oil supply caused by enforcement of the sanctions, and Saudi Arabia has said it isn't actively attempting to seize market share from its neighbor.
But Total said it has turned to Saudi Arabia to replace some Iranian oil, even if the Saudi oil isn't as particularly suited to French refineries.
"The Saudis are doing their bit" to compensate the loss of Iranian crude on the oil market, Mr. de la Chevardiere said. He declined to disclose the amount of oil Total had been buying from Iran and wouldn't specify the amount of oil provided to the company by Saudi Arabia.
Italy and Greece buy Iranian crude oil, the Total CFO said, noting that Greece has bought the oil through generally looser credit terms than other oil-exporting countries. India is now buying extra Iranian crude oil as others reduce their dependence on the Islamic republic, he said.
Speaking on a train to London, where he was to present the group's fourth-quarter earnings to investors, Mr. de la Chevardiere said that tensions affecting the oil market are likely to keep oil prices high throughout this year. These include the unrest in oil producers Libya and Syria but also the heightened rhetoric over sanctions on Iran, while demand is still forecast to increase in emerging markets, he said.
"If one excludes a potential global economic recession, and if OPEC [the Organization of Petroleum Exporting Countries] keeps on reacting when prices weaken, I can say that the crude-oil price should stand well above $80 a barrel at the end of the year," he said.
Earlier Friday, Total reported a 12.8% increase in fourth-quarter net income on high oil prices and in spite of weak refining and chemical markets and stable output.
Total reported fourth-quarter net profit of [euro]2.29 billion ($3.02 billion), up from [euro]2.03 billion in the same period a year earlier. The group's adjusted net income, an earnings benchmark that strips out nonperformance-related inputs and is closely watched by investors, came in slightly above expectations.
The company is still awaiting Russian authorities' decision on a potential tax-rebate request for its Shtokman liquefied-gas project off the Arctic circle, and Total now expects to make a final investment decision--already postponed several times--with its partners in Russia at the end of the first quarter, Mr. de la Chevardiere said.
Total, which is the third-largest European integrated oil-and-gas company, said Friday it plans to invest a net $20 billion in 2012, less than the $22.2 billion it invested in 2011. The company's investments last year were 40% higher than in 2010. Eighty percent of its planned 2012 investment will be in its oil and gas exploration activities.
The company's management forecast annual investment of $23 billion in 2012-2014 as it expects oil prices to remain elevated. Total confirmed it targets a 2.5% increase in average annual output in 2012-2015.
Total has given priority to exploration and production, as its refining and marketing activities are still being weighed down by severe weakness in European refining margins, causing the group to lose "several hundred million euros" in 2011, Mr. de la Chevardiere said. He declined to provide the exact figure.
European margins rose in January to $30 per ton, from an average of $15 per ton in each month last year, due to the unusually cold weather in Europe and as Swiss-based refining group Petroplus Holdings AG filed for insolvency and idled most of its European plants.
But European refining margins will remain weak until other companies cut their production capacities, Mr. de la Chevardiere said. He noted that demand for refined-oil products is on a "constant downward path" as car engines become more efficient and as carbon-emission policies in Europe grow more restrictive.
"We did our part; it's time others do theirs also," the CFO said, referring to Total's idling of one of its six French refineries, near Dunkirk, in 2009.
Credit: By Geraldine Amiel
Subject: Petroleum refineries; Petroleum industry; Sanctions
Location: Saudi Arabia
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 11, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 920885662
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/920885662?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Pipers Call Tune at U.S. Oil Revival
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]11 Feb 2012: n/a.
ProQuest document link
Abstract:
Logistical constraints have the potential to slow the renaissance in domestic energy production.
Full text: Welcome to Clearbrook, Minn.: America's cheapest gas station.
Want to lay your hands on some oil at just $70 a barrel? Turns out you can. Question is what you will do with it once you own it. Such cheap oil also raises a worrying prospect: America's vaunted progress toward less reliance on energy imports may well get bogged down for want of a pipeline.
This cheap oil isn't the familiar West Texas Intermediate or Brent crude grades. They haven't been at $70 in almost two years. (WTI now hovers around $99 and Brent at $117.)
Instead, this oil is coming out of fields in the Bakken basin underlying North Dakota and Montana, as well as Canada. Much of it flows through pipelines that meet at Clearbrook, a Midwest oil hub like the bigger one at Cushing, Okla. In the past week or so, the price of oil delivered at Clearbrook has plummeted from about $95 a barrel to $70.
The reason for Clearbrook crude's big discount to WTI is much the same as for WTI's big discount to Brent: logistics. The volume of oil heading into Clearbrook has surged. North Dakota's output in 2005 was below 100,000 barrels a day. Today, it is more than five times that level and rising as development of shale resources has exploded. Meanwhile, Canadian producers trying to move their oil south toward the Gulf Coast also are filling local pipelines.
So the system around Clearbrook is straining to cope with the oil traffic heading through it. Cushing is suffering similar problems as the provenance of U.S. oil shifts, leading to the wide price spread with Brent. Pipeline capacity of about 425,000 barrels a day coming out of the Bakken basin is full, says Anish Patel, an analyst at research firm ISI Group. Expansions to capacity are coming but not until mid-2012 at the earliest.
In the meantime, producers are relying on trains and trucks to move some of the excess crude toward refineries, where it can be turned into useful products like gasoline. That is great for the likes of Burlington Northern Santa Fe, the railroad owned by Warren Buffett's Berkshire Hathaway. But it also is expensive. One way of thinking about the discount for oil sold at Clearbrook is that it covers the extra cost incurred by the buyer to move the stuff to market by unconventional means.
If the price of oil coming from the Bakken drops below $65 a barrel, that might force some producers there to scale back development, Mr. Patel says. Logistical constraints have the potential to slow the renaissance in domestic energy production.
Indeed, owning overworked pipeline operators such as Enbridge is a good way to cash in on these oil-market anomalies. Alternatively, you could try filling your tank at Clearbrook. Bring a map.
Write to Liam Denning at liam.denning@wsj.com
Credit: By Liam Denning
Subject: Energy policy; Petroleum industry
Location: North Dakota
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 11, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 920896818
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/920896818?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
IEA Again Cuts Oil-Demand View
Author: Herron, James
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]11 Feb 2012: B.4. [Duplicate]
ProQuest document link
Abstract:
The IEA has cut half a million barrels a day from its 2012 oil-demand growth forecast since the start of this year, a change that it said leaves the oil market with enough flexibility to adjust to any loss of Iranian crude exports because of sanctions that will take effect in July.
Full text: LONDON -- The International Energy Agency cut its 2012 oil-demand growth forecast for the second time in just a few weeks as Europe's economic outlook weakens. The cutback comes as crude production from the Organization of Petroleum Exporting Countries reached its highest level since October 2008.
The IEA has cut half a million barrels a day from its 2012 oil-demand growth forecast since the start of this year, a change that it said leaves the oil market with enough flexibility to adjust to any loss of Iranian crude exports because of sanctions that will take effect in July.
This shows that basic oil supply and demand figures don't support prices at their current level of about $118 a barrel for Brent crude, said analysts at Bernstein Research in a note to clients. The IEA, which represents the interests of some energy consuming countries, said the perception of the risk of a supply disruption in Iran or other trouble spots like Sudan is preventing high oil prices from falling.
"The big hit to demand numbers for 2012 is Europe's significantly weaker economic picture," David Fyfe, head of the IEA's oil markets division, said in an interview with Dow Jones Newswires. Demand in North America isn't quite as weak as expected, but still pretty muted, he said.
Crude-oil prices fell Friday after the IEA report. Light, sweet crude for March delivery fell $1.17, or 1.2%, to $98.67 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures U.S. exchange dropped $1.28, or 1.1%, to $117.31 a barrel.
The IEA said in its monthly market report that it expects oil demand to increase 800,000 barrels a day, to 89.9 million barrels, in 2012. That figure is 300,000 barrels a day lower than its January forecast, a cut that was widely expected after the International Monetary Fund reduced its global economic growth forecasts to 3.3% from 4% last month.
Asia is the source of almost all oil-demand growth in 2012, although the picture there is mixed. The IEA trimmed its forecast for China as economic growth slowed and oil demand nearly stagnated in December. However, there is the possibility that China could decide to add to its strategic petroleum reserve this year, which could boost its demand by 200,000 barrels a day, Mr. Fyfe said.
Japan's oil demand rose 9.5% in December from the year-ago month, as it uses fossil fuels to fill the gap left by shutdowns in its nuclear industry after the earthquake and tsunami last year.
The IEA estimated that OPEC produced 30.9 million barrels a day of crude oil in January, its highest level since October 2008 and one million barrels a day above the amount of crude the world needs from the cartel in 2012. "The market looks reasonably well supplied for 2012," and should be able to handle without too much trouble the European Union embargo on Iranian oil, Mr. Fyfe said.
OPEC agreed in December to reduce its output to 30 million barrels a day for 2012, but Saudi Arabia, Kuwait and the United Arab Emirates didn't reduce output in January to make way for increasing Libyan production, the IEA said.
Credit: By James Herron
Subject: Crude oil; Commodity prices
Location: United States--US
Classification: 3400: Investment analysis & personal finance; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.4
Publication year: 2012
Publication date: Feb 11, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 920987490
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/920987490?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Private Equity Drills Into Oil Patch
Author: Zuckerman, Gregory; Dezember, Ryan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 Feb 2012: n/a.
ProQuest document link
Abstract:
Deal makers are excited because advances in drilling techniques such as horizontal drilling and hydraulic fracturing, or fracking, have made it easier to extract oil and natural gas from shale and other rock formations, creating an opening for private-equity firms to place big bets in a capital-hungry business. Firms "can put a lot of money to work quickly and receive out-sized returns" investing in oil and gas, said Karl Kurz, a former chief operating officer of Anadarko Petroleum Corp. who now works for private-equity firm CCMP Capital Advisors LLC.
Full text: Wall Street thinks it has tapped a new gusher.
Searching for growth in a tepid economy, private-equity firms are zeroing in on the U.S. oil patch.
Deal makers are excited because advances in drilling techniques such as horizontal drilling and hydraulic fracturing, or fracking, have made it easier to extract oil and natural gas from shale and other rock formations, creating an opening for private-equity firms to place big bets in a capital-hungry business. Some early investors already have extracted billions of dollars of profits.
Private-equity firms completed $24.8 billion of energy deals last year, nearly triple the $8.5 billion in 2010, while the value of all deals last year rose just 17%, according to data-tracker Preqin.
Now, Apollo Global Management LLC and Riverstone Holdings LLC together are bidding for the exploration unit of El Paso Corp., which includes prime shale acreage in Texas and Louisiana in a deal that could be valued around $7 billion, according to people familiar with the matter.
Firms "can put a lot of money to work quickly and receive out-sized returns" investing in oil and gas, said Karl Kurz, a former chief operating officer of Anadarko Petroleum Corp. who now works for private-equity firm CCMP Capital Advisors LLC.
But shale drilling is relatively new, so there remains uncertainty about how long wells will produce. And the boom is now several years old, so late-arriving buyers may have to pay up. Some buying in Ohio's Utica Shale--believed by many to be the nation's next major oil field--have paid as much as $15,000 an acre recently, up from around $500 a year ago.
Volatile commodity prices also make it hard to use debt in these investments, a common tactic private-equity firms use to boost profits. Indeed, surging production has sent natural-gas prices plummeting nearly 37% over the past year, pushing down shares of companies focused on gas-yielding shale plays.
"The really great time to do these deals was over the past few years, when some firms hit a series of home runs and billionaires were made, like in the Internet boom," said Scott Stuart, who runs SageView Capital LP, a Greenwich, Conn.,private-equity and hedge-fund firm. "It's more competitive now and while you can still make good returns, with gas prices having plummeted it's trickier."
Recent windfalls illustrate why the gamble is worth taking, private-equity firms in the sector say. Energy-related private-equity investments scored gains of more than 30% in each of the past two years, and have beaten industry averages for 12 of the past 14 years, according to Cambridge Associates.
In December, Laredo Petroleum Holdings Inc., backed by buyout-firm Warburg Pincus LLC, raised about $300 million in an initial public offering. Laredo's shares have risen 48%, and Warburg Pincus's stake in the company is now worth nearly $2.6 billion, up from $1.7 billion at the time of the IPO.
An appeal of shale is that its deposits are largely known, reducing some of the risks of new drilling investments. "Shale lacks the hit-or-miss aspect of conventional exploration," said Marc Lipschultz, who heads KKR & Co.'s energy and infrastructure business.
Private-equity executives also note that some of the most expensive deals lately have been undertaken by energy companies, not investment firms. And firms, including KKR and EnCap Investments LP, have been the beneficiaries of those companies willing to pay high prices for a piece of the action.
Private equity occupies a crucial slot in the sector's food chain, fortifying small, cash-hungry explorers until they are ready to be consumed by large producers or go public.
Firms typically team up with management groups with energy experience to lessen risk. Last month, Houston's Apache Corp. agreed to pay $2.85 billion for Cordillera Energy Partners III LLC, the third collaboration between EnCap and oil executive George Solich.
Firms including EnCap, Riverstone and CCMP have been backing explorers for years.
But bets are getting bigger. Last year, KKR spent $7.2 billion for shale-owning Samson Investment Co. in one of 2011's biggest buyouts. Blackstone Group LP has committed to invest as much as $2.2 billion in shale, including $1 billion with a partnership involving George Mitchell, the Houston billionaire credited as the father of shale drilling. And last week the firm raised $1 billion from banks with GeoSouthern Energy Corp. to develop south Texas shale fields.
Some seeking exposure are buying manufacturers. Two years ago, private-equity firm Advent International was introduced to a Calgary-based company called BOS Solutions. The company recycles drilling fluids at well sites but didn't have capital to build machines to satisfy demand, said Advent executive David McKenna.
Advent bought the company and spent about $100 million expanding production, according to a person familiar with the matter.
"We see a great opportunity to look in the whole ecosystem around oil and gas," said Richard Carey, an executive at private-equity firm Permira. Permira last year paid $960 million for California's BakerCorp, which designs water distribution and storage systems and is seeing growing business supplying shale drilling sites.
Write to Gregory Zuckerman at gregory.zuckerman@wsj.com and Ryan Dezember at ryan.dezember@dowjones.com
Credit: By Gregory Zuckerman And Ryan Dezember
Subject: Private equity; Hydraulic fracturing; Natural gas; Executives; Energy industry
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 12, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921096838
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921096838?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Texans Are Baffled by the Keystone Decision; China will get the oil from Canada that could have come to the U.S.
Author: Perry, Rick
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Feb 2012: n/a.
ProQuest document link
Abstract:
President Obama simply caved to the more radical activist elements of his base who almost immediately decided they would vigorously oppose Keystone, regardless of the U.S. State Department's conclusion that it would be one of the safest pipeline systems in the United States.
Full text: Canadian Prime Minister Stephen Harper was in Beijing recently signing an agreement and touting his country's growing energy partnership with China. It's good news for Canada, which is rightfully looking to grow markets for its sizeable oil reserves. And it's particularly good news for China, which needs to keep tapping into fresh supplies to feed its growing economy and mounting demand for oil.
Unfortunately, it's bad news for Americans, particularly when you consider that one of the main reasons China has become such an attractive market to Canada was President Obama's recent rejection of the Keystone XL Pipeline. This cross-border connection would have provided a golden opportunity to partner with our neighbors to the north in producing massive amounts of energy, both for our country and the globe.
It seems unimaginable, yet President Obama refused Trans-Canada's request to run its pipeline across the border from Canada to the Texas Gulf Coast. This extensive pipeline holds the potential of moving up to 830,000 barrels of crude oil per day--including oil produced in North Dakota and Montana--to refineries here in Texas. Translated into job numbers, that's up to 20,000 direct jobs and estimates of up to hundreds of thousands of indirect jobs created by this $7 billion project.
Keystone would have provided a shot in the arm for our nation's uncertain economy, and it could have provided economic opportunity for tens of thousands of families, stretching from here in Texas all the way to the Canadian border.
Hoping to appease environmental radicals, President Obama said no, claiming he didn't have time to adequately consider the pipeline.
This is despite the fact the original request was made in September 2008, and Keystone was the subject of dozens of meetings on multiple levels of his own administration, as well as exhaustive environmental impact reviews. Certainly, three-and-half years is more than enough time to make a decision.
His reasoning becomes even more laughable when you put it up against his massive, ill-conceived so-called stimulus bill, which he muscled through Congress and signed within the first month of his presidency.
President Obama wants us to believe he is for jobs, economic opportunity and greater energy security, and his Keystone decision does help meet those goals--for the People's Republic of China. The American people get nothing.
President Obama simply caved to the more radical activist elements of his base who almost immediately decided they would vigorously oppose Keystone, regardless of the U.S. State Department's conclusion that it would be one of the safest pipeline systems in the United States.
President Obama put his personal political interests ahead of improving our country's economic climate.
His decision also relegates the U.S. to continued reliance on oil from volatile nations in the Middle East, where unrest, chaos and Iran's threats to block the oil supply moving through the Strait of Hormuz are driving gas prices ever closer to $4 a gallon.
It's all reflective of a wrong-headed approach that vilifies energy companies, ignores the realities of energy markets, squeezes the pocketbooks of struggling Americans, and doesn't take us one step closer to energy independence.
In Texas, our approach has been steady and consistent, an "all of the above" energy portfolio that cultivates a vibrant energy market that includes traditional sources, as well as wind, solar and biomass.
We're still a long way from doing it all with renewables, and we need to continue finding and utilizing new supplies of traditional energy sources, like oil, natural gas, nuclear and coal, if we're going to keep our economy healthy in the years to come.
That's what Keystone was bringing us. And that's what President Obama rejected.
There are efforts in Congress to find a way around the president's roadblock, led by Texas Sen. John Cornyn, among others.
Unless President Obama changes his mind, or we find an alternate method of getting the pipeline built, all that oil will likely flow to China instead of here, taking with it an all-too-rare economic opportunity.
Mr. Perry, a Republican, is the governor of Texas.
Credit: By Rick Perry
Subject: Pipelines; Energy policy; Petroleum industry; Federal legislation
People: Obama, Barack Harper, Stephen
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 13, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921096149
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921096149?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Private Equity Drills Into Oil Patch
Author: Zuckerman, Gregory; Dezember, Ryan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Feb 2012: n/a.
ProQuest document link
Abstract:
Deal makers are excited because advances in drilling techniques such as horizontal drilling and hydraulic fracturing, or fracking, have made it easier to extract oil and natural gas from shale and other rock formations, creating an opening for private-equity firms to place big bets in a capital-hungry business. Firms "can put a lot of money to work quickly and receive out-sized returns" investing in oil and gas, said Karl Kurz, a former chief operating officer of Anadarko Petroleum Corp. who now works for private-equity firm CCMP Capital Advisors LLC.
Full text: Wall Street thinks it has tapped a new gusher.
Searching for growth in a tepid economy, private-equity firms are zeroing in on the U.S. oil patch.
Deal makers are excited because advances in drilling techniques such as horizontal drilling and hydraulic fracturing, or fracking, have made it easier to extract oil and natural gas from shale and other rock formations, creating an opening for private-equity firms to place big bets in a capital-hungry business. Some early investors already have extracted billions of dollars of profits.
Private-equity firms completed $24.8 billion of energy deals last year, nearly triple the $8.5 billion in 2010, while the value of all deals last year rose just 17%, according to data-tracker Preqin.
Now, Apollo Global Management LLC and Riverstone Holdings LLC together are bidding for the exploration unit of El Paso Corp., which includes prime shale acreage in Texas and Louisiana in a deal that could be valued around $7 billion, according to people familiar with the matter.
Firms "can put a lot of money to work quickly and receive out-sized returns" investing in oil and gas, said Karl Kurz, a former chief operating officer of Anadarko Petroleum Corp. who now works for private-equity firm CCMP Capital Advisors LLC.
But shale drilling is relatively new, so there remains uncertainty about how long wells will produce. And the boom is now several years old, so late-arriving buyers may have to pay up. Some buying in Ohio's Utica Shale--believed by many to be the nation's next major oil field--have paid as much as $15,000 an acre recently, up from around $500 a year ago.
Volatile commodity prices also make it hard to use debt in these investments, a common tactic private-equity firms use to boost profits. Indeed, surging production has sent natural-gas prices plummeting nearly 37% over the past year, pushing down shares of companies focused on gas-yielding shale plays.
"The really great time to do these deals was over the past few years, when some firms hit a series of home runs and billionaires were made, like in the Internet boom," said Scott Stuart, who runs SageView Capital LP, a Greenwich, Conn.,private-equity and hedge-fund firm. "It's more competitive now and while you can still make good returns, with gas prices having plummeted it's trickier."
Recent windfalls illustrate why the gamble is worth taking, private-equity firms in the sector say. Energy-related private-equity investments scored gains of more than 30% in each of the past two years, and have beaten industry averages for 12 of the past 14 years, according to Cambridge Associates.
In December, Laredo Petroleum Holdings Inc., backed by buyout-firm Warburg Pincus LLC, raised about $300 million in an initial public offering. Laredo's shares have risen 48%, and Warburg Pincus's stake in the company is now worth nearly $2.6 billion, up from $1.7 billion at the time of the IPO.
An appeal of shale is that its deposits are largely known, reducing some of the risks of new drilling investments. "Shale lacks the hit-or-miss aspect of conventional exploration," said Marc Lipschultz, who heads KKR & Co.'s energy and infrastructure business.
Private-equity executives also note that some of the most expensive deals lately have been undertaken by energy companies, not investment firms. And firms, including KKR and EnCap Investments LP, have been the beneficiaries of those companies willing to pay high prices for a piece of the action.
Private equity occupies a crucial slot in the sector's food chain, fortifying small, cash-hungry explorers until they are ready to be consumed by large producers or go public.
Firms typically team up with management groups with energy experience to lessen risk. Last month, Houston's Apache Corp. agreed to pay $2.85 billion for Cordillera Energy Partners III LLC, the third collaboration between EnCap and oil executive George Solich.
Firms including EnCap, Riverstone and CCMP have been backing explorers for years.
But bets are getting bigger. Last year, KKR spent $7.2 billion for shale-owning Samson Investment Co. in one of 2011's biggest buyouts. Blackstone Group LP has committed to invest as much as $2.2 billion in shale, including $1 billion with a partnership involving George Mitchell, the Houston billionaire credited as the father of shale drilling. And last week the firm raised $1 billion from banks with GeoSouthern Energy Corp. to develop south Texas shale fields.
Some seeking exposure are buying manufacturers. Two years ago, private-equity firm Advent International was introduced to a Calgary-based company called BOS Solutions. The company recycles drilling fluids at well sites but didn't have capital to build machines to satisfy demand, said Advent executive David McKenna.
Advent bought the company and spent about $100 million expanding production, according to a person familiar with the matter.
"We see a great opportunity to look in the whole ecosystem around oil and gas," said Richard Carey, an executive at private-equity firm Permira. Permira last year paid $960 million for California's BakerCorp, which designs water distribution and storage systems and is seeing growing business supplying shale drilling sites.
Write to Gregory Zuckerman at gregory.zuckerman@wsj.com and Ryan Dezember at ryan.dezember@dowjones.com
Credit: By Gregory Zuckerman And Ryan Dezember
Subject: Private equity; Hydraulic fracturing; Natural gas; Executives; Energy industry
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 13, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921096166
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921096166?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Private Equity Drills Into Oil Patch
Author: Zuckerman, Gregory; Dezember, Ryan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]13 Feb 2012: C.1.
ProQuest document link
Abstract:
Deal makers are excited because advances in drilling techniques such as horizontal drilling and hydraulic fracturing, or fracking, have made it easier to extract oil and natural gas from shale and other rock formations, creating an opening for private-equity firms to place big bets in a capital-hungry business.
Full text: Wall Street thinks it has tapped a new gusher.
Searching for growth in a tepid economy, private-equity firms are zeroing in on the U.S. oil patch.
Deal makers are excited because advances in drilling techniques such as horizontal drilling and hydraulic fracturing, or fracking, have made it easier to extract oil and natural gas from shale and other rock formations, creating an opening for private-equity firms to place big bets in a capital-hungry business. Some early investors already have extracted billions of dollars of profits.
Private-equity firms completed $24.8 billion of energy deals last year, nearly triple the $8.5 billion in 2010, while the value of all deals last year rose just 17%, according to data-tracker Preqin.
Now, Apollo Global Management LLC and Riverstone Holdings LLC together are bidding for the exploration unit of El Paso Corp., which includes prime shale acreage in Texas and Louisiana in a deal that could be valued around $7 billion, according to people familiar with the matter.
Firms "can put a lot of money to work quickly and receive out-sized returns" investing in oil and gas, said Karl Kurz, a former chief operating officer of Anadarko Petroleum Corp. who now works for private-equity firm CCMP Capital Advisors LLC.
But shale drilling is relatively new, so there remains uncertainty about how long wells will produce. And the boom is now several years old, so late-arriving buyers may have to pay up. Some buying in Ohio's Utica Shale -- believed by many to be the nation's next major oil field -- have paid as much as $15,000 an acre recently, up from around $500 a year ago.
Volatile commodity prices also make it hard to use debt in these investments, a common tactic private-equity firms use to boost profits.
"The really great time to do these deals was over the past few years, when some firms hit a series of home runs and billionaires were made, like in the Internet boom," said Scott Stuart, who runs SageView Capital LP, a Greenwich, Conn.,private-equity and hedge-fund firm. "It's more competitive now and while you can still make good returns, with gas prices having plummeted it's trickier."
Recent windfalls illustrate why the gamble is worth taking, private-equity firms in the sector say. Energy-related private-equity investments scored gains of more than 30% in each of the past two years, and have beaten industry averages for 12 of the past 14 years, according to Cambridge Associates.
In December, Laredo Petroleum Holdings Inc., backed by buyout-firm Warburg Pincus LLC, raised about $300 million in an initial public offering. Laredo's shares have risen 48%, and Warburg Pincus's stake in the company is now worth nearly $2.6 billion, up from $1.7 billion at the time of the IPO.
An appeal of shale is that its deposits are largely known, reducing some of the risks of new drilling investments. "Shale lacks the hit-or-miss aspect of conventional exploration," said Marc Lipschultz, who heads KKR & Co.'s energy and infrastructure business.
Private-equity executives also note that some of the most expensive deals lately have been undertaken by energy companies, not investment firms. And firms, including KKR and EnCap Investments LP, have been the beneficiaries of those companies willing to pay high prices for a piece of the action.
Private equity occupies a crucial slot in the sector's food chain, fortifying small, cash-hungry explorers until they are ready to be consumed by large producers or go public.
Firms typically team up with management groups with energy experience to lessen risk. Last month, Houston's Apache Corp. agreed to pay $2.85 billion for Cordillera Energy Partners III LLC, the third collaboration between EnCap and oil executive George Solich.
Firms including EnCap, Riverstone and CCMP have been backing explorers for years.
But bets are getting bigger. Last year, KKR spent $7.2 billion for shale-owning Samson Investment Co. in one of 2011's biggest buyouts. Blackstone Group LP has committed to invest as much as $2.2 billion in shale, including $1 billion with a partnership involving George Mitchell, the Houston billionaire credited as the father of shale drilling. And last week the firm raised $1 billion from banks with GeoSouthern Energy Corp. to develop south Texas shale fields.
Some seeking exposure are buying manufacturers. Two years ago, private-equity firm Advent International was introduced to a Calgary-based company called BOS Solutions. The company recycles drilling fluids at well sites but didn't have capital to build machines to satisfy demand, said Advent executive David McKenna.
Advent bought the company and spent about $100 million expanding production, according to a person familiar with the matter.
Credit: By Gregory Zuckerman and Ryan Dezember
Subject: Private equity; Hydraulic fracturing; Natural gas; Energy industry; Petroleum industry
Location: United States--US
Classification: 8130: Investment services; 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.1
Publication year: 2012
Publication date: Feb 13, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921130072
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921130072?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Total Looks to Saudis --- Company Partially Substitutes Iranian Oil Before Embargo
Author: Amiel, Geraldine
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]13 Feb 2012: B.8.
ProQuest document link
Abstract:
Total's acknowledgment that it has substituted some Iranian crude oil with Saudi oil is the first such public comment by a major European oil company since the European Union decided last month to embargo Iranian oil.
Full text: LONDON -- French oil major Total SA stopped buying Iranian crude oil for its refineries and trading activities at the end of 2011, six months ahead of the effective implementation of a European embargo on Iran's oil, and has partly replaced it with oil from Saudi Arabia, Chief Financial Officer Patrick de la Chevardiere said Friday.
Total's acknowledgment that it has substituted some Iranian crude oil with Saudi oil is the first such public comment by a major European oil company since the European Union decided last month to embargo Iranian oil.
The company's previous Iranian crude-oil supply had been "some heavy oil that was well suited for our French refineries," and the substitution crude oil the group has found since it stopped buying from Iran is "a bit more complicated to process," Mr. de la Chevardiere said in an interview.
Total has acted early to remove its exposure to Iran as the U.S. and Europe have tightened sanctions on the Islamic republic over its nuclear activities, which they allege are aimed at developing nuclear weapons. Iran denies the claim and says its activities are designed to develop peaceful nuclear-power capabilities for the country.
Iran, meanwhile, has warned its oil-exporting neighbors in the Persian Gulf not to step in to make up any shortfall in Iranian oil supply caused by enforcement of the sanctions, and Saudi Arabia has said it isn't actively attempting to seize market share from its neighbor.
But Total said it has turned to Saudi Arabia to replace some Iranian oil, even if the Saudi oil isn't as particularly suited to French refineries.
Mr. de la Chevardiere declined to disclose the amount of oil Total had been buying from Iran and wouldn't specify the amount of oil provided to the company by Saudi Arabia.
Italy and Greece buy Iraniancrude oil, the Total CFO said, noting that Greece has bought the oil through generally looser credit terms than other oil-exporting countries.
Mr. de la Chevardiere said that tensions affecting the oil market are likely to keep oil prices high throughout this year. These include the unrest in oil producers Libya and Syria but also the heightened rhetoric over sanctions on Iran, while demand is still forecast to increase in emerging markets, he said.
"If one excludes a potential global economic recession, and if OPEC [the Organization of Petroleum Exporting Countries] keeps on reacting when prices weaken, I can say that the crude-oil price should stand well above $80 a barrel at the end of the year," he said.
Credit: By Geraldine Amiel
Subject: Petroleum refineries; Petroleum industry; Sanctions; Embargoes & blockades; International trade; Crude oil
Location: Saudi Arabia Iran
Company / organization: Name: Total SA; NAICS: 211111, 324110, 447190
Classification: 1300: International trade & foreign investment; 8510: Petroleum industry; 9175: Western Europe; 9178: Middle East
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.8
Publication year: 2012
Publication date: Feb 13, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921130711
Document URL: https://login.ezproxy.uta.edu/login?url=https: //search.proquest.com/docview/921130711?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iraq Blocks Exxon License Bid
Author: Hassan Hafidh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Feb 2012: n/a.
ProQuest document link
Abstract:
The new bid round, scheduled for May, is expected to add some 10 billion barrels of crude oil and some 29 trillion cubic feet of gas to Iraq's reserves.
Full text: U.S. energy giant Exxon Mobil Corp. will be barred from Iraq's fourth oil- and gas-licensing auction because of the deals it struck with the country's semi-autonomous Kurdistan region, a spokesman for Iraqi Deputy Prime Minister for Energy Hussein al-Shahristani said Monday.
The move comes as Iraq's central government struggles to assert its authority over energy deals struck within its borders amid a continued lack of legislation for the sector.
The Iraqi government considers as invalid any deals signed with the Kurdistan Regional Government, or KRG, which in turn states that all and any deals it has signed comply with the country's new constitution.
"The Iraqi government has decided that Exxon won't be allowed to participate in the next oil- and gas-bidding round," spokesman Faisal Abdullah told The Wall Street Journal.
Iraq is planning to auction 12 promising exploration blocks, seven of which are believed to contain natural gas, and five thought to contain crude.
The new bid round, scheduled for May, is expected to add some 10 billion barrels of crude oil and some 29 trillion cubic feet of gas to Iraq's reserves.
However, it has already been delayed twice amid arguments on whether the contracts offered should be of the production-sharing type wanted by the explorers or the fixed-fee service contracts wanted by the government.
For the next licensing auction, Baghdad has refused to offer industry-standard production-sharing contracts, where the oil company owns a portion of the oil in the ground and can profit from its sale.
It is instead insisting on service contracts that pay companies a fixed fee for the amount of oil they produce.
The fixed-fee service contracts have worked for the redevelopment of existing oil fields in Iraq--albeit with very slim margins for the companies involved--but are unappealing for many companies facing the gamble of oil exploration, said KBC Energy Economics analyst Samuel Ciszuk.
"You don't know what you're going to find," said Mr. Ciszuk. "You have all these uncertainties, the most rigid contract framework...and delays building up because of slow state decision-making."
Mr. al-Shahristani has previously said Exxon would have to choose between its deal to explore six areas in Kurdistan and its central-government contract to develop the 370,000 barrel-a-day West Qurna Phase 1, Iraq's second-biggest field. It has proven reserves of more than 8.7 billion barrels.
"We are still waiting for Exxon to answer our letters in which we warned that it has to choose between contracts in Kurdistan and those in southern Iraq," the spokesman said, adding that depending on Exxon's reply the government would make a decision about its existing contract in the south.
An Exxon media officer in the U.S. declined to comment.
In December, Iraqi Prime Minister Nouri al-Maliki met with senior Exxon executives during a visit to the U.S. and said afterward that the Irving, Texas, company had promised to reconsider its dealings with the KRG.
The KRG has signed nearly 50 oil and gas deals with international oil companies, mostly second-tier or wildcat explorers. The KRG was hopeful that Exxon's presence would ease the passage of other majors, such as Total SA, which is active in Iraq.
Some of the blocks in the Exxon-KRG deal are in a hotly contested oil-rich territory claimed by both the central government and the KRG, stretching from the Iranian border to the east and to the Syrian border in the northwest.
Baghdad has already blacklisted companies that maintain deals with the Kurds, excluding them from working elsewhere in Iraq. Among those is New York-based Hess Corp., which was barred last year from competing in the fourth energy auction.
However, Adnan Al Janabi, chairman of the Oil and Energy Committee in the Iraqi Council of Representatives, last week said that the Oil Ministry doesn't have the legal authority to blacklist Exxon over its Kurdistan contracts.
Iraq--holder of the world's third-largest oil reserves, estimated at 143 billion barrels--auctioned and awarded some 11 oil fields to international oil firms in 2009 and 2010.
James Herron in London contributed to this article.
Credit: By Hassan Hafidh
Subject: Petroleum industry; Iraq War-2003; Natural gas; Prime ministers; Energy economics
Location: Iraq United States--US
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 20 12
Publication date: Feb 13, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921170828
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921170828?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Prices Top $100
Author: Strumpf, Dan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Feb 2012: n/a.
ProQuest document link
Abstract:
Oil market participants have been closely watching events in Greece because of concerns that a default could spur a broader economic crisis that could tear apart the euro zone, slow economic growth and curb demand for crude-oil.
Full text: NEW YORK--Crude-oil futures rose to their highest level in two weeks after Greece's parliament passed sweeping austerity measures, placing it in line for another bailout.
Light, sweet crude for March delivery rose $1.63, or 1.6%, to $100.30 a barrel on the New York Mercantile Exchange. Earlier, the contract rose to as high as $100.62, its highest level since Jan. 31.
Brent crude on ICE Futures Europe rose $1.02, or 0.9%, to $118.33 a barrel.
Futures pushed higher after Greece's parliament on Sunday approved an unpopular package of spending and wage cuts demanded by the country's international creditors as condition for a second bailout of at least [euro]130 billion ($171.59 billion).
Euro-zone finance ministers are expected to meet Wednesday in Brussels to formally sign off on the deal.
Oil market participants have been closely watching events in Greece because of concerns that a default could spur a broader economic crisis that could tear apart the euro zone, slow economic growth and curb demand for crude-oil.
"What's moving the market is Europe, and when we feel good about Europe, oil has a tendency to rally," said Phil Flynn, an analyst at PFG Best in Chicago.
The developments also sent the euro rallying against the dollar. A weaker dollar typically boosts crude-oil prices by making the dollar-denominated commodity cheaper for holders of other currencies.
Although crude-oil futures shot higher in the wake of Greece's austerity cuts, the market for benchmark Nymex crude has budged little from its tight range around $100 a barrel all year. Futures have spent much of 2012 swinging higher and lower on competing concerns about weak global oil demand and fears about Iranian supply disruptions.
The market for Brent crude, the European benchmark, has rallied sharply however, largely because several European countries are highly dependent on Iranian crude. The differential between the two crudes, which historically has stood at about $1 a barrel, on Monday was about $18.
The European Union's recently imposed oil sanctions on Iran aren't set to kick in until June 1. But in the meantime, Iranian production has been falling, according to analysts at JBC Energy, a consultancy.
"Iranian output has already lost more than 200,000 barrels a day since last August, reflecting the lack of maintenance and investment in Iran's oil fields rather than the embargo against Iranian crude oil," the analysts wrote. "Foreign companies have exited Iran in large numbers over recent years, cutting massively into the oil and gas supply potential of the country."
Still, global demand remains weak, as evidenced by the International Energy Agency's decision Friday to cut its estimates for global oil demand this year by 0.3 million barrels a day.
Front-month March reformulated gasoline blendstock, or RBOB, recently rose 4.56 cents, or 1.5%, to $3.0205 a gallon. March heating oil rose 0.73 cent, or 0.3%, to $3.1894 a gallon.
Credit: By Dan Strumpf
Subject: Petroleum industry; Futures
Location: New York
Company / organization: Name: CME Group; NAICS: 523210; Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 13, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921186976
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921186976?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Hormuz Isn't the Only Oil Hot Spot
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Feb 2012: n/a.
ProQuest document link
Abstract:
[...] optimism can hardly be predicated on surging demand; both the International Energy Agency and the Organization of Petroleum Exporting Countries have just cut estimates.
Full text: The paradox of today's oil market is that to be an optimist, you have got to be a prophet of doom.
There are a lot of them about: Net speculative long positions in Nymex crude oil are at their highest since last May. Such optimism can hardly be predicated on surging demand; both the International Energy Agency and the Organization of Petroleum Exporting Countries have just cut estimates. Loose U.S. monetary policy offers some support, but the euro zone's own laxness offers an offset by weakening the euro against the dollar.
Committed oil bulls must be banking on supply disruptions. The big one would involve Iran blocking the Strait of Hormuz, through which roughly a fifth of the world's oil transits. But a series of smaller disruptions could also support prices.
Even if the Persian Gulf remains tranquil, tightening sanctions will cut Iran's oil output by about 300,000 barrels a day this year, according to consultancy JBC Energy. South Sudan's dispute with Sudan could keep another 100,000 barrels a day off the market in 2012. Unrest in Syria and Yemen keeps another 200,000 barrels a day offline.
The world is counting on another 800,000 barrels a day from Libya to come back after its civil war. Riots and strikes in Kazakhstan raise the prospect of disruption in a country home to Kashagan, one of the largest fields outside the Middle East. Meanwhile, Iraq, which the IEA expects to account for 70% of incremental output from OPEC out to 2016, remains a high-risk country.
Even without Hormuz being blocked, a series of smaller disruptions could cut far into the world's thin cushion of spare capacity of just 2.8 million barrels a day. Little wonder ever more oil-industry investment dollars are flowing back into a region where resources are growing and political spats usually involve zingers on televised debates: the U.S.
Write to Liam Denning at liam.denning@wsj.com
Credit: By Liam Denning
Subject: Petroleum industry
Location: United States--US
Company / organization: Name: International Energy Agency; NAICS: 928120; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 13, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921231711
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921231711?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Hormuz Isn't the Only Oil Hot Spot
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]14 Feb 2012: n/a.
ProQuest document link
Abstract:
[...] optimism can hardly be predicated on surging demand; both the International Energy Agency and the Organization of Petroleum Exporting Countries have just cut estimates.
Full text: The paradox of today's oil market is that to be an optimist, you have got to be a prophet of doom.
There are a lot of them about: Net speculative long positions in Nymex crude oil are at their highest since last May. Such optimism can hardly be predicated on surging demand; both the International Energy Agency and the Organization of Petroleum Exporting Countries have just cut estimates. Loose U.S. monetary policy offers some support, but the euro zone's own laxness offers an offset by weakening the euro against the dollar.
Committed oil bulls must be banking on supply disruptions. The big one would involve Iran blocking the Strait of Hormuz, through which roughly a fifth of the world's oil transits. But a series of smaller disruptions could also support prices.
Even if the Persian Gulf remains tranquil, tightening sanctions will cut Iran's oil output by about 300,000 barrels a day this year, according to consultancy JBC Energy. South Sudan's dispute with Sudan could keep another 100,000 barrels a day off the market in 2012. Unrest in Syria and Yemen keeps another 200,000 barrels a day offline.
The world is counting on another 800,000 barrels a day from Libya to come back after its civil war. Riots and strikes in Kazakhstan raise the prospect of disruption in a country home to Kashagan, one of the largest fields outside the Middle East. Meanwhile, Iraq, which the IEA expects to account for 70% of incremental output from OPEC out to 2016, remains a high-risk country.
Even without Hormuz being blocked, a series of smaller disruptions could cut far into the world's thin cushion of spare capacity of just 2.8 million barrels a day. Little wonder ever more oil-industry investment dollars are flowing back into a region where resources are growing and political spats usually involve zingers on televised debates: the U.S.
Write to Liam Denning at liam.denning@wsj.com
Credit: By Liam Denning
Subject: Petroleum industry
Location: United States--US
Company / organization: Name: International Energy Agency; NAICS: 928120; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 14, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921242590
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921242590?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
CME Oil Trading Halted Due to Technical Glitch
Author: Strumpf, Dan; DiColo, Jerry A
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]14 Feb 2012: n/a.
ProQuest document link
Abstract:
[...] an analysis of the trading halt by Nanex, a market data service, found that shortly after 2 p.m., a series of 800 to 1,000 price quotes in Nymex crude-oil futures repeated in a loop a dozen times over for about four minutes.
Full text: A technical glitch shut down CME Group Inc.'s electronic oil-trading platform for more than an hour Monday, throwing the market into disarray and sending traders to place bets on the New York Mercantile Exchange floor.
The shutdown shortly after 2 p.m. EST halted electronic trading of the world's biggest oil contract and roiled what had been a relatively low-volume session. Prices rose 50 cents a barrel from levels earlier.
The shutdown was caused by "technical issues," according to the CME. The Globex trading platform resumed at 3:15 p.m. EST. "The issue has been fixed and the market is back up and running," a CME spokesman said. He declined to comment further about the cause of the glitch. In a notice on the CME Group's website, the firm, which owns the Nymex, said it would cancel outstanding orders placed Monday on the electronic trading platform, but not completed trades.
The shutdown, which coincided with the end of the trading session, led to confusion over the final day's price of oil, called the settlement price. Front-month March crude settled up $2.24, or 2.3%, at $100.91 a barrel.
Such technical glitches are relatively uncommon for the CME, where an average of 11.6 million contracts changed hands each day last month. There are only two major venues, the CME and rival IntercontinentalExchange Inc. for trading crude-oil contracts.
Even though electronic trading ground to a halt, open outcry trading remained open. Traders on the floor of the Nymex rushed into the normally sleepy oil-futures pits, looking to place trades and take advantage of any price differences due to the glitch, traders said.
With electronic trading halted, fewer people had direct access to the market. For a floor trader, that creates an opportunity to profit on a wider gap between prices offered by buyers and sellers.
"A bunch of options guys ran over there...everybody is trying to take advantage of the wide quotes," said Fred Rigolini, vice president of Paramount Options, a brokerage on the Nymex floor.
"There's a little yelling and screaming in the crude ring right now," said Jeffrey Grossman, president of BRG Brokerage on the Nymex floor, shortly after the Globex halt.
The CME didn't offer additional details as to the cause of the shutdown. However, an analysis of the trading halt by Nanex, a market data service, found that shortly after 2 p.m., a series of 800 to 1,000 price quotes in Nymex crude-oil futures repeated in a loop a dozen times over for about four minutes. Globex shut down shortly thereafter.
"The same block of quotes just kept getting transferred by the system," said Eric Hunsader, CEO of Nanex. "Then I think someone pulled the plug."
John Woods, a Nymex floor trader and head of JJ Woods Associates, said telephone calls from customers were twice as high as during a normal trading session, and he headed to the crude-oil pit.
In recent years, the majority of oil-futures volume has flooded to the electronic market, leaving trading thin on the Nymex floor in downtown New York. When the exchange announced the day's settlement would be computed from the floor, Mr. Woods said there were cheers and laughter.
"It was a throwback to the old days; I guess this just shows we aren't done yet," he said.
Jacob Bunge contributed to this article.
Write to Dan Strumpfat Dan.Strumpf@dowjones.com and Jerry A. DiColo at jerry.dicolo@dowjones.com
Credit: By Dan Strumpf and Jerry A. DiColo
Subject: Stock exchanges; Futures; Price quotations
Company / organization: Name: CME Group; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 14, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921242598
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921242598?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
CME Oil Trading Halted Due to Technical Glitch
Author: Strumpf, Dan; DiColo, Jerry A
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]14 Feb 2012: C.4. [Duplicate]
ProQuest document link
Abstract:
A technical glitch closed down CME Group Inc.'s electronic oil-trading platform for more than an hour Monday, throwing the market into disarray and sending traders to place bets on the New York Mercantile Exchange floor.
Full text: A technical glitch closed down CME Group Inc.'s electronic oil-trading platform for more than an hour Monday, throwing the market into disarray and sending traders to place bets on the New York Mercantile Exchange floor.
The shutdown shortly after 2 p.m. EST halted electronic trading of the world's biggest oil contract and roiled what had been a relatively low-volume session. Prices rose 50 cents a barrel from levels earlier.
The shutdown was caused by "technical issues," according to the CME. The Globex trading platform resumed at 3:15 p.m. EST. "The issue has been fixed and the market is back up and running," a CME spokesman said. He declined to comment further about the cause of the glitch. In a notice on the CME Group's website, the firm, which owns the Nymex, said it would cancel outstanding orders placed Monday on the electronic trading platform, but not completed trades.
The shutdown, which coincided with the end of the trading session, led to confusion over the final day's price of oil, called the settlement price. Front-month March crude settled up $2.24, or 2.3%, at $100.91 a barrel.
Even though electronic trading ground to a halt, open outcry trading remained open. Traders on the floor of the Nymex rushed into the normally sleepy oil-futures pits, looking to place trades and take advantage of any price differences due to the glitch, traders said.
With electronic trading halted, fewer people had direct access to the market. For a floor trader, that presents an opportunity to profit on a wider gap between prices offered by buyers and sellers.
The CME didn't offer additional details as to the cause of the shutdown. However, an analysis of the trading halt by Nanex, a market data service, found that shortly after 2 p.m., a series of 800 to 1,000 price quotes in Nymex crude-oil futures repeated in a loop a dozen times over for about four minutes. Globex shut down shortly thereafter.
"The same block of quotes just kept getting transferred by the system," said Eric Hunsader, CEO of Nanex. "Then I think someone pulled the plug."
---
Jacob Bunge contributed to this article.
Credit: By Dan Strumpf and Jerry A. DiColo
Subject: Commodity markets; Shutdowns; Futures trading; Crude oil prices; Commodity prices
Location: United States--US
Company / organization: Name: CME Group; NAICS: 523210; Name: New York Mercantile Exchange; NAICS: 523210
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Feb 14, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: News papers
Language of publication: English
Document type: News
ProQuest document ID: 921282726
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921282726?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Crude Oil Ends Below $101
Author: Bird, David
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]15 Feb 2012: C.4.
ProQuest document link
Abstract:
Oil-market participants have been tracking events in Greece out of concern that a default could spur a broader economic crisis that could tear apart the euro zone, slow economic growth and curb demand for crude oil.
Full text: U.S. crude-oil prices fell amid conflicting economic signals from Europe.
Light, sweet crude oil for March delivery on the New York Mercantile Exchange declined 17 cents, or 0.2%, to $100.74 a barrel on Tuesday, after reaching as high as $101.84 a barrel. The drop followed a $2.24 rise on Monday that put crude at a six-week high.
On the ICE, expiring March Brent crude oil gained 23 cents, or 0.2%, to $118.16 a barrel.
Moody's Investors Service late Monday cut its credit rating on Italy, Malta, Portugal, Slovakia, Slovenia and Spain, and warned the top ratings of Austria, France and the U.K. were at risk. That bearish signal conflicted with data from Germany, Europe's biggest economy, showing an economic sentiment indicator for February rose to its first positive reading since May 2011.
Oil prices fell after news of a snag in formalizing the Greek debt package. For months, crude prices have been battered by conflicting signals of progress in resolving the Greek debt crisis.
"Another nonstep forward is a good way to put it," said Peter Donovan, a vice president at Vantage Trading.
European Union officials scrapped a plan to meet in Brussels Wednesday to sign off on the deal because all of the paperwork isn't ready. The ministers are expected to hold a conference call instead. Greece's Parliament on Sunday approved a package of spending and wage cuts demanded by the country's international creditors as a condition for a second bailout.
Oil-market participants have been tracking events in Greece out of concern that a default could spur a broader economic crisis that could tear apart the euro zone, slow economic growth and curb demand for crude oil. The International Energy Agency, the West's oil watchdog, last week said oil demand in the major industrialized nations of Europe will fall by 400,000 barrels a day this year, double the decline expected just a month earlier.
"Every time you think Europe is in the background, it sticks its head back up again," said Dominic Chirichella, an analyst at the Energy Management Institute.
Credit: By David Bird
Subject: Crude oil; Commodity prices
Location: United States--US
Classification: 3400: Investment analysis & personal finance; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Feb 15, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921411117
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921411117?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Mexico Oil Watchdog Sounds Alarm --- Regulator Highlights Disaster Risk in State-Owned Pemex's Plans to Drill Ultra-Deep-Water Wells
Author: Gonzalez, Angel; Iliff, Laurence
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]15 Feb 2012: A.10.
ProQuest document link
Abstract:
Mexico's oil regulator is sounding an alarm over plans by the country's state oil monopoly to drill two ultra-deep-water wells near U.S. waters this year, saying neither the company nor his commission is prepared to handle a serious accident or oil spill there.
Full text: Mexico's oil regulator is sounding an alarm over plans by the country's state oil monopoly to drill two ultra-deep-water wells near U.S. waters this year, saying neither the company nor his commission is prepared to handle a serious accident or oil spill there.
The regulator's chief, Juan Carlos Zepeda, said Petroleos Mexicanos has relatively little experience with deep-water drilling, much less with the ultra-deep wells -- those at depths exceeding 6,000 feet -- that it could tackle as soon as next month. Pemex plans to drill as many as six deep-water wells this year, including the two ultra-deep wells, more than at any time in its history.
Mr. Zepeda said his fledgling National Hydrocarbons Commission also is out of its depth, with a staff of just 60 and a budget of $7.3 million, about 2% of what its Washington counterpart spent last year.
While U.S. offshore inspectors zip to faraway drilling platforms on helicopters, Mr. Zepeda said in an interview, "all I have is a borrowed car," an old Nissan Sentra belonging to Mexico's Energy Ministry, which has the ultimate say about where the oil company can drill.
Pemex, as the oil company is known, says it seeks to abide by the commission's rules, and is confident it can tackle the ultra deep-water challenge.
Experts say that Mr. Zepeda is speaking out publicly in an effort to overcome resistance to oversight among top officials at Pemex and in the Energy Ministry, which hope off-shore discoveries will revive Mexico's declining oil industry. Mr. Zepeda's agency was formed in 2009 to allow more technical and independent oversight of the industry.
Mr. Zepeda's warnings follow the Deepwater Horizon blowout, which killed 11 workers in April 2010 and unleashed the worst offshore oil spill in U.S. history. That, in turn, has led to increased U.S. concern about offshore drilling outside American waters. Last month, U.S. Interior Department officials inspected a drilling rig scheduled to operate in Cuban waters to assuage concerns by Florida residents.
The U.S. Coast Guard declined to comment specifically on Mexico's deep-water plans, but said that its officials and those from Interior hold regular discussions with Mexico on environmental cooperation, and the countries have a long-standing relationship on oil-spill response.
Still, some energy experts said that Mr. Zepeda's concerns were justified. Despite its expected reliance on experienced outside contractors, Pemex "is going to very deep water without having much experience in less-deep water," said David Shields, an independent analyst of the Mexican oil industry.
Mr. Zepeda's commission gave some of Pemex's deep-water plans a conditional blessing in November, but required the company to have a system in place that could swiftly seal a leaking well far below the sea. Pemex still hasn't proved it has that capability, he said.
Now the agency is reviewing Pemex's plan to drill a prospective site near the U.S. maritime border at 9,000 feet, nearly twice as deep of the Deepwater Horizon's Macondo well.
That is a big leap for Pemex, Mr. Zepeda said. Despite Pemex not having received the commission's go-ahead, the company seems to be advancing its plans, he said, adding that his agency soon will issue a report critical of the project.
Carlos Morales Gil, Pemex's head of exploration and production, said the company was in talks with the Helix Well Containment Group, a U.S. consortium that inherited and improved some of the equipment used to quell the Deepwater Horizon spill. He said Pemex also was considering manufacturing its own system.
But Pemex, one of the world's largest oil companies, bristles at the criticism that it gets from Mr. Zepeda's watchdog. "We have the capabilities. We have the rigs," Mr. Morales said. "You have to not underestimate Pemex."
Pemex says its industrial accident rate is better than the industry average. But it has experienced some major disasters. In 1979, a blowout at one of the company's shallow-water wells gushed for several months, fouling Texas beaches and resulting in the largest Gulf oil spill until the Deepwater Horizon disaster. In 2007, 22 people died in the botched evacuation of a Pemex offshore Gulf drilling rig that had caught fire during a storm.
The rush to deep water reflects the Mexican government's pressing need for oil revenue, from which it derives about one-third of its budget.
Pemex, which has reported falling production for seven straight years, has only about 10 years of proven reserves of crude, and is trying to compensate for the decline of its giant Cantarell offshore field, which was discovered in the 1970s.
Credit: Angel Gonzalez; Laurence Iliff
Subject: Petroleum industry; Oil spills; Offshore drilling
Location: United States--US Mexico
Company / organization: Name: Pemex Petroquimica; NAICS: 324110
Product name: Nissan Sentra
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.10
Publication year: 2012
Publication date: Feb 15, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921413920
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921413920?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. F urther reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Sudan Fails to Reach Oil Deal With South Sudan
Author: Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 Feb 2012: n/a.
ProQuest document link
Abstract:
Sudan on Tuesday failed to reach a much-awaited deal on oil transit fees with its land-locked neighbor, South Sudan, and seized an additional 2.4 million barrels of oil shipments, officials said late Tuesday.
Full text: Sudan on Tuesday failed to reach a much-awaited deal on oil transit fees with its land-locked neighbor, South Sudan, and seized an additional 2.4 million barrels of oil shipments, officials said late Tuesday.
Oil negotiations, which have been under way since last week, appeared to hit a deadlock Tuesday after South Sudan accused Sudan of "stealing" more of its shipments from transit pipelines.
The Peace and Security Council of the African Union appealed to the two nations Wednesday to remain committed to the negotiations on oil, with a view to reaching "a fair agreement".
"The council stresses AU's deep concern at the unilateral actions taken by both states in regard to the issue of oil and petroleum matters," it said in a statement.
The AU also appealed to international community and the United Nations Security Council for support to facilitate the resolution of the outstanding issues in the post-secession relations between the two oil-producing nations.
Choul Laam, an assistant to South Sudan's chief oil negotiator, said Tuesday that the two nations are expected to set a new date for a fresh round of talks in the next couple of days.
South Sudan's negotiators have also rejected Sudan's demands for over $30 a barrel in transit and handling fees, saying it is much higher than the global average.
South Sudan, which relies on pipelines and ports through its northern neighbor, halted oil shipments in January following an escalation of the dispute on fees. Despite the halt, some shipments remained in the pipelines and ports.
Last month, South Sudan accused Sudan of having stolen $815 million worth of its oil.
Sudanese officials said the government will continue to confiscate South Sudan's oil to recover unpaid transit fees.
South Sudan seceded from Sudan last summer, retaining at least two-thirds of the country's oil fields.
Sudan's President Omar al Bashir last week warned that failure to resolve the oil dispute could plunge the two countries into war.
Credit: By Nicholas Bariyo
Subject: Pipelines; Petroleum industry; Fees & charges; Councils
Location: South Sudan
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 15, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921439037
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921439037?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Report Of Iran Oil Cut Briefly Lifts Brent Crude To 6-Month High
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 Feb 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: LONDON--A report Wednesday from an Iranian state television broadcaster--later denied by the Iranian government--that Tehran had cut its oil exports to six European nations briefly lifted European oil prices to a six-month high Wednesday, exposing oil markets' nervousness over any abrupt Iranian oil disruption.
The report was the latest from Iran to shock oil markets after the country's threats to close the Strait of Hormuz had sent oil prices higher in recent weeks. The strait is a strategic Persian Gulf shipping artery through which a fifth of world oil supplies are transported.
The Iranian broadcaster Press TV said on its website: "In response to the latest sanctions imposed by the EU against Iran's energy and banking sectors, the Islamic Republic has cut oil exports to six European countries," naming France, the Netherlands, Spain, Italy, Portugal and Greece as targets of the measure.
Although Portugal buys no oil from Tehran, the five other countries have been among the EU's largest importers of Iranian oil, together receiving 659,000 barrels a day in September, according to data from EU statistics agency Eurostat.
Some companies, such as France's largest oil company Total SA, have since stopped buying or shipping oil from Tehran. Royal Dutch Shell PLC declined to comment on the report and BP PLC couldn't immediately be reached for comment.
The International Energy Agency, which coordinates energy policy for industrialized nations in the Organisation for Economic Co-operation and Development, declined to comment on the Iranian reports and oil-price moves.
The Press TV report briefly lifted the European benchmark Brent crude price on ICE Futures Europe as high as $119.99 a barrel, up 2.2% on the day to a six-month high.
Oil prices eased somewhat after an Iranian oil-ministry spokesman and an Iranian diplomat in charge of Western Europe denied the Press TV report to separate news agencies.
Italy's Foreign Minister Giulio Terzi also denied that Iranian oil exports to Italy have been halted.
At 1746 GMT, Brent oil for April delivery was up 1.3% at $118.88 a barrel, compared with the Tuesday settlement price.
Iranian oil officials and an Iranian diplomat in one of the six European countries Wednesday said they had not received any official notification about a decision to cut oil exports.
"If there had been a decision, we would have been aware," the diplomat said.
A separate Iranian state broadcaster's report, however, said ambassadors of the six countries were summoned Wednesday and told Iran would "revise" its oil supply to them, according to state broadcaster IRIB.
So far, Iran has reacted defiantly to Europe's planned embargo, saying it could easily find new customers. The National Iranian Oil Co. has raised the price of its oil for European customers, even as stronger sanctions make it increasingly difficult to purchase its crude, a person who had seen the Iranian oil official selling prices said Wednesday.
Iranian lawmakers and the country's oil minister have previously threatened to abruptly interrupt oil exports to some European Union countries in response to a full EU embargo, which is scheduled to come into force July 1.
A top Iranian lawmaker had said Tuesday on the Iranian parliament's website that the pre-emptive ban was still under consideration, though there was a consensus to implement it.
Even though it has been denied, the Iranian Press TV report comes amid increasing tensions in the Middle East.
Iran's President Mahmoud Ahmadinejad Wednesday unveiled further progress on its nuclear reactor, though Iran denies western claims that it is building atomic weapons and says the program is peaceful.
Iran has been accused of bomb blasts this week in Bangkok and New Delhi, while Israel has warned it could seek to destroy Iran's nuclear facilities.
Elsewhere, some unrest in large oil-producing nations such as Saudi Arabia and Nigeria also unsettled oil markets.
"There is little doubt that the increase in tensions in these regions accompanies an increase in the risk of disruption to oil supplies," U.S. bank JP Morgan said Wednesday in a note.
James Herron, Alexis Flynn, Sarah Kent and Selina Williams in London, Patricia Kowsmann in Lisbon and Liam Moloney in Rome contributed to this article.
Write to Benoît Faucon at benoit.faucon@dowjones.com
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 15, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921439321
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921439321?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Mexico Oil Watchdog Sounds Alarm; Regulator Highlights Disaster Risk in State-Owned Pemex's Plans to Drill Ultra-Deep-Water Wells
Author: Gonzalez, Angel; Iliff, Laurence
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 Feb 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Mexico's oil regulator is sounding an alarm over plans by the country's state oil monopoly to drill two ultra-deep-water wells near U.S. waters this year, saying neither the company nor his commission is prepared to handle a serious accident or oil spill there.
The regulator's chief, Juan Carlos Zepeda, said Petroleos Mexicanos has relatively little experience with deep-water drilling, much less with the ultra-deep wells--those at depths exceeding 6,000 feet--that it could tackle as soon as next month. Pemex plans to drill as many as six deep-water wells this year, including the two ultra-deep wells, more than at any time in its history.
Mr. Zepeda said his fledgling National Hydrocarbons Commission also is out of its depth, with a staff of just 60 and a budget of $7.3 million, about 2% of what its Washington counterpart spent last year.
While U.S. offshore inspectors zip to faraway drilling platforms on helicopters, Mr. Zepeda said in an interview, "all I have is a borrowed car," an old Nissan Sentra belonging to Mexico's Energy Ministry, which has the ultimate say about where the oil company can drill.
Pemex, as the oil company is known, says it seeks to abide by the commission's rules, and is confident it can tackle the ultra deep-water challenge.
Experts say that Mr. Zepeda is speaking out publicly in an effort to overcome resistance to oversight among top officials at Pemex and in the Energy Ministry, which hope off-shore discoveries will revive Mexico's declining oil industry. Mr. Zepeda's agency was formed in 2009 to allow more technical and independent oversight of the industry.
Mr. Zepeda's warnings follow the Deepwater Horizon blowout, which killed 11 workers in April 2010 and unleashed the worst offshore oil spill in U.S. history. That, in turn, has led to increased U.S. concern about offshore drilling outside American waters. Last month, U.S. Interior Department officials inspected a drilling rig scheduled to operate in Cuban waters to assuage concerns by Florida residents.
The U.S. Coast Guard declined to comment specifically on Mexico's deep-water plans, but said that its officials and those from Interior hold regular discussions with Mexico on environmental cooperation, and the countries have a long-standing relationship on oil-spill response.
Still, some energy experts said that Mr. Zepeda's concerns were justified. Despite its expected reliance on experienced outside contractors, Pemex "is going to very deep water without having much experience in less-deep water," said David Shields, an independent analyst of the Mexican oil industry.
Mr. Zepeda's commission gave some of Pemex's deep-water plans a conditional blessing in November, but required the company to have a system in place that could swiftly seal a leaking well far below the sea. Pemex still hasn't proved it has that capability, he said.
Now the agency is reviewing Pemex's plan to drill a prospective site near the U.S. maritime border at 9,000 feet, nearly twice as deep of the Deepwater Horizon's Macondo well.
That is a big leap for Pemex, Mr. Zepeda said. Despite Pemex not having received the commission's go-ahead, the company seems to be advancing its plans, he said, adding that his agency soon will issue a report critical of the project.
Carlos Morales Gil, Pemex's head of exploration and production, said the company was in talks with the Helix Well Containment Group, a U.S. consortium that inherited and improved some of the equipment used to quell the Deepwater Horizon spill. He said Pemex also was considering manufacturing its own system.
But Pemex, one of the world's largest oil companies, bristles at the criticism that it gets from Mr. Zepeda's watchdog. "We have the capabilities. We have the rigs," Mr. Morales said on the sidelines of a recent energy conference in Houston. "You have to not underestimate Pemex."
Pemex says its industrial accident rate is better than the industry average. But it has experienced some major disasters. In 1979, a blowout at one of the company's shallow-water wells gushed for several months, fouling Texas beaches and resulting in the largest Gulf oil spill until the Deepwater Horizon disaster. In 2007, 22 people died in the botched evacuation of a Pemex offshore Gulf drilling rig that had caught fire during a storm.
The rush to deep water reflects the Mexican government's pressing need for oil revenue, from which it derives about one-third of its budget.
Pemex, which has reported falling production for seven straight years, has only about 10 years of proven reserves of crude, and is trying to compensate for the decline of its giant Cantarell offshore field, which was discovered in the 1970s.
Since 2002, the company has invested $3.6 billion in drilling 18 deep-water wells, said Pemex CEO Juan Jose Suárez Coppel. The pace sped up in 2011, when the company drilled five deepwater wells. But none of the wells have yielded commercial oil production or substantial oil discoveries yet.
For Pemex, the deep-water campaign is a sign it is taking its destiny in its own hands.
"There's this vision in Mexico and outside that we're waiting for the Virgin of Guadalupe to come and help us," Mr. Suárez said at a recent conference in Houston. But at Pemex, "even geologists, who are optimists, are not expecting that."
Write to Laurence Iliff at laurence.iliff@dowjones.com
Credit: Angel Gonzalez; Laurence Iliff
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 15, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921469446
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921469446?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Rise Imperils Budding Recovery
Author: Casselman, Ben; Dougherty, Conor
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 Feb 2012: n/a.
ProQuest document link
Abstract:
Americans spend less than 5% of their disposable income on gas, but because most families can't easily cut back on driving, at least in the short term, higher gas prices usually result in lower spending in other areas. [...] because gas prices are so public, they have an outsize impact on consumer confidence, said Chris Christopher, an economist with IHS Global Insight.
Full text: Rising oil prices are emerging once again as a threat to the U.S. economic recovery just as it appears to be gaining momentum.
Oil prices have climbed sharply in recent weeks as mounting tension with Iran has raised the threat of a disruption in global supplies. On Wednesday, oil futures on the New York Mercantile Exchange rose $1.06 to $101.80 a barrel on reports that Iran had cut off sales to six European countries in response to the European Union's newly stepped-up sanctions. Iran's oil ministry later denied the report.
Pricier oil comes at a delicate time. The job market has begun showing signs of life, and other economic indicators are pointing toward stronger growth. But the recovery remains too halting to easily absorb the shock of sharply costlier oil.
An oil spike would also complicate the job of the Federal Reserve. The central bank would have to balance any calls for more Fed action to stimulate the economy against rising inflation fears. Minutes of the Fed's last policy-setting meeting in January, released Wednesday, showed the central bank divided over whether to launch a new bond-buying program to support economic growth--but the bank kept the option open. In the past, the Fed has been willing to look past temporary spikes in inflation, but it isn't clear it would be willing to do so again.
Higher crude prices are likely to translate into higher prices at the gas pump, where drivers already are paying more to fill up. The average price of a gallon of regular gasoline has jumped 13.1 cents to $3.518 in the past month, according to auto club AAA. Some parts of the country have seen even bigger increases, with prices approaching $4 a gallon in parts of California.
Financial markets fell Wednesday as rising oil prices and new uncertainty about the latest Greek bailout rattled investors. The Dow Jones Industrial Average suffered its biggest drop of the new year, falling 97.33 points, or 0.8%, to 12780.95. Other major U.S. indexes also fell.
Oil prices affect virtually every aspect of the U.S. economy. Higher prices at the pump force consumers to cut back spending on discretionary items like restaurant meals, haircuts and family vacations, hurting those industries.
Manufacturers face lower profit margins as they pay more to get their products to market and face higher costs for plastics and other petroleum-based materials. A prolonged increase can drive up inflation and drive down hiring.
"It has the power to derail an economic recovery that's not looking very strong already," said Paul Dales, an economist for research firm Capital Economics.
To be sure, there are factors that could mitigate the impact of rising oil prices. Low natural-gas prices, combined with a warm winter, have pushed down heating bills for most homeowners and have held down the cost of raw materials for many manufacturers. Americans are also driving fewer miles and using less fuel than they did three years ago, which could make them less exposed to higher prices.
Higher oil prices tend to show up first in consumer spending. Americans spend less than 5% of their disposable income on gas, but because most families can't easily cut back on driving, at least in the short term, higher gas prices usually result in lower spending in other areas. Moreover, because gas prices are so public, they have an outsize impact on consumer confidence, said Chris Christopher, an economist with IHS Global Insight.
"The average American can't say to their boss, 'Hey I need to be paid more because it costs more to get to work,' " Mr. Christopher said.
Already, there are signs consumers are growing wary of higher gas prices. A preliminary reading of February consumer sentiment from University of Michigan last week showed an unexpected drop in confidence that many analysts attributed to higher gasoline prices.
Some economists fear a repeat of last year, when the economy appeared to be gaining strength only to stall when oil prices spiked because of turmoil in Libya.
Gasoline prices are still well below the level they reached last May, when they briefly approached $4 a gallon. And they are nowhere close to the all-time highs reached in 2008, when parts of the country saw gas exceed $4.50 a gallon.
Tom Kloza, chief oil analyst for Oil Price Information Service, a research firm, said that barring a significant supply disruption, there is little reason to expect oil prices to approach their 2008 level this year. He said consumers have learned to expect oil prices to rise in the spring and could pre-emptively cut back on spending, while the weak economy has left companies with little room to maneuver.
Oil-based products make up a majority of the dozens of raw materials that go into the models made by Goodyear Tire & Rubber Co. In its fourth-quarter earnings release Tuesday, the Akron, Ohio-based company said the steady upward march of oil and other prices raised overall raw material costs about 30%, or $2 billion, in 2011 over 2010. In the U.S. and most other parts of the world, the company was able to offset that pressure with price increases and by introducing costlier models.
Robert Gross wasn't so lucky. Mr. Gross is chief executive of Monro Muffler Brake Inc., a Rochester, N.Y.-based chain of muffler and automotive repair stores that generates 40% of sales from tires. With consumers hurting from paltry income growth and high unemployment, Mr. Gross's company has had a hard time passing along increases. Higher oil and tire costs were the main reason margins for the third quarter ended Dec. 24 shrank to 38.4% from 39.1%.
"They're shocked at how expensive tires are. If people need something else they buy the something else first," he said.
Other businesses have already shifted their operations in an effort to insulate themselves from rising energy costs.
Forever Preserved, an Encinitas, Calif., maker of preserved plants and palm trees displayed in offices, malls and other enclosed areas, can ill afford higher fuel prices, said owner Ronald Pecoff. Mr. Pecoff sold off four commercial vehicles that he and his employees used to make thrice-weekly trips transporting harvested palm tree leaves between his production facility in Encinitas and their tree farm 90 miles east in Borrego Springs. He now has a contractor make less frequent trips, leaving the company with fewer workers, lower insurance costs and no need to pay mechanics for wear and tear.
"I've minimized all my exposure to transportation as much as possible," he says.
Jon Hilsenrath
contributed to this article.
Write to Ben Casselman at ben.casselman@wsj.com and Conor Dougherty at conor.dougherty@wsj.com
Credit: By Ben Casselman And Conor Dougherty
Subject: Gasoline prices; Natural gas; Central banks; Economists; Petroleum industry
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 16, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: Englis h
Document type: News
ProQuest document ID: 921517779
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921517779?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Report Of Iran Oil Cut Briefly Lifts Brent Crude To 6-Month High
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 Feb 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: LONDON--A report Wednesday from an Iranian state television broadcaster--later denied by the Iranian government--that Tehran had cut its oil exports to six European nations briefly lifted European oil prices to a six-month high Wednesday, exposing oil markets' nervousness over any abrupt Iranian oil disruption.
The report was the latest from Iran to shock oil markets after the country's threats to close the Strait of Hormuz had sent oil prices higher in recent weeks. The strait is a strategic Persian Gulf shipping artery through which a fifth of world oil supplies are transported.
The Iranian broadcaster Press TV said on its website: "In response to the latest sanctions imposed by the EU against Iran's energy and banking sectors, the Islamic Republic has cut oil exports to six European countries," naming France, the Netherlands, Spain, Italy, Portugal and Greece as targets of the measure.
Although Portugal buys no oil from Tehran, the five other countries have been among the EU's largest importers of Iranian oil, together receiving 659,000 barrels a day in September, according to data from EU statistics agency Eurostat.
Some companies, such as France's largest oil company Total SA, have since stopped buying or shipping oil from Tehran. Royal Dutch Shell PLC declined to comment on the report and BP PLC couldn't immediately be reached for comment.
The International Energy Agency, which coordinates energy policy for industrialized nations in the Organisation for Economic Co-operation and Development, declined to comment on the Iranian reports and oil-price moves.
The Press TV report briefly lifted the European benchmark Brent crude price on ICE Futures Europe as high as $119.99 a barrel, up 2.2% on the day to a six-month high.
Oil prices eased somewhat after an Iranian oil-ministry spokesman and an Iranian diplomat in charge of Western Europe denied the Press TV report to separate news agencies.
Italy's Foreign Minister Giulio Terzi also denied that Iranian oil exports to Italy have been halted.
Brent oil for April delivery rose 1.4%, or $1.58, to $118.93 a barrel, its highest settlement since June 14.
Iranian oil officials and an Iranian diplomat in one of the six European countries Wednesday said they hadn't received any official notification about a decision to cut oil exports.
"If there had been a decision, we would have been aware," the diplomat said.
A separate Iranian state broadcaster's report, however, said ambassadors of the six countries were summoned Wednesday and told Iran would "revise" its oil supply to them, according to state broadcaster IRIB.
So far, Iran has reacted defiantly to Europe's planned embargo, saying it could easily find new customers. The National Iranian Oil Co. has raised the price of its oil for European customers, even as stronger sanctions make it increasingly difficult to purchase its crude, a person who had seen the Iranian oil official selling prices said Wednesday.
Iranian lawmakers and the country's oil minister have previously threatened to abruptly interrupt oil exports to some European Union countries in response to a full EU embargo, which is scheduled to come into force July 1.
A top Iranian lawmaker had said Tuesday on the Iranian parliament's website that the pre-emptive ban was still under consideration, though there was a consensus to implement it.
Even though it has been denied, the Iranian Press TV report comes amid increasing tensions in the Middle East.
Iran's President Mahmoud Ahmadinejad Wednesday unveiled further progress on its nuclear reactor, though Iran denies western claims that it is building atomic weapons and says the program is peaceful.
Iran has been accused of bomb blasts this week in Bangkok and New Delhi, while Israel has warned it could seek to destroy Iran's nuclear facilities.
Elsewhere, some unrest in large oil-producing nations such as Saudi Arabia and Nigeria also unsettled oil markets.
"There is little doubt that the increase in tensions in these regions accompanies an increase in the risk of disruption to oil supplies," U.S. bank JP Morgan said Wednesday in a note.
James Herron, Alexis Flynn, Sarah Kent and Selina Williams in London, Patricia Kowsmann in Lisbon and Liam Moloney in Rome contributed to this article.
Write to Benoît Faucon at benoit.faucon@dowjones.com
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 16, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921562546
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921562546?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Rise Imperils Budding Recovery
Author: Casselman, Ben; Dougherty, Conor
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]16 Feb 2012: A.1. [Duplicate]
ProQuest document link
Abstract:
Americans spend less than 5% of their disposable income on gas, but because most families can't easily cut back on driving, at least in the short term, higher gas prices usually result in lower spending in other areas. [...] because gas prices are so public, they have an outsize impact on consumer confidence, said Chris Christopher, an economist with IHS Global Insight.
Full text: Rising oil prices are emerging once again as a threat to the U.S. economic recovery just as it appears to be gaining momentum.
Oil prices have climbed sharply in recent weeks as mounting tension with Iran has raised the threat of a disruption in global supplies. On Wednesday, oil futures on the New York Mercantile Exchange rose $1.06 to $101.80 a barrel on reports that Iran had cut off sales to six European countries in response to the European Union's newly stepped-up sanctions. Iran's oil ministry later denied the report.
Pricier oil comes at a delicate time. The job market has begun showing signs of life, and other economic indicators are pointing toward stronger growth. But the recovery remains too halting to easily absorb the shock of sharply costlier oil.
An oil spike would also complicate the job of the Federal Reserve. The central bank would have to balance any calls for more Fed action to stimulate the economy against rising inflation fears. Minutes of the Fed's last policy-setting meeting in January, released Wednesday, showed the central bank divided over whether to launch a new bond-buying program to support economic growth -- but the bank kept the option open. In the past, the Fed has been willing to look past temporary spikes in inflation, but it isn't clear it would be willing to do so again.
Higher crude prices are likely to translate into higher prices at the gas pump, where drivers already are paying more to fill up. The average price of a gallon of regular gasoline has jumped 13.1 cents to $3.518 in the past month, according to auto club AAA. Some parts of the country have seen even bigger increases, with prices approaching $4 a gallon in parts of California.
Financial markets fell Wednesday as rising oil prices and new uncertainty about the latest Greek bailout rattled investors. The Dow Jones Industrial Average suffered its biggest drop of the new year, falling 97.33 points, or 0.8%, to 12780.95. Other major U.S. indexes also fell.
Oil prices affect virtually every aspect of the U.S. economy. Higher prices at the pump force consumers to cut back spending on discretionary items like restaurant meals, haircuts and family vacations, hurting those industries.
Manufacturers face lower profit margins as they pay more to get their products to market and face higher costs for plastics and other petroleum-based materials. A prolonged increase can drive up inflation and drive down hiring.
"It has the power to derail an economic recovery that's not looking very strong already," said Paul Dales, an economist for research firm Capital Economics.
To be sure, there are factors that could mitigate the impact of rising oil prices. Low natural-gas prices, combined with a warm winter, have pushed down heating bills for most homeowners and have held down the cost of raw materials for many manufacturers. Americans are also driving fewer miles and using less fuel than they did three years ago, which could make them less exposed to higher prices.
Higher oil prices tend to show up first in consumer spending. Americans spend less than 5% of their disposable income on gas, but because most families can't easily cut back on driving, at least in the short term, higher gas prices usually result in lower spending in other areas. Moreover, because gas prices are so public, they have an outsize impact on consumer confidence, said Chris Christopher, an economist with IHS Global Insight.
"The average American can't say to their boss, 'Hey I need to be paid more because it costs more to get to work,' " Mr. Christopher said.
Already, there are signs consumers are growing wary of higher gas prices. A preliminary reading of February consumer sentiment from University of Michigan last week showed an unexpected drop in confidence that many analysts attributed to higher gasoline prices.
Some economists fear a repeat of last year, when the economy appeared to be gaining strength only to stall when oil prices spiked because of turmoil in Libya.
Gasoline prices are still well below the level they reached last May, when they briefly approached $4 a gallon. And they are nowhere close to the all-time highs reached in 2008, when parts of the country saw gas exceed $4.50 a gallon.
Tom Kloza, chief oil analyst for Oil Price Information Service, a research firm, said that barring a significant supply disruption, there is little reason to expect oil prices to approach their 2008 level this year. He said consumers have learned to expect oil prices to rise in the spring and could pre-emptively cut back on spending, while the weak economy has left companies with little room to maneuver.
Oil-based products make up a majority of the dozens of raw materials that go into the models made by Goodyear Tire & Rubber Co. In its fourth-quarter earnings release Tuesday, the Akron, Ohio-based company said the steady upward march of oil and other prices raised overall raw material costs about 30%, or $2 billion, in 2011 over 2010. In the U.S. and most other parts of the world, the company was able to offset that pressure with price increases and by introducing costlier models.
Robert Gross wasn't so lucky. Mr. Gross is chief executive of Monro Muffler Brake Inc., a Rochester, N.Y.-based chain of muffler and automotive repair stores that generates 40% of sales from tires.
With consumers hurting from paltry income growth and high unemployment, Mr. Gross's company has had a hard time passing along increases. Higher oil and tire costs were the main reason margins for the third quarter ended Dec. 24 shrank to 38.4% from 39.1%.
"They're shocked at how expensive tires are. If people need something else they buy the something else first," he said.
Other businesses have already shifted their operations in an effort to insulate themselves from rising energy costs.
Forever Preserved, an Encinitas, Calif., maker of preserved plants and palm trees displayed in offices, malls and other enclosed areas, can ill afford higher fuel prices, said owner Ronald Pecoff. Mr. Pecoff sold off four commercial vehicles that he and his employees used to make thrice-weekly trips transporting harvested palm tree leaves between his production facility in Encinitas and their tree farm 90 miles east in Borrego Springs. He now has a contractor make less frequent trips, leaving the company with fewer workers, lower insurance costs and no need to pay mechanics for wear and tear.
"I've minimized all my exposure to transportation as much as possible," he says.
---
Jon Hilsenrath contributed to this article.
Credit: By Ben Casselman and Conor Dougherty
Subject: Gasoline prices; Natural gas; Central banks; Economists; Petroleum industry; Economic recovery
Location: United States--US
Classification: 9190: United States; 1110: Economic conditions & forecasts; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.1
Publication year: 2012
Publication date: Feb 16, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921571360
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921571360?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Venezuela Supplies Oil to Syria
Author: Vyas, Kejal; Rai, Neena
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Feb 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: CARACAS--A Venezuelan oil tanker has been sent to Syria, raising suspicions that Venezuelan President Hugo Chávez is supplying the regime of Syrian President Bashar al-Assad with fuel as it seeks to crush a nearly year-long uprising by some citizens.
A 47-ton Venezuelan vessel named Negra Hipolita was set to arrive at the Syrian port of Banias on Wednesday, shipping records on the website Marinetraffic show. Reuters reported that the tanker was on its second trip to Banias in three months and carried diesel fuel.
The cargo was set to arrive just as the Syrian government looked expand its crackdown on dissent, naming new cities in its offensive against opposition strongholds. Thousands of people have already been killed in the conflict as opponents call for Mr. Assad to step down.
On Thursday, the U.N. General Assembly voted to approve a resolution calling for an immediate halt to Mr. Assad's offensive.
Mr. Chávez, a Washington critic, during a recent speech warned Mr. Assad that Western powers were looking to topple his regime just as they worked to "assassinate" Libyan leader Moammar Gadhafi.
In recent years, Mr. Chávez also has strengthened economic and political ties with Iran's President Mahmoud Ahmadinejad, an Assad ally.
A spokesman at Venezuela's state oil monopoly Petróleos de Venezuela declined comment on Thursday. An Oil Ministry spokesman didn't return calls seeking comment.
Last year, the U.S. State Department slapped PdVSA, as the Venezuelan oil monopoly is known, with sanctions for sending two shipments of petroleum products to Iran. Venezuelan officials haven't denied they sent the shipment.
Credit: By Kejal Vyas And Neena Rai
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 17, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921659493
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921659493?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Essar Oil Posts Loss
Author: Chaturvedi, Saurabh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Feb 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: NEW DELHI - Essar Oil Ltd. Friday slipped to a net loss of 39.9 billion rupees ($809 million) for the third quarter after making a 40.15 billion rupees provision toward deferred sales tax and also due to lower crude throughput and a weak refinery margin.
India's second-largest private-sector refiner by capacity posted a net profit of 2.73 billion rupees a year earlier.
Revenue for the quarter through December remained almost flat at 138.97 billion rupees, compared with 138.09 billion rupees a year earlier.
Refining margin for the quarter declined to $6.07 a barrel from $7.21 a year earlier.
Credit: By Saurabh Chaturvedi
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 17, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921760454
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921760454?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Mobil, Intel: Money Flow Leaders (XOM, INTC)
Author: MARKET DATA STAFF
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Feb 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Exxon Mobil Corp. topped the list at midday for, which tracks stocks that fell in price but had the largest inflow of money. See the.
Intel Corp. topped the list for, which tracks stocks that rose in price but had the largest outflow of money. See the.
Go to () for complete coverage.
Credit: By MARKET DATA STAFF
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 17, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921876644
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921876644?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Mitsui Unit to Pay $90 Million Over Gulf Oil Spill
Author: Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Feb 2012: n/a.
ProQuest document link
Abstract:
A civil-court trial to settle claims related to the oil spill is currently scheduled for Feb. 27 in a U.S. District Court in New Orleans.
Full text: The U.S. Department of Justice, Coast Guard and Environmental Protection Agency have settled civil claims with a division of Japanese conglomerate Mitsui & Co. for its role in the April 2010 Deepwater Horizon accident.
Under terms of the settlement, Mitsui's MOEX Offshore, which had a 10% stake in BP BLC's doomed oil well, will pay $90 million.
Approximately $45 million of the settlement will be used to replenish a fund that pays for oil-spill cleanups and covers damages from spill, according the Justice Department.
The settlement is the first the federal government has made in the wake of the Deepwater Horizon accident, which unleashed the worst offshore oil spill in U.S. history.
BP had a 65% stake in the well, while Anadarko Petroleum had a 25% stake.
A civil-court trial to settle claims related to the oil spill is currently scheduled for Feb. 27 in a U.S. District Court in New Orleans. That trial will determine the culpability BP and other companies will face over the spill, while later trials will determine how much oil escaped from the well and how well companies did containing and cleaning up the oil.
Write to Tom Fowler at tom.fowler@wsj.com
Credit: By Tom Fowler
Subject: Oil spills; Settlements & damages; Equity stake
Company / organization: Name: Department of Justice; NAICS: 922130; Name: MOEX Offshore 2007 LLC; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 17, 2012
Section: US
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921876991
Document URL: https://login.ezproxy.uta.edu/login?url=https: //search.proquest.com/docview/921876991?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. Approves Shell Oil-Spill Plan for Alaska
Author: Tracy, Tennille
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Feb 2012: n/a.
ProQuest document link
Abstract:
WASHINGTON--U.S. officials have approved an oil-spill plan for Royal Dutch Shell PLC as the company looks to begin drilling in the Arctic, saying Friday that Shell has demonstrated its ability to respond to potential spills in icy waters despite protests from environmental groups.
Full text: WASHINGTON--U.S. officials have approved an oil-spill plan for Royal Dutch Shell PLC as the company looks to begin drilling in the Arctic, saying Friday that Shell has demonstrated its ability to respond to potential spills in icy waters despite protests from environmental groups.
The approval, granted by the U.S. Interior Department, helps pave the way for Shell to begin drilling in the Chukchi Sea this summer after years of preparation for the project.
Shell still has to obtain drilling permits from the Interior Department before it can move forward.
"We are taking a cautious approach," Interior Secretary Ken Salazar said in a statement.
Environmental groups have asked the Interior Department to block, or at least postpone, drilling in the Arctic Ocean until oil companies are better equipped to handle spills in waters that freeze over for many months of the year. They have also raised more general objections to drilling in the region, saying that little is known about the region's wildlife and ecosystems.
In approving Shell's oil-spill response plan, a crucial part of the federal permitting process, the Interior Department said the company met new requirements adopted after BP PLC's Deepwater Horizon oil spill. Shell had to prove that it could respond to a spill that released five times as much oil as a previous contingency plan and make additional preparations for emergencies.
Credit: By Tennille Tracy
Subject: Oil spills; Petroleum industry
Location: United States--US Chukchi Sea
Company / organization: Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 17, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921892144
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921892144?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Keystone XL and National Security; Who gains the most from Obama's rejection of a new oil pipeline?
Author: O'Grady, Mary Anastasia
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Feb 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: With gasoline prices hitting $4 a gallon in some parts of the country even before the summer driving season has started, President Obama's decision to block the Keystone XL pipeline is looking more and more foolish on economic grounds alone. But Indiana Sen. Richard Lugar wants Americans to pay attention to the matter for a different reason: national security.
In an op-ed penned in the Miami Herald this week, Mr. Lugar, who is the ranking member of the Senate Foreign Relations Committee, points out that Venezuela's Hugo Chávez has cultivated a cozy relationship with Iran and that means Iran now has a Western Hemisphere ally that may be ready to act on its behalf. The latest manifestation of that alliance: "Iranian President Mahmoud Ahmadinejad made a five-day visit last month to Venezuela and three other Latin American countries, his fifth trip to the region since 2005."
With the increase in Iranian belligerence, Washington had better focus, Mr. Lugar warns. "The administration's neglect of the dangers in the Iran-Venezuela bonds assumes greater importance against the backdrop of the rising tensions in the Middle East."
One of those dangers, in Mr. Lugar's view, is U.S. dependency on Venezuelan oil supplies to Gulf Coast refineries. If Iran closes the Straits of Hormuz and wants to really tighten the screws, it could get Venezuela to shut off those crude supplies at the same time.
Numerous sources in Venezuela say Mr. Lugar has this problem backward. His logic, which has dominated thinking in Washington since Chávez first came to power, is that Chávez has an "oil weapon" that he can use against the U.S. by cutting off supplies. But the Venezuelan strongman needs the U.S. more than it needs him. He is heavily dependent on the greenbacks he receives for his oil, and the authoritarian populist is unlikely to walk away from them in an election year in Venezuela.
That doesn't mean Venezuela is not a threat. As Mr. Lugar rightly points out, Iran has shown that it is eager to practice terrorism in the West if given the chance, and Venezuela provides a trampoline to plan and launch attacks from nearby.
With this in mind, the U.S. should be seeking to defund the Chávez machine, and there is no better way to do that than with approval of the Keystone XL. The Alberta crude that will travel through the XL is of a similar quality to Venezuelan oil, and the U.S. could begin buying from Canada instead of from Venezuela if a pipeline were put in place.
There is one thing that Mr. Lugar and Venezuelans who don't believe that Chávez has an oil weapon agree on, and that is the Venezuelan dictator's vulnerability. "Divisions in Venezuela's Russian-armed military, an inflation rate over 30 percent, a dilapidated oil infrastructure, widespread food and energy shortages, and soaring crime rates are all putting heavy pressure on [him]," the senator writes. Losing a customer like the U.S. might just push him over and with him, Iran's strongest base of support in the hemisphere.
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Credit: By Mary Anastasia O'Grady
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 17, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 921987556
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/921987556?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
South Sudan Wants Oil Back
Author: Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Feb 2012: n/a.
ProQuest document link
Abstract:
[...] last month, landlocked South Sudan, which seceded from Sudan last summer, has been relying on pipelines and ports in Sudan to ship at least 350,000 barrels of oil a day to export markers, mainly in Asia and European markets.
Full text: KAMPALA, Uganda-Newly independent South Sudan has issued a legal notice over the more than 6 million barrels of oil allegedly stolen by its northern neighbor, Sudan, since December last year as the spat over oil transit fees between the two former civil war foes continues to escalate, officials said Saturday.
South Sudan's justice ministry issued an international legal notice Friday and instructed its legal consultants to track down several vessels carrying the stolen oil across the globe, according to Barnaba Benjamin, South Sudan's information minister.
"This is stolen oil and our legal experts are pursuing whoever buys it," he said.
Until last month, landlocked South Sudan, which seceded from Sudan last summer, has been relying on pipelines and ports in Sudan to ship at least 350,000 barrels of oil a day to export markers, mainly in Asia and European markets.
However, it halted shipments after accusing its northern neighbor of stealing its transit oil. Sudan officials say they confiscated vessels carrying crude oil belonging to South Sudan as compensation for transit fees owed.
While Sudan has insisted that its southern neighbor pays as much as $32 per barrel of crude shipped though its facilities, South Sudan insists it will only pay around $1 a barrel, in accordance with international standards.
In an apparent escalation of tensions, a Sudanese government spokesman accused South Sudan of trying to topple the regime in Khartoum by halting oil shipments and sponsoring rebels in the restive South Kordofan and Blue Nile states, a charge denied by South Sudan.
"They [South Sudan] are continuing to disturb our peace, by sponsoring rebellion on our territory" said Sudan government spokesman Rabie Abdelaty.
Sudanese officials say that by halting oil shipments, South Sudan is trying to squeeze its neighbor into economic hardships to stir Arab string-like uprisings.
An oil tanker carrying oil, allegedly stolen from South Sudan, was expected to arrive in Japan on Saturday or Sunday, according shipbrokers and a shipping fixture seen by Dow Jones Newswires Friday.
Trafigura, owners of the shipment on Friday, reiterated a previous statement that it had bought oil from South Sudan in the past, but denied that it had knowingly bought stolen oil. South Sudan is also investigating some unnamed Chinese companies for their alleged role in helping Sudan steal its oil, according to Benjamin.
South Sudan has also accused Chinese companies of under declaring oil wells as well colluding with Sudan to block shipments through pipelines in December and January. The accusations are threatening to sour relations with China, the largest buyer of Sudanese oil. Several Chinese-owned enterprises are currently engaged in laborious talks with South Sudan over their oil production licenses.
Gurdeep Singh and Jenny Gross in London contributed to this article
Credit: By Nicholas Bariyo
Subject: Petroleum industry; Pipelines; Shipping industry; Shipments; Energy economics
Location: South Sudan
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 18, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 922048577
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/922048577?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Overheard: Peak Oil (In Euros, That Is)
Author: Anonymous
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]18 Feb 2012: B.16.
ProQuest document link
Abstract:
The euro's dwindling purchasing power is both a result of the Continent's financial woes and a factor tightening the screws.
Full text: [Financial Analysis and Commentary]
Can the euro zone catch a break? Not with that currency.
This past week, Brent crude oil came within sparking distance of its all-time high -- priced in euros that is. On Thursday, it closed at 92.09 euros a barrel, just 86 euro cents below the peak hit in the halcyon summer of 2008. At Thursday's $120.11 a barrel, Brent was still 18% below its record when priced in dollars.
The euro's dwindling purchasing power is both a result of the Continent's financial woes and a factor tightening the screws. Worse, hot spots like Greece and Spain are particularly exposed due to a high dependence on oil imports. Geopolitics compounds this: Greece relies on Iranian oil for 30% of consumption, says Bank of AmericaMerrill Lynch. Contrast that with the U.S., where net imports of oil have fallen significantly.
At the current dollar price, a move of less than two euro cents against the greenback would push Brent to a record when priced in the single currency. Don't start your engines, as they might say in Athens.
---
overheard@wsj.com
Subject: Euro
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.16
Publication year: 2012
Publication date: Feb 18, 2012
column: Heard on the Street
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 922486075
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/922486075?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iran Says It Has Stopped Oil Exports to the U.K., France
Author: Faucon, Benoit
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 Feb 2012: n/a.
ProQuest document link
Abstract:
In a statement posted on the Iranian oil ministry's website, its spokesman, Ali Reza Nikzad, said "exporting crude to British and French companies has been halted...we will sell our oil to new customers."
Full text: LONDON--Iran said Sunday it had stopped selling its crude oil to French and British companies, a move that seems likely to have little direct impact on European supplies.
The U.K. doesn't import Iranian oil, and Total SA--the largest French oil company and once the main importer of Iranian oil to France--stopped purchases from Tehran in late 2011.
In addition, the European Union last month decided to ban all purchases of Iranian oil for EU countries, though the measure won't be fully in force until July 1.
In the meantime, however, Iran's move could cause oil refiners in Greece, Spain and Italy, which remain large importers of Iranian oil, to think twice about buying more oil from Iran. Though many purchases of Iranian crude by European refiners are locked into long-term contracts, these refiners could refrain from buying crude cargoes from the Islamic Republic on a stand-alone basis.
Iran draws the vast majority of its export revenues from oil sales. In a statement posted on the Iranian oil ministry's website, its spokesman, Ali Reza Nikzad, said "exporting crude to British and French companies has been halted...we will sell our oil to new customers."
A spokesperson for Italy's Eni SpA, which continues getting crude from Tehran in payment for past works on Iranian fields, couldn't immediately comment on the Iranian move. A spokesman for Repsol YPF SA, Spain's largest oil company, also had no comment.
Last week, oil prices in London spiked to a six-month high on a report that Iran had stopped sending oil to six European Union countries ahead of a planned embargo July 1. Tehran later denied the report.
France imported 75,000 barrels a day of Iranian oil in the third quarter of last year, according to the EU's statistics body, Eurostat. But Total, which imported virtually all the Iranian oil destined for the French market for its refineries, stopped buying crude in December.
A French foreign ministry spokesman last week declined to comment on whether France still imports any Iranian oil. The U.K. cut its imports to zero in the third quarter, according to Eurostat.
The main EU buyers of Iranian crude, Greece, Italy and Spain, together accounted for 532,000 barrels a day of the 700,000 barrels a day imported in the EU during the third quarter, according to Eurostat.
Meanwhile the Associated Press reported Sunday that Iran's semiofficial Mehr news agency said a fire broke out at the country's biggest petrochemical facility but was quickly extinguished. Mehr said there were no casualties or serious damages from the fire at the Imam Khomeini Petrochemical Complex in southwestern Iran. The report gave no details on the cause of the fire.
Write to Benoit Faucon at benoit.faucon@dowjones.com
Credit: By Benoit Faucon
Subject: Petroleum industry
Location: United Kingdom--UK
Company / organization: Name: European Union; NAICS: 926110, 928120; Name: Total SA; NAICS: 211111, 324110, 447190
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 19, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 922961659
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/922961659?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iran Says It Has Stopped Oil Exports to the U.K., France
Author: Faucon, Benoit
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Feb 2012: n/a.
ProQuest document link
Abstract:
In a statement posted on the Iranian oil ministry's website, its spokesman, Ali Reza Nikzad, said "exporting crude to British and French companies has been halted...we will sell our oil to new customers."
Full text: LONDON--Iran said Sunday it had stopped selling its crude oil to French and British companies, a move that seems likely to have little direct impact on European supplies.
The U.K. doesn't import Iranian oil, and Total SA--the largest French oil company and once the main importer of Iranian oil to France--stopped purchases from Tehran in late 2011.
In addition, the European Union last month decided to ban all purchases of Iranian oil for EU countries, though the measure won't be fully in force until July 1.
In the meantime, however, Iran's move could cause oil refiners in Greece, Spain and Italy, which remain large importers of Iranian oil, to think twice about buying more oil from Iran. Though many purchases of Iranian crude by European refiners are locked into long-term contracts, these refiners could refrain from buying crude cargoes from the Islamic Republic on a stand-alone basis.
Iran draws the vast majority of its export revenues from oil sales. In a statement posted on the Iranian oil ministry's website, its spokesman, Ali Reza Nikzad, said "exporting crude to British and French companies has been halted...we will sell our oil to new customers."
A spokesperson for Italy's Eni SpA, which continues getting crude from Tehran in payment for past works on Iranian fields, couldn't immediately comment on the Iranian move. A spokesman for Repsol YPF SA, Spain's largest oil company, also had no comment.
Last week, oil prices in London spiked to a six-month high on a report that Iran had stopped sending oil to six European Union countries ahead of a planned embargo July 1. Tehran later denied the report.
France imported 75,000 barrels a day of Iranian oil in the third quarter of last year, according to the EU's statistics body, Eurostat. But Total, which imported virtually all the Iranian oil destined for the French market for its refineries, stopped buying crude in December.
A French foreign ministry spokesman last week declined to comment on whether France still imports any Iranian oil. The U.K. cut its imports to zero in the third quarter, according to Eurostat.
The main EU buyers of Iranian crude, Greece, Italy and Spain, together accounted for 532,000 barrels a day of the 700,000 barrels a day imported in the EU during the third quarter, according to Eurostat.
Meanwhile the Associated Press reported Sunday that Iran's semiofficial Mehr news agency said a fire broke out at the country's biggest petrochemical facility but was quickly extinguished. Mehr said there were no casualties or serious damages from the fire at the Imam Khomeini Petrochemical Complex in southwestern Iran. The report gave no details on the cause of the fire.
Write to Benoit Faucon at benoit.faucon@dowjones.com
Credit: By Benoit Faucon
Subject: Petroleum industry
Location: United Kingdom--UK
Company / organization: Name: European Union; NAICS: 926110, 928120; Name: Total SA; NAICS: 211111, 324110, 447190
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 20, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 922251843
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/922251843?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Prices Touch 9-Month Highs
Author: Dawoud, Iman
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Feb 2012: n/a.
ProQuest document link
Abstract:
Earlier Monday, Iran's deputy oil minister and state oil company head, Ahmad Qalebani, was quoted by the Mehr news agency as saying Tehran would cut oil exports to other European Union countries if their "hostile actions" continue.
Full text: LONDON--Crude-oil futures climbed Monday on Iranian supply worries as Tehran threatened to halt oil exports to other European Union countries a day after it cut sales to U.K. and French companies.
Early afternoon in London, the front-month April Brent contract on the ICE futures exchange was up 65 cents, or 0.5%, at $120.23 a barrel. The U.S. crude front-month March contract was trading up $1.88, or 1.8%, at $105.48 a barrel in electronic trade.
Prices were down slightly from an earlier spike on Iran supply worries that took oil up to nine-month highs of $105.80 a barrel and $121.15 a barrel for U.S. crude futures and Brent respectively.
Earlier Monday, Iran's deputy oil minister and state oil company head, Ahmad Qalebani, was quoted by the Mehr news agency as saying Tehran would cut oil exports to other European Union countries if their "hostile actions" continue.
The worries over Iranian supplies come amid South Sudan's halt in output of around 350,000 barrels a day in an escalating dispute with neighboring Sudan over transit fees for crude shipped via an export pipeline through Sudan.
Renewed optimism that a solution to Greece's ongoing debt crisis will be reached at a meeting of euro-zone finance ministers later in the day in Brussels is also supporting prices, analysts said.
"If [U.S. crude futures break] above the $105 a barrel level then there is potential for it to reach $110. However, at this time I would say we might experience some consolidation around the $105 mark," said Sucden Financial research analyst Myrto Sokou.
However, volumes are expected to be thin due to the U.S. Presidents' Day holiday.
The stronger euro versus the dollar on renewed hopes that Germany will step in and sanction the bailout for Greece was also feeding through into oil prices. Crude prices typically rise when the dollar weakens because it makes the commodity cheaper for holders of other currencies.
Strong gains in European equity markets were also providing upside momentum to crude prices, analysts said.
A positive outcome on Greece is likely to lead to further gains in oil prices, analysts said.
Credit: By Iman Dawoud
Subject: Petroleum industry; Crude oil prices; Futures
Location: United States--US United Kingdom--UK
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 20, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 922252031
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/922252031?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journa l
IEA: Oil Market Ready For Iran Loss
Author: Faucon, Benoit
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Feb 2012: n/a.
ProQuest document link
Abstract:
LONDON--Oil markets could cope with any loss of Iranian oil exports tied to sanctions, including an abrupt cut to the European Union, a top official with the International Energy Agency said Monday.
Full text: LONDON--Oil markets, including in the European Union, could cope with any loss of Iranian oil exports, an official with the International Energy Agency said Monday, after an Iranian threat to pre-empt an EU embargo pushed oil prices to a nine-month high.
But the IEA, which represents the views of energy consumers, warned that the standoff between Iran and the West was bringing the burden of oil prices on the global economy to near levels last seen in 2008.
Didier Houssin, IEA director for energy markets and security, said in an interview that "there are alternative supplies that can make up for any loss of Iranian exports," with more production made available both within and outside the Organization of Petroleum Exporting Countries in the second half.
The remarks came as Ahmed Ghalebani, managing director of the National Iranian Oil Co., warned European companies it would interrupt their supplies if they don't sign long-term deals, according to the oil ministry's website Shana.
Iran will sell "oil to European countries in terms of two to five-year contracts and without any preconditions and...otherwise the exports will be canceled," he warned.
Iran has been ratcheting up pressure on the European Union in recent days as it tries to pre-empt a full EU ban on its oil starting July 1.
On Sunday, Iran's oil ministry said had it halted exports to the France and the U.K.--though the measure was essentially symbolic as both countries already stopped buying Iranian oil.
But even if Iran heeds to its threat to cut supplies to other buyers, the IEA's Mr. Houssin said the "impact of such a move will be extremely limited," as many refineries will soon stop producing due to seasonal maintenance and oil companies have already started replacing Iran oil.
Even Mr. Ghalebani admitted Monday the level of Iranian oil sales to the EU "has dropped" from a previous level of 515,000 barrels a day. At the same time, people familiar with Iranian talks to find replacements in India and China say they are stumbling due to U.S. banking sanctions.
Large producers including Saudi Arabia, have already started to fill the gap, Mr. Houssin said. Current spare capacity available in OPEC, most of it in the Gulf, stands at 2.82 million barrels a day, according to the IEA, making it easy to replace the 2.2 million barrels a day of crude Iran normally exports.
Despite the comfortable cushion of available oil, the front-month April Brent contract on London's ICE futures exchange rose to $121.15 a barrel, its highest level since May, while the front-month March contract on the New York Mercantile Exchange hit $104.50 a barrel, also a nine-month high.
Markets have also been rattled by fears the verbal escalation could spiral into a military conflict after Iran threatened to block the Strait of Hormuz through which transits one-fifth of global oil supply.
But Houssin said: "the IEA stands ready to react if there is a major supply disruption" as it did last year when it released emergency stockpiles after a civil war interrupted oil flows from Libya.
Marlene Holzner, a spokeswoman for European Energy Commissioner Günther Oettinger, said similarly Monday that "the EU is well stocked with oil and petroleum products to face a potential disruption of supplies."
Still, the threat has been reflected in higher prices, pushing the cost of oil to levels dangerous for the world economy, the IEA's Mr. Houssin said.
"Our indications are that the share of the oil cost compared with the [global gross domestic product] has reached a level close to 2008," he said. At the time, a spike in oil prices to $147 a barrel was partly blamed for worsening the global recession.
"This [current] level of price could represent a risk to the global economic recovery," Mr. Houssin said.
Alessandro Torello in Brussels and Sarah Kent in London contributed to this article.
Write to Benoit Faucon at benoit.faucon@dowjones.com
Credit: By Benoit Faucon
Subject: Petroleum industry; Economic growth; Exports; Recessions; Gross Domestic Product--GDP; Supplies
Company / organization: Name: European Union; NAICS: 926110, 928120; Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 20, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 922263646
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/922263646?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Construction Firm Expands In Oil Drilling
Author: Dezember, Ryan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Feb 2012: n/a.
ProQuest document link
Abstract:
Flint's businesses include rig hauling, pipeline installation and horizontal drilling, a service that is crucial to unlocking unconventional energy reservoirs such as in shale formations and Canada's oil sands.
Full text: Construction and engineering company URS Corp. agreed to buy a Canadian oil-field-services company for $1.25 billion, stepping up the U.S. company's exposure to the North American drilling boom.
URS, based in San Francisco, said it agreed to pay 25 Canadian dollars (US$25) a share for Flint Energy Services Ltd., which has headquarters in Calgary and operates throughout the U.S. and Canada. The price represents a 68% premium to Flint's closing price Friday on the Toronto Stock Exchange.
The U.S. company will also assume about $225 million in Flint debt.
URS long has worked for oil companies around the world, providing engineering but not oil-field or production services. In recent years, it has considered entering the growing drilling market in North America, Chief Executive Martin Koffel said in an interview Monday. "We're very attracted to the movement toward North American energy independence," he said.
Flint's businesses include rig hauling, pipeline installation and horizontal drilling, a service that is crucial to unlocking unconventional energy reservoirs such as in shale formations and Canada's oil sands. About 80% of Flint's business is in western Canada, where energy companies are expected to spend an estimated $180 billion on oil-sands development over the next 10 years. The rest of Flint's operations are in the major shale basins in the U.S.
Oil-field services recovered rapidly from recession amid rising demand to extract oil and natural gas from North America's newfound oil fields. A recent drop in U.S. natural-gas prices has prompted producers, including Chesapeake Energy Corp. and Devon Energy Corp., to cut back on drilling in gas fields. But demand for oil-field services continues to outpace supply as producers move rigs and capital to emerging shale-oil fields, said Flint Chief Executive William Lindgard, who will head a new oil and natural-gas division at URS.
After the deal's closing, which is expected in the second quarter, the oil and natural-gas sector will make up 22% of URS's revenue, the company said.
Credit: By Ryan Dezember
Subject: Petroleum industry; Oil reserves; Oil sands; Oil fields; Natural gas
Location: United States--US North America San Francisco California
Company / organization: Name: Flint Energy Services Ltd; NAICS: 236210, 541330
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 20, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 922288443
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/922288443?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S., Mexico Sign Deal on Oil Drilling in Gulf
Author: Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Feb 2012: n/a.
ProQuest document link
Abstract:
The agreement signed Monday by U.S. Secretary of State Hillary Clinton and Mexican Foreign Minister Patricia Espinosa in Los Cabos, Mexico, establishes a legal framework for U.S. companies to develop offshore energy projects with Petroleos Mexicanos, the Mexican state oil company known as Pemex, in areas that straddle the two nations' maritime border.
Full text: The U.S. and Mexico have reached an agreement that would allow oil and gas drilling on more than 1.5 million acres in the Gulf of Mexico, resolving a dispute that has left those areas in limbo for more than a decade.
The agreement signed Monday by U.S. Secretary of State Hillary Clinton and Mexican Foreign Minister Patricia Espinosa in Los Cabos, Mexico, establishes a legal framework for U.S. companies to develop offshore energy projects with Petroleos Mexicanos, the Mexican state oil company known as Pemex, in areas that straddle the two nations' maritime border. The acreage runs due east from the U.S.-Mexico border to a point more than 200 miles south of the mouth of the Mississippi River, and includes areas where the water is almost 11,000 feet deep.
The agreement also allows U.S. and Mexican safety officials to work together to ensure the projects meet the safety standards of both nations and sets the groundwork for more cooperation to develop uniform safety guidelines for offshore energy development.
The safety agreement is particularly important as Pemex prepares to drill a site near the U.S. maritime border in 9,000 feet of water, nearly twice as deep as the well drilled by the doomed Deepwater Horizon rig in 2010. Officials on both sides of the border have expressed concerns about Pemex's ability to safely handle such a complex project since it has done relatively few deep-water projects compared with operators in U.S. waters and none as deep as 9,000 feet.
"We're moving forward with Mexico to make sure we have a common set of safety protocols," U.S. Secretary of the Interior Ken Salazar said in a conference call.
Mexico, the U.S.'s No. 2 oil supplier behind Canada, has seen its offshore oil production drop for seven straight years and has only about 10 years of proven reserves of crude. The deep-water project is seen as an attempt to reverse that trend.
Houston-based Helix Energy Solutions Group Inc. has discussed providing a system to Pemex to contain a subsea oil leak like the one that occurred following the April 2010 Deepwater Horizon accident off Louisiana, but no firm agreement has yet been reached, according to a spokesman for Helix.
The areas that are part of the agreement may contain as much as 172 million barrels of oil and 304 billion cubic feet of natural gas, according to the U.S. Bureau of Ocean Energy Management.
The bureau included some of the acreage in a lease sale in December, with the understanding nothing would be finalized until the dispute was settled. The area is near successful projects such as Royal Dutch Shell PLC's Perdido production platform, which is producing about 90,000 barrels of oil equivalent per day.
Credit: By Tom Fowler
Subject: Petroleum industry; Agreements; Energy management
Location: United States--US Gulf of Mexico
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 21, 2012
Section: US
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: En glish
Document type: News
ProQuest document ID: 922287790
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/922287790?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Renewed Iran Threat Rattles Oil Markets
Author: Faucon, Benoit
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Feb 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: LONDON--An Iranian threat to pre-empt a European Union embargo pushed oil prices to a nine-month high, prompting the International Energy Agency to warn that the standoff between Iran and the West was bringing the burden of oil prices on the global economy to near levels last seen in 2008.
An official with the IEA said, however, that oil markets including those in the EU could cope with any loss of Iranian oil exports.
Didier Houssin, IEA director for energy markets and security, said that "there are alternative supplies that can make up for any loss of Iranian exports," with more production made available both within and outside the Organization of Petroleum Exporting Countries in the second half.
The remarks came as Ahmed Ghalebani, managing director of National Iranian Oil Co., warned European companies it would interrupt their supplies if they don't sign long-term deals, according to the oil ministry's website, Shana.
Iran will sell "oil to European countries in terms of two- to five-year contracts and without any preconditions, and...otherwise the exports will be canceled," he warned.
Iran has been ratcheting up pressure on the EU in recent days as it tries to pre-empt a full EU ban on its oil starting July 1.
On Sunday, Iran's oil ministry said it had halted exports to France and the U.K.--though the measure was essentially symbolic as both countries had already stopped buying Iranian oil.
But even if Iran acts on its threat to cut supplies to other buyers, the IEA's Mr. Houssin said the "impact of such a move will be extremely limited," as many refineries will soon stop producing due to seasonal maintenance, and oil companies have already started replacing Iran oil.
Even Mr. Ghalebani acknowledged Monday that the level of Iranian oil sales to the EU "has dropped" from a previous level of 515,000 barrels a day.
At the same time, people familiar with Iranian talks to find replacement buyers in India and China say they are stumbling because of U.S. banking sanctions.
Large producers including Saudi Arabia have already begun to fill the gap, Mr. Houssin said. Current spare capacity available in OPEC, most of it in the Gulf, stands at 2.82 million barrels a day, according to the IEA, making it easy to replace the 2.2 million barrels a day of crude Iran normally exports.
Despite the comfortable cushion of available oil, the front-month April Brent contract on London's ICE futures exchange rose to $121.15 a barrel, its highest level since May 2011, while the front-month March contract on the New York Mercantile Exchange hit $104.50 a barrel, also a nine-month high.
Markets have also been rattled by fears the verbal escalation could spiral into a military conflict after Iran threatened to block the Strait of Hormuz, through which one-fifth of global oil supply transits.
But Mr. Houssin said "the IEA stands ready to react if there is a major supply disruption" as it did last year when it released emergency stockpiles after fighting interrupted oil flows from Libya.
Marlene Holzner, a spokeswoman for European Energy Commissioner Günther Oettinger, said similarly Monday that "the EU is well stocked with oil and petroleum products to face a potential disruption of supplies."
Still, the threat has been reflected in higher prices, pushing the cost of oil to levels dangerous for the world economy, the IEA's Mr. Houssin said.
"Our indications are that the share of the oil cost compared with the [global gross domestic product] has reached a level close to 2008," he said. At that time, a spike in oil prices to $147 a barrel was blamed for worsening the global recession.
"This [current] level of price could represent a risk to the global economic recovery," Mr. Houssin said.
Alessandro Torello in Brussels and Sarah Kent in London contributed to this article.
Write to Benoit Faucon at benoit.faucon@dowjones.com
Credit: By Benoit Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 21, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 922288460
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/922288460?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Construction Firm Expands in Oil Drilling
Author: Dezember, Ryan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Feb 2012: n/a.
ProQuest document link
Abstract:
Flint's businesses include rig hauling, pipeline installation and horizontal drilling, a service that is crucial to unlocking unconventional energy reservoirs such as in shale formations and Canada's oil sands.
Full text: Construction and engineering company URS Corp. agreed to buy a Canadian oil-field-services company for $1.25 billion, stepping up the U.S. company's exposure to the North American drilling boom.
URS, based in San Francisco, said it agreed to pay 25 Canadian dollars (US$25) a share for Flint Energy Services Ltd., which has headquarters in Calgary and operates throughout the U.S. and Canada. The price represents a 68% premium to Flint's closing price Friday on the Toronto Stock Exchange.
The U.S. company will also assume about $225 million in Flint debt.
URS long has worked for oil companies around the world, providing engineering but not oil-field or production services. In recent years, it has considered entering the growing drilling market in North America, Chief Executive Martin Koffel said in an interview Monday. "We're very attracted to the movement toward North American energy independence," he said.
Flint's businesses include rig hauling, pipeline installation and horizontal drilling, a service that is crucial to unlocking unconventional energy reservoirs such as in shale formations and Canada's oil sands. About 80% of Flint's business is in western Canada, where energy companies are expected to spend an estimated $180 billion on oil-sands development over the next 10 years. The rest of Flint's operations are in the major shale basins in the U.S.
Oil-field services recovered rapidly from recession amid rising demand to extract oil and natural gas from North America's newfound oil fields. A recent drop in U.S. natural-gas prices has prompted producers, including Chesapeake Energy Corp. and Devon Energy Corp., to cut back on drilling in gas fields. But demand for oil-field services continues to outpace supply as producers move rigs and capital to emerging shale-oil fields, said Flint Chief Executive William Lindgard, who will head a new oil and natural-gas division at URS.
After the deal's closing, which is expected in the second quarter, the oil and natural-gas sector will make up 22% of URS's revenue, the company said.
Write to Ryan Dezember at ryan.dezember@dowjones.com
Credit: By Ryan Dezember
Subject: Petroleum industry; Oil reserves; Oil sands; Oil fields; Natural gas
Location: United States--US North America San Francisco California
Company / organization: Name: Flint Energy Services Ltd; NAICS: 236210, 541330
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 21, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 922305669
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/922305669?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Construction Firm Expands In Oil Drilling
Author: Dezember, Ryan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]21 Feb 2012: B.2.
ProQuest document link
Abstract:
Flint's businesses include rig hauling, pipeline installation and horizontal drilling, a service that is crucial to unlocking unconventional energy reservoirs such as in shale formations and Canada's oil sands.
Full text: Construction and engineering company URS Corp. agreed to buy a Canadian oil-field-services company for $1.25 billion, stepping up the U.S. company's exposure to the North American drilling boom.
URS, based in San Francisco, said it agreed to pay 25 Canadian dollars (US$25) a share for Flint Energy Services Ltd., which has headquarters in Calgary and operates throughout the U.S. and Canada. The price represents a 68% premium to Flint's closing price Friday on the Toronto Stock Exchange.
The U.S. company will also assume about $225 million in Flint debt.
URS long has worked for oil companies, providing engineering but not oil-field or production services. In recent years, it has considered entering the drilling market in North America, Chief Executive Martin Koffel said in an interview Monday. "We're very attracted to the movement toward North American energy independence," he said.
Flint's businesses include rig hauling, pipeline installation and horizontal drilling, a service that is crucial to unlocking unconventional energy reservoirs such as in shale formations and Canada's oil sands. About 80% of Flint's business is in western Canada, where energy companies are expected to spend $180 billion on oil-sands development over the next 10 years. The rest of Flint's operations are in the major shale basins in the U.S.
Oil-field services recovered rapidly from recession amid rising demand to extract oil and natural gas from North America's newfound oil fields.
Credit: By Ryan Dezember
Subject: Petroleum industry; Oilfield equipment & services; Acquisitions & mergers
Location: United States--US North America San Francisco California
Company / organization: Name: Toronto Stock Exchange; NAICS: 523210; Name: Flint Energy Services Ltd; NAICS: 236210, 54 1330; Name: URS Corp; NAICS: 541310, 541330
Classification: 2330: Acquisitions & mergers; 8510: Petroleum industry; 9172: Canada; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.2
Publication year: 2012
Publication date: Feb 21, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 922324923
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/922324923?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
U.S. News: U.S., Mexico Sign Deal On Oil Drilling in Gulf
Author: Fowler, Tom
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]21 Feb 2012: A.3. [Duplicate]
ProQuest document link
Abstract:
The agreement signed Monday by U.S. Secretary of State Hillary Clinton and Mexican Foreign Minister Patricia Espinosa in Los Cabos, Mexico, establishes a legal framework for U.S. companies to develop offshore energy projects with Petroleos Mexicanos, the Mexican state oil company known as Pemex, in areas that straddle the two nations' maritime border.
Full text: The U.S. and Mexico have reached an agreement that would allow oil and gas drilling on more than 1.5 million acres in the Gulf of Mexico, resolving a dispute that has left those areas in limbo for more than a decade.
The agreement signed Monday by U.S. Secretary of State Hillary Clinton and Mexican Foreign Minister Patricia Espinosa in Los Cabos, Mexico, establishes a legal framework for U.S. companies to develop offshore energy projects with Petroleos Mexicanos, the Mexican state oil company known as Pemex, in areas that straddle the two nations' maritime border. The acreage runs due east from the U.S.-Mexico border to a point more than 200 miles south of the mouth of the Mississippi River, and includes areas where the water is almost 11,000 feet deep.
The agreement also allows U.S. and Mexican safety officials to work together to ensure the projects meet the safety standards of both nations and sets the groundwork for more cooperation to develop uniform safety guidelines for offshore energy development.
The safety agreement is particularly important as Pemex prepares to drill a site near the U.S. maritime border in 9,000 feet of water, nearly twice as deep as the well drilled by the doomed Deepwater Horizon rig in 2010. Officials on both sides of the border have expressed concerns about Pemex's ability to safely handle such a complex project since it has done relatively few deep-water projects compared with operators in U.S. waters and none as deep as 9,000 feet.
"We're moving forward with Mexico to make sure we have a common set of safety protocols," U.S. Secretary of the Interior Ken Salazar said in a conference call.
Mexico, the U.S.'s No. 2 oil supplier behind Canada, has seen its offshore oil production drop for seven straight years and has only about 10 years of proven reserves of crude. The deep-water project is seen as an attempt to reverse that trend.
Houston-based Helix Energy Solutions Group Inc. has discussed providing a system to Pemex to contain a subsea oil leak like the one that occurred following the April 2010 Deepwater Horizon accident off Louisiana, but no firm agreement has yet been reached, according to a spokesman for Helix.
The areas that are part of the agreement may contain as much as 172 million barrels of oil and 304 billion cubic feet of natural gas, according to the U.S. Bureau of Ocean Energy Management.
The bureau included some of the acreage in a lease sale in December, with the understanding nothing would be finalized until the dispute was settled. The area is near successful projects such as Royal Dutch Shell PLC's Perdido production platform, which is producing about 90,000 barrels of oil equivalent per day.
Credit: By Tom Fowler
Subject: Petroleum industry; Energy management; International agreements; Oil exploration; Natural gas exploration
Location: United States--US Gulf of Mexico Mexico
People: Clinton, Hillary Espinosa, Patricia
Company / organization: Name: Petroleos Mexicanos; NAICS: 211111
Classification: 1300: International trade & foreign investment; 8510: Petroleum industry; 9173: Latin America; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.3
Publication year: 2012
Publication date: Feb 21, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 922325046
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/922325046?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Renewed Iran Threat Rattles Oil Markets
Author: Faucon, Benoit
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]21 Feb 2012: A.9.
ProQuest document link
Abstract:
An Iranian threat to pre-empt a European Union embargo pushed oil prices to a nine-month high, prompting the International Energy Agency to warn that the standoff between Iran and the West was bringing the burden of oil prices on the global economy near to levels last seen in 2008.
Full text: LONDON -- An Iranian threat to pre-empt a European Union embargo pushed oil prices to a nine-month high, prompting the International Energy Agency to warn that the standoff between Iran and the West was bringing the burden of oil prices on the global economy near to levels last seen in 2008.
But an official with the IEA, which represents the views of energy consumers, said that oil markets including those in the EU could cope with any loss of Iranian oil exports.
Didier Houssin, IEA director for energy markets and security, said that "there are alternative supplies that can make up for any loss of Iranian exports," with more production made available both within and outside the Organization of Petroleum Exporting Countries in the second half.
The remarks came as Ahmed Ghalebani, managing director of National Iranian Oil Co., warned European companies it would interrupt their supplies if they don't sign long-term deals, according to the oil ministry's website, Shana.
Iran will sell "oil to European countries in terms of two- to five-year contracts and without any preconditions, and . . . otherwise the exports will be canceled," he warned.
Iran has been ratcheting up pressure on the EU in recent days as it tries to pre-empt a full EU ban on its oil starting July 1.
On Sunday, Iran's oil ministry said it had halted exports to France and the U.K. -- though the measure was essentially symbolic as both countries had already stopped buying Iranian oil.
But even if Iran acts on its threat to cut supplies to other buyers, the IEA's Mr. Houssin said the "impact of such a move will be extremely limited," as many refineries will soon stop producing due to seasonal maintenance, and oil companies have already started replacing Iran oil.
Even Mr. Ghalebani acknowledged Monday that the level of Iranian oil sales to the EU "has dropped" from a previous level of 515,000 barrels a day.
At the same time, people familiar with Iranian talks to find replacement buyers in India and China say they are stumbling because of U.S. banking sanctions.
Large producers including Saudi Arabia have already begun to fill the gap, Mr. Houssin said. Current spare capacity available in OPEC, most of it in the Gulf, stands at 2.82 million barrels a day, according to the IEA, making it easy to replace the 2.2 million barrels a day of crude Iran normally exports.
Despite the comfortable cushion of available oil, the front-month April Brent contract on London's ICE futures exchange rose to $121.15 a barrel, its highest level since May 2011, while the front-month March contract on the New York Mercantile Exchange hit $104.50 a barrel, also a nine-month high.
Markets have also been rattled by fears the verbal escalation could spiral into a military conflict after Iran threatened to block the Strait of Hormuz, through which one-fifth of global oil supply transits.
But Mr. Houssin said "the IEA stands ready to react if there is a major supply disruption" as it did last year when it released emergency stockpiles after fighting interrupted oil flows from Libya.
Marlene Holzner, a spokeswoman for European Energy Commissioner Gunther Oettinger, said similarly Monday that "the EU is well stocked with oil and petroleum products to face a potential disruption of supplies."
Still, the threat has been reflected in higher prices, pushing the cost of oil to levels dangerous for the world economy, the IEA's Mr. Houssin said.
---
Alessandro Torello in Brussels and Sarah Kent in London contributed to this article.
Credit: By Benoit Faucon
Subject: Petroleum industry; Energy industry; Supplies; Commodity prices; Embargoes & blockades; Crude oil prices
Location: Iran
People: Houssin, Didier Ghalebani, Ahmed
Company / organization: Name: International Energy Agency; NAICS: 928120; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.9
Publication year: 2012
Publication date: Feb 21, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 922326850
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/922326850?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Gains 1.4% as Greece Gets Bailout
Author: Strumpf, Dan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Feb 2012: n/a.
ProQuest document link
Abstract:
Euro-zone finance ministers agreed to a [euro]130 billion rescue package for Greece after the country adopted a fresh round of austerity measures.
Full text: NEW YORK--Crude futures rose sharply Tuesday on optimism that the bailout of Greece will ease the continent's economic woes and boost oil demand.
Euro-zone finance ministers agreed to a [euro]130 billion rescue package for Greece after the country adopted a fresh round of austerity measures. The agreement boosted market sentiment across the board and ended months of uncertainty over whether the country that has been at the center of the euro-zone's sovereign-debt crisis would get a second bailout.
Light, sweet crude for March delivery rose $1.41, or 1.4%, to $104.65 a barrel on the New York Mercantile Exchange. With the contract due to expire at the close of trading Tuesday, the more heavily traded April contract was up $1.34, or 1.3%, to $104.94 a barrel.
Brent crude on ICE Futures Europe rose 37 cents, or 0.3%, to $120.42 a barrel.
Oil-market participants have been closely watching the outcome of the currency union's negotiations because of concern that a default by Greece or another member would damp economic growth and reduce crude-oil demand.
"It's definitely bullish for oil demand," said Phil Flynn, analyst at PFG Best in Chicago.
But he cautioned that there remains uncertainty over whether the bailout marks a final resolution to the country's crisis. "Every time the market has tried to put the Greece situation to bed it hasn't been put to bed," he said. "Does anybody think this isn't another case of kicking the can down the road?"
At the same time, crude-oil prices got a boost from bellicose comments from Iran over the weekend. Over the weekend, the country said that it stopped exports to France and the U.K. and warned European companies that it would halt their supplies unless they sign long-term contracts.
Although the countries aren't major importers of Iranian oil, the measures marked the latest escalation of tensions between Iran and Western countries, who have imposed additional sanctions on the Islamic republic in order to pressure it into halting its nuclear program. Tehran says the program is for peaceful purposes. Iran exports some 600,000 barrels of oil a day to Europe.
Over the weekend, J.P. Morgan Chase analysts raised their oil-price targets amid the mounting geopolitical tensions. In addition to Iran, the analysts pointed to issues in Syria and Nigeria, as well as the flare-up between Sudan and South Sudan.
The analysts say they now expect Brent prices to average $118 a barrel this year, up from a previous forecast of $112 a barrel. They raised their 2012 forecast for the Nymex benchmark to $111 a barrel from $107 a barrel.
Front-month March reformulated gasoline blendstock, or RBOB, recently traded 3.45 cents, or 1.1%, higher at $3.0501 a gallon. March heating oil traded 3.10 cents, or 1%, higher at $3.2199 a gallon.
Credit: By Dan Strumpf
Subject: Petroleum industry; Eurozone
Location: New York
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 21, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: New s
ProQuest document ID: 922396291
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/922396291?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Total, Cnooc Join Tullow in Uganda Oil Project
Author: Flynn, Alexis
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Feb 2012: n/a.
ProQuest document link
Abstract:
The partners will also undertake a number of projects aimed at developing the East African nation's energy infrastructure, including building Uganda's first refinery and a pipeline to the Indian Ocean.
Full text: LONDON--Tullow Oil PLC's long-delayed $2.9 billion deal to sell one-third stakes in three Ugandan oil-exploration areas to Total SA of France and China's Cnooc Ltd. was finally signed Tuesday, the three parties said in separate statements.
The conclusion of the deal comes weeks after the U.K. firm signed a joint oil-production-sharing agreement with the East African nation and paves the way for some $10 billion worth of investment in the country's nascent oil sector.
The deal, agreed early last year, has been dogged by snags ranging from tax disputes to disagreements over oil-production plans.
The three firms can now focus their efforts on pumping oil from the huge reserves discovered on the shores of Lake Albert. Early production is expected to start by 2013, with a major escalation phase in 2016, said Tullow's head of exploration, Angus McCoss.
The partners will also undertake a number of projects aimed at developing the East African nation's energy infrastructure, including building Uganda's first refinery and a pipeline to the Indian Ocean.
Mr. McCoss said the $2.9 billion cash injection would be well received and would help to both underpin Tullow's current exploration program and also potentially fund some acquisitions if appropriate.
"We have a full program this year, and [the money] will go a long way to underwriting that," said Mr. McCoss, adding that he "didn't rule out" some of the cash being used for mergers and acquisitions.
"There are no shortage of options across the portfolio," he said.
Credit: By Alexis Flynn
Subject: Energy policy; Acquisitions & mergers
Location: United Kingdom--UK
Company / organization: Name: Tullow Oil PLC; NAICS: 211111; Name: Total SA; NAICS: 211111, 324110, 447190; Name: CNOOC Ltd; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 21, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 922396308
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/922396308?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Williams Partners, Cabot Oil Join on Gas Pipeline
Author: Lamar, Mia
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Feb 2012: n/a.
ProQuest document link
Abstract:
The companies said the high-pressure pipeline will initially be designed to transport at least 500,000 dekatherms a day of Cabot's production in the Marcellus Shale, a formation of gas-bearing rock in states including West Virginia, Pennsylvania and New York that has helped spark a production boom in North America.
Full text: Williams Partners LP and Cabot Oil & Gas Corp. disclosed plans to partner on a new pipeline that will transport Cabot's natural-gas production to New England and New York markets.
Called the Constitution Pipeline, the project will be 75%-owned by Williams Partners, which will provide construction, operation and other services. Cabot will own the remaining 25%.
The companies said the high-pressure pipeline will initially be designed to transport at least 500,000 dekatherms a day of Cabot's production in the Marcellus Shale, a formation of gas-bearing rock in states including West Virginia, Pennsylvania and New York that has helped spark a production boom in North America.
"This pipeline is truly the next big step of our capacity expansion program and positions us with access to the premium New England and New York marketplace that has historically been constrained from both a lack of reliable supply and pipeline infrastructure," said Cabot Chairman and Chief Executive Dan O. Dinges.
He added that the bulk of the company's investment will be contributed during the 2014 and early 2015 time frame. The initial in-service date for the system is slated for March 2015.
Cabot on Monday reported its fourth-quarter profit slumped 46% over a year-earlier quarter boosted by asset sales. Core earnings, however, topped analyst expectations as higher production boosted results.
Credit: By Mia Lamar
Subject: Financial performance
Location: New York West Virginia
Company / organization: Name: Williams Partners LP; NAICS: 486210; Name: Cabot Oil & Gas Corp; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 21, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 922396314
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/922396314?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil, Metals Gain on Greek Debt Deal
Author: DiColo, Jerry A
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]22 Feb 2012: C.4.
ProQuest document link
Abstract:
Copper, gold and other metals posted gains, while crude oil surged to a nine-month high after European leaders approved a 130 billion euro ($172 billion) bailout that would allow Greece to avoid defaulting on debt payments due next month.
Full text: Commodities markets jumped higher as euro-zone finance ministers approved a second bailout for Greece.
Copper, gold and other metals posted gains, while crude oil surged to a nine-month high after European leaders approved a 130 billion euro ($172 billion) bailout that would allow Greece to avoid defaulting on debt payments due next month. The deal, which requires Greek leaders to implement new measures to curb government spending, isn't expected to solve Europe's debt problems.
But investors were able to breathe easier knowing that a disorderly debt default isn't about to disrupt markets, said Bill O'Grady, chief market strategist at Confluence Investment Management. There also were concerns that a Greek default could hurt demand for raw materials by scuttling economic growth.
"All you can ever do in these situations is buy time," Mr. O'Grady said. "In the short run, there is some hope that maybe we'll be OK."
Copper rose 12.85 cents, or 3.5%, to settle at $3.8335 a pound on the Comex division of the New York Mercantile Exchange. Comex gold futures, which were helped by a falling U.S. dollar early in the trading session, rose $32.60, or 1.9%, to $1,757.10 a troy ounce, a high for the year.
Along with the latest bailout from the European Union, traders' attention turned to other factors that could raise prices. After markets in the U.S. were closed Monday for the Presidents Day holiday, copper prices gained momentum from China's decision on Saturday to cut bank reserve requirement ratios by half a percentage point. China is the world's largest consumer of copper, and the measures were considered a sign that Beijing is more concerned with restarting growth than curbing high inflation.
In addition, oil prices gained amid tensions with Iran, sending crude up $2.60, or 2.5%, to $105.84 a barrel on the Nymex, the highest settlement price since May 4. Over the weekend, Iran warned European companies that it would halt supplies unless they signed long-term contracts. Tehran also cut exports to France and the U.K.
Credit: By Jerry A. DiColo
Subject: Investment policy; Default; Copper; Government spending; Commodity prices
Location: United States--US
Classification: 9180: International; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Feb 22, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 922483318
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/922483318?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
EU Experts Deadlock on Canadian Oil Sands
Author: Torello, Alessandro
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Feb 2012: n/a.
ProQuest document link
Abstract:
Technocrats meeting here failed to reach a large enough majority to back a proposed update to the Fuel Quality Directive, which encourages the use of cleaner fuels as part of a broader EU effort to cut greenhouse gas emissions.
Full text: BRUSSELS--A panel of European Union technical experts deadlocked over whether to penalize Canadian oil sands, the latest move in a simmering trade squabble between Brussels and Ottawa.
Technocrats meeting here failed to reach a large enough majority to back a proposed update to the Fuel Quality Directive, which encourages the use of cleaner fuels as part of a broader EU effort to cut greenhouse gas emissions. The update would set a specific target to cut emissions from transport fuels and rank fuels according to their carbon dioxide content.
The commission's proposal would penalize the use of fuels made from oil sands, citing higher CO2 emissions in the extraction process. Climate Action Commissioner Connie Hedegaard, a supporter of the proposal, said the measure would now be forward to EU ministers to decide.
The issue has interfered with negotiation of a free trade agreement between the EU and Canada, which is one of the main global producers of crude from oil sands. Canada has threatened to take the bloc to the World Trade Organization if it proceeded with its legislation. The U.S. is also following the debate closely as it uses oil from Canada's oil sands to refine into fuel that it exports to Europe.
Canadian officials and oil industry executives say oil sands emissions aren't higher than many other conventional sources of crude. Canada Natural Resource Minister Joe Oliver said he was pleased with the result of the vote, and said his government is working to determine what its next step would be.
"We remain strongly opposed to Canadian oil sands crude being unfairly discriminated against without scientific justification," Oliver said. "If the EU moves ahead in implementing these or any other unjustified, discriminatory measures, Canada won't hesitate to defend its interests."
Canada's Western province of Alberta is estimated to hold around 170 billion barrels of proven oil reserves, placing it third in the world behind Saudi Arabia and Venezuela. Buried just below Alberta's boreal forest, the deposits are a mixture of quartz sands and bitumen--a thick, tarry form of crude.
Canada's exports of oil-sands crude to Europe are negligible. But any EU legislation singling out the fuel could set a precedent, encouraging oil sands critics in other jurisdictions--particularly in the U.S., the Alberta oil industry's main export market.
Write to Alessandro Torello at alessandro.torello@dowjones.com
Credit: By Alessandro Torello
Subject: Petroleum industry; Oil sands; Emissions
Location: United States--US
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 23, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 922951168
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/922951168?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Exxon's Oil, Gas Reserves Inch Up
Author: Ordonez, Isabel; Lamar, Mia
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Feb 2012: n/a.
ProQuest document link
Abstract:
Exxon Mobil, the world's largest publicly traded company, also said it added 1.8 billion barrels of oil equivalent last year to its proved reserves, which equals 107% of the oil and gas it produced.
Full text: HOUSTON--Exxon Mobil Corp. said Thursday the company's 2011 proved oil-and-gas reserves inched up compared with the previous year.
As of the end of 2011, the company's proved reserves base stood at 24.9 billion oil-equivalent barrels, up from 24.8 billion oil-equivalent barrels in 2010.
Proved reserves are the amount of reserves that can be feasibly recovered at current oil and gas prices.
Exxon Mobil, the world's largest publicly traded company, also said it added 1.8 billion barrels of oil equivalent last year to its proved reserves, which equals 107% of the oil and gas it produced. Excluding the impact of asset sales, reserves additions replaced 116% of production, the company said.
The bulk of reserves additions came from the Kearl Expansion Project in Canada, which totaled one billion oil-equivalent barrels. Proved reserves additions were also made in countries like the U.S., Nigeria and Indonesia, the company said.
Exxon Mobil's 2011 reserve replacement ratio was weaker than the previous year, when its XTO Energy acquisition helped the oil giant post a 226% reserve replacement ratio, said UBS in a note to clients. But the figure was better than what Exxon was reporting before the acquisition.
The company's official reserves figures based on rules set by the Securities and Exchange Commission will be posted on its 10-K, which is generally filed by the end of February.
Shares were recently down 7 cents to $86.85. The stock is up 2.6% since the start of the year, trailing the broader market.
Write to Isabel Ordonez at Isabel.ordonez@dowjones.com and Mia Lamar at mia.lamar@dowjones.com
Credit: By Isabel Ordonez And Mia Lamar
Subject: Oil reserves; Natural gas reserves; Petroleum industry
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 23, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923001251
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923001251?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil-Spread Bets Resurface
Author: Strumpf, Daniel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Feb 2012: n/a.
ProQuest document link
Abstract:
Rising North American oil production is shaking up the crude markets and reviving some familiar trades that yielded big profits for investors last year.
Full text: Rising North American oil production is shaking up the crude markets and reviving some familiar trades that yielded big profits for investors last year.
Output from North Dakota, Canada and elsewhere is again leading to a buildup of oil in Cushing, Okla., and pipeline congestion around the central U.S. oil hub.
That has meant that the price of U.S. oil, while still at a nine-month high, is lagging behind that of its European counterpart, Brent crude. West Texas Intermediate traded on the New York Mercantile Exchange rose $1.55, or 1.5%, to $107.83 a barrel on Thursday. Brent crude gained 72 cents, or 0.6%, to $123.62 a barrel on ICE Futures U.S. The gap, or spread, between the two has jumped to $15.79, from less than $8 at the end of last year.
The gap is reviving interest in bets on the relative price of oil, with speculators piling back into the trade in recent months. One measure of interest, a Brent-WTI spread contract that trades on the IntercontinentalExchange Inc.'s London bourse, has seen trading volumes rise sharply since the beginning of the year, according to the exchange.
The added twist this time: The bets come with a potential expiration date. A pipeline that pumps oil into Cushing is scheduled to be reversed in June, a move traders anticipate will ease the glut in Cushing and potentially drive U.S. prices higher.
For now, one popular wager among oil speculators involves betting that the price of the Cushing contract will fall, known as a short position, and wagering that the Brent contract will rise.
Last year, the bet profited handsomely as a similar glut of oil at Cushing depressed the price of West Texas Intermediate, or WTI, while Brent crude surged in the wake of turmoil in the Middle East.
Another common trade involves selling WTI futures for delivery in the near term and buying WTI for delivery later. Called a "calendar spread," the trade essentially is a bet that the influx of oil into Cushing will depress the price of the oil there in the short term. That already is happening. A month ago, the price of WTI for delivery in April was 32 cents cheaper than oil for May delivery. Now, the two contracts are almost 42 cents apart.
The Brent-WTI trade is "in vogue again," said Rich Ilczyszyn, chief market strategist at futures brokerage iiTrader. "I like the calendar spread as well. There's money all over the place."
Tariq Zahir, manager of the $2 million commodity-trading fund Tyche Capital Advisors, said he has been placing calendar-spread trades as far out as the middle of the year. "We definitely do feel, over the next month, month and a half, that we will see continuing builds in Cushing," Mr. Zahir said.
Similar events roiled the oil market last year when the gap between Brent and WTI widened for months before hitting a record of nearly $28 a barrel in October. Months later, the spread narrowed to less than $8 a barrel, only to blow out again. Historically, the two crudes have traded within just a few dollars of each other.
A trader who rode the spread from its recent trough to its recent peak, during which it widened by $11 a barrel over two months, would have nearly quadrupled the investment, said Carl Larry, president of Oil Outlooks and Opinions, a trading newsletter.
To be sure, oil prices around the world have been rising all year. Rising tensions between Iran and the West, Greece's agreement to a second bailout and falling unemployment in the U.S. have boosted market sentiment.
The impact of Iran tensions has had a more pronounced impact on Brent crude, however, because the European Union imports about 600,000 barrels of oil a day from Iran. The U.S. hasn't imported Iranian oil for decades.
And the trading strategy depends on oil inventories at Cushing staying high for the next few months. Oil stored in tanks there has risen 12% over the past month, to 32.2 million barrels, according to the Energy Information Administration.
Write to Daniel Strumpf at daniel.strumpf@dowjones.com
Credit: By Daniel Strumpf
Subject: Petroleum industry; Petroleum production; Pipelines; Futures
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 23, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923084181
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923084181?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil-Spread Bets Resurface
Author: Strumpf, Daniel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 Feb 2012: n/a.
ProQuest document link
Abstract:
Rising North American oil production is shaking up the crude markets and reviving some familiar trades that yielded big profits for investors last year.
Full text: Rising North American oil production is shaking up the crude markets and reviving some familiar trades that yielded big profits for investors last year.
Output from North Dakota, Canada and elsewhere is again leading to a buildup of oil in Cushing, Okla., and pipeline congestion around the central U.S. oil hub.
That has meant that the price of U.S. oil, while still at a nine-month high, is lagging behind that of its European counterpart, Brent crude. West Texas Intermediate traded on the New York Mercantile Exchange rose $1.55, or 1.5%, to $107.83 a barrel on Thursday. Brent crude gained 72 cents, or 0.6%, to $123.62 a barrel on ICE Futures U.S. The gap, or spread, between the two has jumped to $15.79, from less than $8 at the end of last year.
The gap is reviving interest in bets on the relative price of oil, with speculators piling back into the trade in recent months. One measure of interest, a Brent-WTI spread contract that trades on the IntercontinentalExchange Inc.'s London bourse, has seen trading volumes rise sharply since the beginning of the year, according to the exchange.
The added twist this time: The bets come with a potential expiration date. A pipeline that pumps oil into Cushing is scheduled to be reversed in June, a move traders anticipate will ease the glut in Cushing and potentially drive U.S. prices higher.
For now, one popular wager among oil speculators involves betting that the price of the Cushing contract will fall, known as a short position, and wagering that the Brent contract will rise.
Last year, the bet profited handsomely as a similar glut of oil at Cushing depressed the price of West Texas Intermediate, or WTI, while Brent crude surged in the wake of turmoil in the Middle East.
Another common trade involves selling WTI futures for delivery in the near term and buying WTI for delivery later. Called a "calendar spread," the trade essentially is a bet that the influx of oil into Cushing will depress the price of the oil there in the short term. That already is happening. A month ago, the price of WTI for delivery in April was 32 cents cheaper than oil for May delivery. Now, the two contracts are almost 42 cents apart.
The Brent-WTI trade is "in vogue again," said Rich Ilczyszyn, chief market strategist at futures brokerage iiTrader. "I like the calendar spread as well. There's money all over the place."
Tariq Zahir, manager of the $2 million commodity-trading fund Tyche Capital Advisors, said he has been placing calendar-spread trades as far out as the middle of the year. "We definitely do feel, over the next month, month and a half, that we will see continuing builds in Cushing," Mr. Zahir said.
Similar events roiled the oil market last year when the gap between Brent and WTI widened for months before hitting a record of nearly $28 a barrel in October. Months later, the spread narrowed to less than $8 a barrel, only to blow out again. Historically, the two crudes have traded within just a few dollars of each other.
A trader who rode the spread from its recent trough to its recent peak, during which it widened by $11 a barrel over two months, would have nearly quadrupled the investment, said Carl Larry, president of Oil Outlooks and Opinions, a trading newsletter.
To be sure, oil prices around the world have been rising all year. Rising tensions between Iran and the West, Greece's agreement to a second bailout and falling unemployment in the U.S. have boosted market sentiment.
The impact of Iran tensions has had a more pronounced impact on Brent crude, however, because the European Union imports about 600,000 barrels of oil a day from Iran. The U.S. hasn't imported Iranian oil for decades.
And the trading strategy depends on oil inventories at Cushing staying high for the next few months. Oil stored in tanks there has risen 12% over the past month, to 32.2 million barrels, according to the Energy Information Administration.
Write to Daniel Strumpf at daniel.strumpf@dowjones.com
Credit: By Daniel Strumpf
Subject: Petroleum industry; Petroleum production; Pipelines; Futures
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 24, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923083962
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923083962?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
'Stupid' and Oil Prices; Obama's Forrest Gump analysis of rising gas prices.
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 Feb 2012: n/a.
ProQuest document link
Abstract:
To wit, that a gasoline prices are beyond his control, but b to the extent oil and gas production is rising in America, his energy policies deserve all the credit, and c higher prices are one more reason to raise taxes on oil and gas drillers while handing even more subsidies to his friends in green energy. According to the Greater New Orleans Gulf Permits Index for January 31, over the previous three months the feds issued an average of three deep-water drilling permits a month compared to the historical average of seven.
Full text: 'The American people aren't stupid," thundered President Obama yesterday in Miami, ridiculing Republicans who are blaming him for rising gasoline prices. Let's hope he's right, because not even Forrest Gump could believe the logic of what Mr. Obama is trying to sell.
To wit, that a) gasoline prices are beyond his control, but b) to the extent oil and gas production is rising in America, his energy policies deserve all the credit, and c) higher prices are one more reason to raise taxes on oil and gas drillers while handing even more subsidies to his friends in green energy. Where to begin?
It's true enough that oil prices can't be commanded from the Oval Office, so in that sense Mr. Obama's disavowal of blame is a rare show of humility in the face of market forces. Would that he showed similar modesty in trying to command the tides of home prices, car sales ("cash for clunkers"), or the production of electric batteries.
The oil price surge has several likely sources. One is the turmoil in the Middle East, especially new fears of a supply shock from a conflict with Iran. But it's worth recalling that Mr. Obama also blamed the last oil-price surge, in spring 2011, on the Libyan uprising. Moammar Gadhafi is now gone and Libyan oil production is coming back on stream, yet oil prices dipped only briefly below $90 a barrel and have been rising since October. Something else must be going on.
Mr. Obama yesterday blamed rising demand from the likes of Brazil and China, and there is something to that as well. But this energy demand is also not new, and if anything Chinese and Brazilian economic growth has been slowing in recent months.
Another suspect--one Mr. Obama doesn't like to mention--is U.S. monetary policy. Oil is traded in dollars, and its price therefore rises when the value of the dollar falls, all else being equal. The Federal Reserve throughout Mr. Obama's term has pursued the easiest monetary policy in modern times, expressly to revive the housing market. It has done so with the private support and urging of the White House and through Mr. Obama's appointees who are now a majority on the Fed's Board of Governors.
Oil staged its last price surge along with other commodity prices when the Fed revved up its second burst of "quantitative easing" in 2010-2011. Prices stabilized when QE2 ended. But in recent months the Fed has again signaled its commitment to near-zero interest rates first through 2013, and recently through 2014. Commodity prices, including oil, have since begun another surge, and hedge funds have begun to bet on commodity plays again. John Paulson says he's betting on gold, the ultimate hedge against a falling dollar.
Fed officials and Mr. Obama want to take credit for easy money if stock-market and housing prices rise, but then deny any responsibility if commodity prices rise too, causing food and energy prices to soar for consumers. They can't have it both ways, as not-so-stupid Americans intuitively understand when they buy groceries or gas. This is the double-edged sword of an economic recovery "built to last" on easy money rather than on sound fiscal and regulatory policies.
As for domestic energy, Mr. Obama rightly points to the rising share of U.S. oil consumption now produced at home. But this trend began in the late Bush Administration, which opened up large new areas on and offshore for oil and gas drilling that are now coming on stream. Mr. Obama sneered at expanded drilling as a candidate in 2008 and for most of his term has done little to expand it.
In early 2010, he proposed to open some new areas to drilling but shut that down after the Gulf oil spill. According to the Greater New Orleans Gulf Permits Index for January 31, over the previous three months the feds issued an average of three deep-water drilling permits a month compared to the historical average of seven. Over the same three months, the feds approved an average of 4.7 shallow-water permits a month, compared to the historical average of 14.7.
Approval of an offshore drilling plan now takes 92 days, 31 more than the historical average. And so far in 2012, an average of 23% of all drilling plans have been approved, compared to the average of 73.4%.
Oh, and don't forget the Keystone XL pipeline, which would have increased the delivery of oil from Canada and North Dakota's Bakken Shale to Gulf Coast refineries, replacing oil from Venezuela.
The reality is that most of the increase in U.S. oil and gas production has come despite the Obama Administration. It is flowing from the shale boom, which is the result of private technological advances and investment. Mr. Obama has seen the energy sun rise and is crowing like a rooster that he made it happen.
Mr. Obama yesterday also repeated his proposal that now is the time to raise taxes on oil and gas companies, as if doing so will make them more likely to drill. He must not believe the economic truism that when you tax something you get less of it, including fewer of the new jobs they've created.
***
We'd almost feel sorry for Mr. Obama's gas-price predicament if it weren't a case of rough justice. The President has deliberately sought to raise the price of energy throughout the economy via his cap-and-trade agenda. He is now getting his wish, albeit a little too overtly for political comfort. Mr. Obama has also spent three years blaming George W. Bush for every economic ill. If Mr. Obama now feels frustrated by economic events beyond his control, perhaps he should call Mr. Bush for consolation.
Subject: Petroleum industry; Housing prices; Gasoline prices
People: Obama, Barack
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 24, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923084121
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923084121?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil-Spread Bets Resurface
Author: Strumpf, Daniel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]24 Feb 2012: C.4.
ProQuest document link
Abstract:
Rising North American oil production is shaking up the crude markets and reviving some familiar trades that yielded big profits for investors last year.
Full text: Rising North American oil production is shaking up the crude markets and reviving some familiar trades that yielded big profits for investors last year.
Output from North Dakota, Canada and elsewhere is again leading to a buildup of oil in Cushing, Okla., and pipeline congestion around the central U.S. oil hub.
That has meant that the price of U.S. oil, while still at a nine-month high, is lagging behind that of its European counterpart, Brent crude. West Texas Intermediate traded on the New York Mercantile Exchange rose $1.55, or 1.5%, to $107.83 a barrel on Thursday. Brent crude gained 72 cents, or 0.6%, to $123.62 a barrel on ICE Futures U.S.
The gap, or spread, between the two has jumped to $15.79, from less than $8 at the end of last year.
The gap is reviving interest in bets on the relative price of oil, with speculators piling back into the trade in recent months. One measure of interest, a Brent-WTI spread contract that trades on the IntercontinentalExchange Inc.'s London bourse, has seen trading volumes rise sharply since the beginning of the year, according to the exchange.
The added twist this time: The bets come with a potential expiration date. A pipeline that pumps oil into Cushing is scheduled to be reversed in June, a move traders anticipate will ease the glut in Cushing and potentially drive U.S. prices higher.
For now, one popular wager among oil speculators involves betting that the price of the Cushing contract will fall, known as a short position, and wagering that the Brent contract will rise.
Last year, the bet profited handsomely as a similar glut of oil at Cushing depressed the price of West Texas Intermediate, or WTI, while Brent crude surged in the wake of turmoil in the Middle East.
Another common trade involves selling WTI futures for delivery in the near term and buying WTI for delivery later. Called a "calendar spread," the trade essentially is a bet that the influx of oil into Cushing will depress the price of the oil there in the short term. That already is happening. A month ago, the price of WTI for delivery in April was 32 cents cheaper than oil for May delivery. Now, the two contracts are almost 42 cents apart.
The Brent-WTI trade is "in vogue again," said Rich Ilczyszyn, chief market strategist at futures brokerage iiTrader. "I like the calendar spread as well. There's money all over the place."
Tariq Zahir, manager of the $2 million commodity-trading fund Tyche Capital Advisors, said he has been placing calendar-spread trades as far out as the middle of the year.
"We definitely do feel, over the next month, month and a half, that we will see continuing builds in Cushing," Mr. Zahir said.
Similar events roiled the oil market last year when the gap between Brent and WTI widened for months before hitting a record of nearly $28 a barrel in October.
Months later, the spread narrowed to less than $8 a barrel, only to blow out again. Historically, the two crudes have traded within just a few dollars of each other.
A trader who rode the spread from its recent trough to its recent peak, during which it widened by $11 a barrel over two months, would have nearly quadrupled the investment, said Carl Larry, president of Oil Outlooks and Opinions, a trading newsletter.
To be sure, oil prices around the world have been rising all year. Rising tensions between Iran and the West, Greece's agreement to a second bailout and falling unemployment in the U.S. have boosted market sentiment.
The impact of Iran tensions has had a more pronounced impact on Brent crude, however, because the European Union imports about 600,000 barrels of oil a day from Iran. The U.S. hasn't imported Iranian oil for decades.
And the trading strategy depends on oil inventories at Cushing staying high for the next few months. Oil stored in tanks there has risen 12% over the past month, to 32.2 million barrels, according to the Energy Information Administration.
Credit: By Daniel Strumpf
Subject: Petroleum industry; Petroleum production; Pipelines; Futures; Commodity prices; Crude oil prices
Location: United States--US
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Feb 24, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923176675
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923176675?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
'Stupid' and Oil Prices
Author: Anonymous
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]24 Feb 2012: A.12.
ProQuest document link
Abstract:
To wit, that a gasoline prices are beyond his control, but b to the extent oil and gas production is rising in America, his energy policies deserve all the credit, and c higher prices are one more reason to raise taxes on oil and gas drillers while handing even more subsidies to his friends in green energy. According to the Greater New Orleans Gulf Permits Index for January 31, over the previous three months the feds issued an average of three deep-water drilling permits a month compared to the historical average of seven.
Full text: 'The American people aren't stupid," thundered President Obama yesterday in Miami, ridiculing Republicans who are blaming him for rising gasoline prices. Let's hope he's right, because not even Forrest Gump could believe the logic of what Mr. Obama is trying to sell.
To wit, that a) gasoline prices are beyond his control, but b) to the extent oil and gas production is rising in America, his energy policies deserve all the credit, and c) higher prices are one more reason to raise taxes on oil and gas drillers while handing even more subsidies to his friends in green energy. Where to begin?
It's true enough that oil prices can't be commanded from the Oval Office, so in that sense Mr. Obama's disavowal of blame is a rare show of humility in the face of market forces. Would that he showed similar modesty in trying to command the tides of home prices, car sales ("cash for clunkers"), or the production of electric batteries.
The oil price surge has several likely sources. One is the turmoil in the Middle East, especially new fears of a supply shock from a conflict with Iran. But it's worth recalling that Mr. Obama also blamed the last oil-price surge, in spring 2011, on the Libyan uprising. Moammar Gadhafi is now gone and Libyan oil production is coming back on stream, yet oil prices dipped only briefly below $90 a barrel and have been rising since October. Something else must be going on.
Mr. Obama yesterday blamed rising demand from the likes of Brazil and China, and there is something to that as well. But this energy demand is also not new, and if anything Chinese and Brazilian economic growth has been slowing in recent months.
Another suspect -- one Mr. Obama doesn't like to mention -- is U.S. monetary policy. Oil is traded in dollars, and its price therefore rises when the value of the dollar falls, all else being equal. The Federal Reserve throughout Mr. Obama's term has pursued the easiest monetary policy in modern times, expressly to revive the housing market. It has done so with the private support and urging of the White House and through Mr. Obama's appointees who are now a majority on the Fed's Board of Governors.
Oil staged its last price surge along with other commodity prices when the Fed revved up its second burst of "quantitative easing" in 2010-2011. Prices stabilized when QE2 ended. But in recent months the Fed has again signaled its commitment to near-zero interest rates first through 2013, and recently through 2014. Commodity prices, including oil, have since begun another surge, and hedge funds have begun to bet on commodity plays again. John Paulson says he's betting on gold, the ultimate hedge against a falling dollar.
Fed officials and Mr. Obama want to take credit for easy money if stock-market and housing prices rise, but then deny any responsibility if commodity prices rise too, causing food and energy prices to soar for consumers. They can't have it both ways, as not-so-stupid Americans intuitively understand when they buy groceries or gas. This is the double-edged sword of an economic recovery "built to last" on easy money rather than on sound fiscal and regulatory policies.
As for domestic energy, Mr. Obama rightly points to the rising share of U.S. oil consumption now produced at home. But this trend began in the late Bush Administration, which opened up large new areas on and offshore for oil and gas drilling that are now coming on stream. Mr. Obama sneered at expanded drilling as a candidate in 2008 and for most of his term has done little to expand it.
In early 2010, he proposed to open some new areas to drilling but shut that down after the Gulf oil spill. According to the Greater New Orleans Gulf Permits Index for January 31, over the previous three months the feds issued an average of three deep-water drilling permits a month compared to the historical average of seven. Over the same three months, the feds approved an average of 4.7 shallow-water permits a month, compared to the historical average of 14.7.
Approval of an offshore drilling plan now takes 92 days, 31 more than the historical average. And so far in 2012, an average of 23% of all drilling plans have been approved, compared to the average of 73.4%.
Oh, and don't forget the Keystone XL pipeline, which would have increased the delivery of oil from Canada and North Dakota's Bakken Shale to Gulf Coast refineries, replacing oil from Venezuela.
The reality is that most of the increase in U.S. oil and gas production has come despite the Obama Administration. It is flowing from the shale boom, which is the result of private technological advances and investment. Mr. Obama has seen the energy sun rise and is crowing like a rooster that he made it happen.
Mr. Obama yesterday also repeated his proposal that now is the time to raise taxes on oil and gas companies, as if doing so will make them more likely to drill. He must not believe the economic truism that when you tax something you get less of it, including fewer of the new jobs they've created.
---
We'd almost feel sorry for Mr. Obama's gas-price predicament if it weren't a case of rough justice. The President has deliberately sought to raise the price of energy throughout the economy via his cap-and-trade agenda. He is now getting his wish, albeit a little too overtly for political comfort. Mr. Obama has also spent three years blaming George W. Bush for every economic ill. If Mr. Obama now feels frustrated by economic events beyond his control, perhaps he should call Mr. Bush for consolation.
(See related letters: "Letters to the Editor: More Supply Would Lower Oil Prices, as It Has for Gas" -- WSJ March 1, 2012)
Subject: Petroleum industry; Housing prices; Gasoline prices; Political campaigns; Economic policy; Editorials -- Gasoline prices
Location: United States--US
People: Obama, Barack
Classification: 9190: United States; 1110: Economic conditions & forecasts; 1210: Politics & political behavior
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.12
Publication year: 2012
Publication date: Feb 24, 2012
column: REVIEW & OUTLOOK (Editorial)
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923176686
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923176686?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Prices Kick Europe While It's Down
Author: Peaple, Andrew
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 Feb 2012: n/a.
ProQuest document link
Abstract:
Europe's pain is heightened because of the dollar's relative strength in recent months. Since the end of August, Brent crude has risen 8% in dollar terms, but by 18% when translated into euros, according to Capital Economics.
Full text: Somebody up there doesn't like Europe, it seems. Brent crude oil's surge to $123.90 per barrel, up 11% in February alone, is partly due to worries over Europe's planned embargo of Iranian oil. Yet Europe is the region likely to suffer most from oil's surge: In both euro and sterling terms, Brent prices reached record levels this week. As if Europeans didn't have enough to deal with.
Europe's pain is heightened because of the dollar's relative strength in recent months. Since the end of August, Brent crude has risen 8% in dollar terms, but by 18% when translated into euros, according to Capital Economics.
The problem is that oil traders are fixated on oil supply threats, not just from Iran, but also thanks to ongoing export problems in Syria, South Sudan and Nigeria. Conversely, Europe's economic weakness is providing little restraint to prices. The Continent's oil demand could fall by 4% in the first half of 2012, the International Energy Agency forecasts, whereas other key consumers such as North America and China are expected to see steady or only slightly moderating demand.
Europe's relative strength to withstand higher oil prices has declined too. U.S. consumers, for example, at least have the compensation of low natural gas prices. More broadly, while major Asian economies continue to see strong growth and the U.S. recovery gathers steam, the euro zone is still flirting with recession. A $10 rise in oil prices can cut annual gross domestic product growth in consuming countries by between 0.1 and 0.5 percentage point, BofA Merrill Lynch estimates--enough to push some European economies, such as France and Ireland, into negative territory this year.
Perhaps most worryingly, the European countries most reliant on Iranian oil supplies are those in the most perilous economic position. Greece, for example, gets a third of its oil imports from Iran. Just when Europe's economy needs all the breaks it can get, its own diplomatic imperatives are piling on the problems.
Write to Andrew Peaple at andrew.peaple@dowjones.com
Credit: By Andrew Peaple
Subject: Petroleum industry; Natural gas prices; Recessions; Energy economics; Gross Domestic Product--GDP
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 24, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspap ers
Language of publication: English
Document type: News
ProQuest document ID: 923252601
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923252601?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Statoil, Exxon Say Tanzania Offshore Gas Find Is Big
Author: Ordonez, Isabel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 Feb 2012: n/a.
ProQuest document link
Abstract:
HOUSTON--Exxon Mobil Corp. and Norway's Statoil ASA said Friday a recent discovery off the coast of Tanzania has proved to hold large quantities of natural gas, further cementing the idea that East Africa could become an exporter of liquefied natural gas to Asian markets.
Full text: HOUSTON--Exxon Mobil Corp. and Norway's Statoil ASA said Friday a recent discovery off the coast of Tanzania has proved to hold large quantities of natural gas, further cementing the idea that East Africa could become an exporter of liquefied natural gas to Asian markets.
Analysis of the Zafarani discovery in Block 2 offshore Tanzania showed it holds up to five trillion cubic feet of natural gas, the companies said in a press release. The gas find was announced a week ago.
The drilling success is good news for several East African countries, where offshore oil and gas exploration is picking up speed and prospecting results have been encouraging. Italy's Eni SpA and Anadarko Petroleum Corp. of the U.S. have made large discoveries in neighboring Mozambique. BG Group PLC last year also made a discovery in Tanzania.
"This discovery is...an important event for the future development of the Tanzanian gas industry," Tim Dodson, Statoil's executive vice president for exploration, said in prepared remarks. Statoil is the operator of the block with a 65% interest, while Exxon Mobil has the remaining 35%.
The discovery was the second large gas find Exxon Mobil announced in recent days. On Wednesday, Exxon and its partners exploring for hydrocarbons in the Black Sea unveiled a potentially large natural gas discovery. The Domino-1 exploration well, located in the Neptun Block, encountered 70.7 meters of net gas, implying the field can hold between 1.5 trillion and three trillion cubic feet of natural gas. OMV Petrom SA, a subsidiary of the Austrian oil-and-gas company OMV AG, and Exxon Mobil each hold a 50% interest.
The discovery--the first one offshore Romania--is significant as it opens a new frontier. But production is still several years off, according to OMV Petrom. The field lies in an area awarded to Romania in 2009 by the International Court of Justice after a decades-old dispute with Ukraine.
Katarina Gustafsson contributed to this article.
Write to Isabel Ordonez at Isabel.ordonez@dowjones.com
Credit: By Isabel Ordonez
Subject: Natural gas; Petroleum industry
Location: East Africa
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 24, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923290341
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923290341?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon to Spend at Record Level in Coming Years
Author: Ordonez, Isabel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 Feb 2012: n/a.
ProQuest document link
Abstract:
HOUSTON--Exxon Mobil Corp. said Friday it plans spend a record $37 billion annually in capital projects for the foreseeable future, becoming the latest oil giant to unveil an eye-popping capital budget aimed at boosting production and reserves.
Full text: HOUSTON--Exxon Mobil Corp. said Friday it plans spend a record $37 billion annually in capital projects for the foreseeable future, becoming the latest oil giant to unveil an eye-popping capital budget aimed at boosting production and reserves.
"The corporation anticipates an investment profile of about $37 billion per year for the next several years," Exxon said in an annual report filed with the Securities and Exchange Commission. "The corporation's financial strength enables it to make large, long-term capital expenditures." The figure is slightly higher than the record $36.8 billion the Texas-based oil major invested in 2011 and a jump from the $32.2 billion it spent in 2010.
The announcement marks the rebirth of a trend towards bigger spending by the oil majors that was interrupted by the global financial crisis, which caused oil prices to tumble in 2008.
A recovery in crude prices has led the big oil companies to shrug off the uncertainty and keep boosting spending as they seek to fund the projects that will drive production growth and replenish reserves for decades.
But part of the increased spending comes from higher costs for equipment, materials and labor. These projects are getting increasingly expensive as companies push technological boundaries to tap reserves in hard-to-reach places such as deep water and the Arctic.
Rival Chevron Corp. said in December it plans to spend $32.7 billion in capital projects this year, 12% more than in 2011, while ConocoPhillips said its 2012 budget of $14.8 billion will be 11% higher than in 2011.
Exxon Mobil is the world's largest publicly traded oil company
Write to Isabel Ordonez at Isabel.ordonez@dowjones.com
Credit: By Isabel Ordonez
Subject: Petroleum industry; Oil reserves; Capital expenditures
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: Securities & Exchange Commission; NAICS: 926150
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 25, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923293966
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923293966?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. Bulks Up Iran Defenses; Pentagon Plans New Sea, Land Measures to Counter Any Attempt to Close Persian Gulf Oil Gateway
Author: Entous, Adam; Barnes, Julian E
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 Feb 2012: n/a.
ProQuest document link
Abstract:
According to defense officials, the Pentagon submitted a request to Congress on Feb. 7 on behalf of Central Command seeking to reallocate $100 million in defense funding to "bridge near-term capability gaps" in the Persian Gulf.
Full text: The Pentagon is beefing up U.S. sea- and land-based defenses in the Persian Gulf to counter any attempt by Iran to close the Strait of Hormuz.
The U.S. military has notified Congress of plans to preposition new mine-detection and clearing equipment and expand surveillance capabilities in and around the strait, according to defense officials briefed on the requests, including one submitted earlier this month.
The military also wants to quickly modify weapons systems on ships so they could be used against Iranian fast-attack boats, as well as shore-launched cruise missiles, the defense officials said.
The readiness push is spearheaded by the military's Central Command, which oversees U.S. forces in the Gulf region, these officials said. It shows the extent to which war planners are taking tangible steps to prepare for a possible conflict with Iran, even as top White House and defense leaders try to tamp down talk of war and emphasize other options.
The changes put a spotlight on what officials have singled out as potential U.S. shortcomings in the event of conflict with Iran. The head of Central Command, Marine Gen. James Mattis, asked for the equipment upgrades after reviews by war planners last spring and fall exposed "gaps" in U.S. defense capabilities and military preparedness should Tehran close the Strait of Hormuz, officials said.
The Central Command reviews, in particular, have fueled concerns about the U.S. military's ability to respond swiftly should Iran mine the strait, through which nearly 20% of the world's traded oil passes.
"When the enemy shows more signs of capability, we ask what we can do to checkmate it," a U.S. military officer said. "They ought to know we take steps to make sure we are ready."
Tensions with Iran have soared as the U.S. and its allies have tightened sanctions against the country over its nuclear program. Tehran has responded by threatening to close the strait. Israel has accused Iran of being behind a recent series of botched bombing plots targeting Israeli diplomats, a charge Iran denies. Iranian officials, in turn, accuse Israel and the U.S. of conducting a secret campaign to assassinate scientists working on Iran's nuclear program. The U.S. has denied the accusation, while Israel has declined to comment
New suspicions over Iran's nuclear ambitions emerged Friday. In a report, the International Atomic Energy Agency, the United Nations' nuclear watchdog, said Iran has increased its stockpile of uranium that is enriched beyond the purity level needed for civilian power reactors, and begun producing it under a mountain of rock and soil that some U.S. and Israeli officials say could be immune from attack.
Iran denies it is trying to build atomic weapons. It refused this week to allow U.N. inspectors access to suspected weapons sites, adding doubts to prospects for negotiations.
The U.S. is concerned that Israel--which believes that Tehran will soon be able to assemble a weapon, and that time is running short to stop the bid--may choose to strike Iran by this autumn to stymie such a program. That, defense officials worry, could provoke retaliation that could prompt U.S. military action to defend its troops and key allies, and to keep the Strait of Hormuz open.
The U.S. moves outline the potential shape of a conflict between Iran and the West: Iran could rapidly mine the strait and use heavily armed speedboats to attack or ram Western ships trying to clear the waterway. A successful Iranian attack on a U.S. warship could drag America into a larger conflict.
Central Command officials have told lawmakers they want the new mine-detection systems fielded before this fall, according to defense officials, underlining the urgency of preparedness.
In addition, U.S. special-operations teams stationed in the United Arab Emirates would take part in any military action in the strait should Iran attempt to close it, defense officials said. A military official said these forces have been working to train elite local forces in Gulf nations including the U.A.E., Bahrain and Kuwait, but added: "They would be used in the event of active operations."
According to defense officials, the Pentagon submitted a request to Congress on Feb. 7 on behalf of Central Command seeking to reallocate $100 million in defense funding to "bridge near-term capability gaps" in the Persian Gulf.
The request has yet to be made public because it is still being studied by lawmakers, defense officials said. The money will be used to upgrade patrol craft and unmanned drones, as well as to add small arms on surface ships, the officials said.
Congress was told the money was urgently needed, according to an official briefed on the plan. "You can buy it and deploy it rapidly," the official said.
The new money comes on top of changes made last summer that provided Central Command with about $200 million for additional upgrades, some of which could be used in areas outside the Persian Gulf, defense officials said. The earlier request, which included money for a torpedo defense system, airborne antimine weapons and new cyber-weapons, was made by defense officials and backed without fanfare by Congress.
That request also included additional deployments of the SeaFox underwater drone, which is launched from a helicopter and uses a warhead to destroy mines. The system was deemed "an urgent operational need" by the U.S. Fifth Fleet, according to Navy officials.
The Pentagon and other U.S. agencies generally submit such reprogramming requests when they can't wait until the next fiscal year. The Pentagon started making some adjustments as early as a year ago, but those didn't require reprogramming.
The Pentagon told Congress that some of the new money would be used to modify existing weapons systems to be used against seaborne threats in the Persian Gulf and, specifically, the Strait of Hormuz.
Iran's Islamic Revolutionary Guard deploys some of the fastest naval vessels in the Persian Gulf. These craft may be small--only 17 meters, or 56 feet, long in some cases--but they can carry machine guns, torpedoes and the Iranian-made "Kowsar" antiship cruise missile. Some can reach speeds of 60 to 70 knots, according to U.S. military intelligence analysts.
Antitank weapons are being reconfigured for use against swarms of these boats that could threaten U.S. warships, the Pentagon told Congress. Similarly, rapid-fire machine guns designed to shoot down missiles are being tested for use against small boats.
Pentagon war planners believe the addition of smaller-caliber guns would quickly make U.S. destroyers, which were designed mainly to fight other large ships, more effective against the Iranian craft.
"We are using capabilities we already have in a different way," a senior defense official said.
The additional money for equipment upgrades is on top of the nearly $82 million the Pentagon sought in January to improve its largest conventional bunker-buster bomb, the 30,000-pound Massive Ordnance Penetrator.
The bomb, officials said, was designed to take out bunkers like those used by Iran to protect its most sensitive nuclear development work.
Western intelligence agencies had long suspected that the Iranian navy had between 2,000 and 3,000 mines, largely of Soviet or Chinese origin. But new intelligence suggests Iran may have as many as 5,000, including newer types that may be more powerful and harder to detect.
U.S. forces would also need to contend with Iran's coastal air-defense system, shore-based artillery, Kilo-class and midget submarines, remote-controlled boats and unmanned kamikaze aerial vehicles, according to current and former U.S. officials.
The U.S. Navy has 14 minesweepers, three of which are stationed in Bahrain. Mackenzie Eaglen, a fellow at the American Enterprise Institute, said U.S. minesweeping capabilities have slipped because the military has deferred critical maintenance, a shortcoming it is "working overtime" to address.
Keith Johnson and Jay Solomon contributed to this article.
Write to Adam Entous at adam.entous@wsj.com and Julian E. Barnes at julian.barnes@wsj.com
Credit: By Adam Entous and Julian E. Barnes
Subject: Armed forces
Location: United States--US Persian Gulf Strait of Hormuz
Company / organization: Name: Department of Defense; NAICS: 928110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 25, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923293989
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923293989?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
World News: Angolan Oil Firm Drops Iran Project
Author: Faucon, Benoit
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]25 Feb 2012: A.8.
ProQuest document link
Abstract:
The Angolan disclosure comes as the U.S. and European Union continue to expand sanctions and try to persuade consumers of Iranian oil to find alternative supplies, in order to choke off Tehran's revenue and force it to abandon what the West says is a program to develop nuclear weapons, a charge Iran denies.
Full text: LUANDA, Angola -- Angola's Sonangol is pulling out of a $7.5 billion natural-gas project in Iran because of sanctions, an executive with the African state oil giant said Friday, as Western pressure on African ties with Tehran appeared to score a success.
The Angolan disclosure comes as the U.S. and European Union continue to expand sanctions and try to persuade consumers of Iranian oil to find alternative supplies, in order to choke off Tehran's revenue and force it to abandon what the West says is a program to develop nuclear weapons, a charge Iran denies.
Mateus de Brito, an executive with state-owned Sociedade Nacional de Combustiveis de Angola, known as Sonangol, said "Sonangol is out of Iran" because of the international sanctions.
"Sonangol . . . has informed the Iranian government of its decision," he said. In 2009, Sonangol signed up for 20% in a project in Iran's giant South Pars field after European companies pulled out of the country due to previous sanctions.
A spokesman for the National Iranian Oil Co. couldn't be reached to comment.
Credit: By Benoit Faucon
Subject: Sanctions; Natural gas industry; Foreign investment
Location: Angola Iran
Company / organization: Name: European Union; NAICS: 926110, 928120; Name: Sonangol; NAICS: 211111
Classification: 9180: International; 8510: Petroleum industry; 9110: Company specific; 1210: Politics & political behavior
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.8
Publication year: 2012
Publication date: Feb 25, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923360303
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923360303?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
U.S. Bulks Up Iran Defenses --- Pentagon Plans New Sea, Land Measures to Counter Any Attempt to Close Persian Gulf Oil Gateway
Author: Entous, Adam; Barnes, Julian E
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]25 Feb 2012: A.1. [Duplicate]
ProQuest document link
Abstract:
According to defense officials, the Pentagon submitted a request to Congress on Feb. 7 on behalf of Central Command seeking to reallocate $100 million in defense funding to "bridge near-term capability gaps" in the Persian Gulf.
Full text: The Pentagon is beefing up U.S. sea- and land-based defenses in the Persian Gulf to counter any attempt by Iran to close the Strait of Hormuz.
The U.S. military has notified Congress of plans to preposition new mine-detection and clearing equipment and expand surveillance capabilities in and around the strait, according to defense officials briefed on the requests, including one submitted earlier this month.
The military also wants to quickly modify weapons systems on ships so they could be used against Iranian fast-attack boats, as well as shore-launched cruise missiles, the defense officials said.
The readiness push is spearheaded by the military's Central Command, which oversees U.S. forces in the Gulf region, these officials said. It shows the extent to which war planners are taking tangible steps to prepare for a possible conflict with Iran, even as top White House and defense leaders try to tamp down talk of war and emphasize other options.
The changes put a spotlight on what officials have singled out as potential U.S. shortcomings in the event of conflict with Iran. The head of Central Command, Marine Gen. James Mattis, asked for the equipment upgrades after reviews by war planners last spring and fall exposed "gaps" in U.S. defense capabilities and military preparedness should Tehran close the Strait of Hormuz, officials said.
Those reviews have fueled concerns about the U.S. military's ability to respond swiftly should Iran mine the strait, through which nearly 20% of the world's traded oil passes.
Tensions with Iran have soared as the U.S. and its allies have tightened sanctions against the country over its nuclear program.
New suspicions over Iran's nuclear ambitions emerged Friday. In a report, the International Atomic Energy Agency, the United Nations' nuclear watchdog, said Iran has increased its stockpile of uranium that is enriched to a level beyond that needed for civilian purposes and closer to weapons grade, and has begun producing it under a mountain of rock and soil that some U.S. and Israeli officials say could be immune from attack.
Iran denies it is trying to build atomic weapons. It refused this week to allow U.N. inspectors access to suspected weapons sites, adding doubts to prospects for negotiations.
Tehran has responded to international sanctions by threatening to close the strait. Israel has accused Iran of being behind a recent series of botched bombing plots targeting Israeli diplomats, a charge Iran denies. Iranian officials, in turn, accuse Israel and the U.S. of conducting a secret campaign to assassinate scientists working on Iran's nuclear program. The U.S. has denied the accusation, while Israel has declined to comment.
The U.S. is concerned that Israel -- which believes that Tehran will soon be able to assemble a weapon, and that time is running short to stop the bid -- may choose to strike Iran by this autumn to stymie such a program. That, defense officials worry, could provoke retaliation that could prompt U.S. military action to defend its troops and key allies, and to keep the Strait of Hormuz open.
The U.S. moves outline the potential shape of a conflict between Iran and the West: Iran could rapidly mine the strait and use heavily armed speedboats to attack or ram Western ships trying to clear the waterway. A successful Iranian attack on a U.S. warship could drag America into a larger conflict.
Central Command officials have told lawmakers they want the new mine-detection systems fielded before this fall, according to defense officials, underlining the urgency of preparedness.
"When the enemy shows more signs of capability, we ask what we can do to checkmate it," a U.S. military officer said. "They ought to know we take steps to make sure we are ready."
In addition, U.S. special-operations teams stationed in the United Arab Emirates would take part in any military action in the strait should Iran attempt to close it, defense officials said. A military official said these forces have been working to train elite local forces in Gulf nations including the U.A.E., Bahrain and Kuwait, but added: "They would be used in the event of active operations."
According to defense officials, the Pentagon submitted a request to Congress on Feb. 7 on behalf of Central Command seeking to reallocate $100 million in defense funding to "bridge near-term capability gaps" in the Persian Gulf.
The request has yet to be made public because it is still being studied by lawmakers, defense officials said. The money will be used to upgrade patrol craft and unmanned drones, as well as to add small arms on surface ships, the officials said.
Congress was told the money was urgently needed, according to an official briefed on the plan. "You can buy it and deploy it rapidly," the official said.
The new money comes on top of changes made last summer that provided Central Command with about $200 million for additional upgrades, some of which could be used in areas outside the Persian Gulf, defense officials said. The earlier request, which included money for a torpedo defense system, airborne antimine weapons and new cyber-weapons, was made by defense officials and backed without fanfare by Congress.
That request also included additional deployments of the SeaFox underwater drone, which is launched from a helicopter and uses a warhead to destroy mines. The system was deemed "an urgent operational need" by the U.S. Fifth Fleet, according to Navy officials.
The Pentagon and other U.S. agencies generally submit such reprogramming requests when they can't wait until the next fiscal year. The Pentagon started making some adjustments as early as a year ago, but those didn't require reprogramming.
The Pentagon told Congress that some of the new money would be used to modify existing weapons systems to be used against seaborne threats in the Persian Gulf and, specifically, the Strait of Hormuz.
Iran's Islamic Revolutionary Guard deploys some of the fastest naval vessels in the Persian Gulf. These craft may be small -- only 17 meters, or 56 feet, long in some cases -- but they can carry machine guns, torpedoes and the Iranian-made "Kowsar" antiship cruise missile. Some can reach speeds of 60 to 70 knots, according to U.S. military intelligence analysts.
Antitank weapons are being reconfigured for use against swarms of these boats that could threaten U.S. warships, the Pentagon told Congress. Similarly, rapid-fire machine guns designed to shoot down missiles are being tested for use against small boats.
Pentagon war planners believe the addition of smaller-caliber guns would quickly make U.S. destroyers, which were designed mainly to fight other large ships, more effective against the Iranian craft.
"We are using capabilities we already have in a different way," a senior defense official said.
The additional money for equipment upgrades is on top of the nearly $82 million the Pentagon sought in January to improve its largest conventional bunker-buster bomb, the 30,000-pound Massive Ordnance Penetrator.
The bomb, officials said, was designed to take out bunkers like those used by Iran to protect its most sensitive nuclear development work.
Western intelligence agencies had long suspected that the Iranian navy had between 2,000 and 3,000 mines, largely of Soviet or Chinese origin. But new intelligence suggests Iran may have as many as 5,000, including newer types that may be more powerful and harder to detect.
U.S. forces would also need to contend with Iran's coastal air-defense system, shore-based artillery, Kilo-class and midget submarines, remote-controlled boats and unmanned kamikaze aerial vehicles, according to current and former U.S. officials.
The U.S. Navy has 14 minesweepers, three of which are stationed in Bahrain. Mackenzie Eaglen, a fellow at the American Enterprise Institute, said U.S. minesweeping capabilities have slipped because the military has deferred critical maintenance, a shortcoming it is "working overtime" to address.
---
Keith Johnson and Jay Solomon contributed to this article.
Credit: By Adam Entous and Julian E. Barnes
Subject: Armed forces; Petroleum industry; National security; International relations-US -- Iran
Location: United States--US Persian Gulf Strait of Hormuz Iran
Company / organization: Name: Department of Defense; NAICS: 928110
Classification: 9180: International; 1210: Politics & political behavior; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.1
Publication year: 2012
Publication date: Feb 25, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923361308
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/9 23361308?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Rising Demand for Oil Spells More Price Pain
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 Feb 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: When European motorists complain of price pain at the gas pump, they may not have seen the worst of it.
Analysts warn that oil could become even more expensive in the second half of the year as supplies struggle to catch up with rising demand.
The cost of a barrel of North Sea Brent crude hit a record before pulling back Thursday when priced in euros and British pounds, two currencies that have been weakening of late. The price hit [euro]93.55 and £79.19.
The euro rebounded against the dollar, climbing to a multimonth high on Friday. But even in dollars, crude prices have been surging. The front-month contract has climbed 13% this month to settle at $125.47 on Friday, its highest close in nearly 10 months and moving closer to the record settlement of $146.08 set in 2008.
Prices could pull back briefly, as demand is at a seasonal low, but many analysts say the broader trend is that prices will continue to rise because of risks to oil supplies. Deutsche Bank analysts said that threat hasn't been this severe since the late 1970s and early 1980s, the time of the Iranian revolution and a war between Iran and Iraq that disrupted oil supplies.
Fears of a disruption now emanate from Iran's threats to close the Strait of Hormuz, the route for a fifth of the world's oil, in response to a European Union embargo on Tehran's oil as way to pressure it to give up its controversial nuclear program. The threat has contributed to a 17% rise in Brent prices since the beginning of the year.
Even if Iran doesn't follow through with its threat, the country is still likely to ship less oil to global markets because of the embargo, which is to take full effect on July 1.
Analysts had expected much of the 600,000 barrels of Iranian oil that the EU consumes each day to simply be diverted to other buyers. But the U.S. is using its own sanctions against Iran's central bank as a stick to force the likely replacements--Asian buyers--to limit their Iranian oil purchases.
Lower sales and declining investment in Iranian oil fields means Iran's production could fall by more than 300,000 barrels a day this year, Vienna-based consultancy JBC Energy GmbH says.
As a result, Brent will likely spike to $135 a barrel this year, analysts at J.P. Morgan Chase now say, well above their previous expected top of $120 a barrel. Goldman Sachs Group said it expects the U.K. contract to rise to $127.50 a barrel over the next 12 months.
Already, disruptions to oil production in Nigeria, Sudan and Yemen have reminded markets of how unreliable oil supplies are. Add a closure to the Strait of Hormuz to the mix, however, and prices may jump to a record.
"Such a catastrophe would be enough to push oil prices to $150" a barrel, says Dale Nijoka, global oil sector leader at consultancy Ernst & Young LLP.
Though experts say Iran couldn't interrupt oil flows for long, such a move would be even more painful to consumers if demand is rebounding. European refineries will come back on line after their usual late-winter and spring maintenance, and weak European economies are expected to gain strength.
The bottom line for demand: Global consumption of oil and liquid fuels should increase by about 1.3 million barrels a day in the third quarter from the first quarter, according to the U.S. Energy Information Administration. But supply will fall by about 310,000 barrels a day in the third quarter from the first.
To be sure, there could be mitigating factors, such as new oil supplies from places such as the United Arab Emirates and the use of government stockpiles, as they did last year for Libyan disruptions.
But even if Saudi Arabia can draw on its spare capacity to make up for losses in Iran and elsewhere, the markets won't necessarily be reassured. The cushion of available oil will grow thin, and an unsettled atmosphere will likely translate into another spiky curve for oil prices this year.
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 26, 2012
column: Market Focus
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923490998
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923490998?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
'Stupid' and Oil Prices; Obama's Forrest Gump analysis of rising gas prices.
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 Feb 2012: 13.
ProQuest document link
Abstract:
To wit, that a gasoline prices are beyond his control, but b to the extent oil and gas production is rising in America, his energy policies deserve all the credit, and c higher prices are one more reason to raise taxes on oil and gas drillers while handing even more subsidies to his friends in green energy. According to the Greater New Orleans Gulf Permits Index for January 31, over the previous three months the feds issued an average of three deep-water drilling permits a month compared to the historical average of seven.
Full text: 'The American people aren't stupid," thundered President Obama yesterday in Miami, ridiculing Republicans who are blaming him for rising gasoline prices. Let's hope he's right, because not even Forrest Gump could believe the logic of what Mr. Obama is trying to sell.
To wit, that a) gasoline prices are beyond his control, but b) to the extent oil and gas production is rising in America, his energy policies deserve all the credit, and c) higher prices are one more reason to raise taxes on oil and gas drillers while handing even more subsidies to his friends in green energy. Where to begin?
It's true enough that oil prices can't be commanded from the Oval Office, so in that sense Mr. Obama's disavowal of blame is a rare show of humility in the face of market forces. Would that he showed similar modesty in trying to command the tides of home prices, car sales ("cash for clunkers"), or the production of electric batteries.
The oil price surge has several likely sources. One is the turmoil in the Middle East, especially new fears of a supply shock from a conflict with Iran. But it's worth recalling that Mr. Obama also blamed the last oil-price surge, in spring 2011, on the Libyan uprising. Moammar Gadhafi is now gone and Libyan oil production is coming back on stream, yet oil prices dipped only briefly below $90 a barrel and have been rising since October. Something else must be going on.
Mr. Obama yesterday blamed rising demand from the likes of Brazil and China, and there is something to that as well. But this energy demand is also not new, and if anything Chinese and Brazilian economic growth has been slowing in recent months.
Another suspect--one Mr. Obama doesn't like to mention--is U.S. monetary policy. Oil is traded in dollars, and its price therefore rises when the value of the dollar falls, all else being equal. The Federal Reserve throughout Mr. Obama's term has pursued the easiest monetary policy in modern times, expressly to revive the housing market. It has done so with the private support and urging of the White House and through Mr. Obama's appointees who are now a majority on the Fed's Board of Governors.
Oil staged its last price surge along with other commodity prices when the Fed revved up its second burst of "quantitative easing" in 2010-2011. Prices stabilized when QE2 ended. But in recent months the Fed has again signaled its commitment to near-zero interest rates first through 2013, and recently through 2014. Commodity prices, including oil, have since begun another surge, and hedge funds have begun to bet on commodity plays again. John Paulson says he's betting on gold, the ultimate hedge against a falling dollar.
Fed officials and Mr. Obama want to take credit for easy money if stock-market and housing prices rise, but then deny any responsibility if commodity prices rise too, causing food and energy prices to soar for consumers. They can't have it both ways, as not-so-stupid Americans intuitively understand when they buy groceries or gas. This is the double-edged sword of an economic recovery "built to last" on easy money rather than on sound fiscal and regulatory policies.
As for domestic energy, Mr. Obama rightly points to the rising share of U.S. oil consumption now produced at home. But this trend began in the late Bush Administration, which opened up large new areas on and offshore for oil and gas drilling that are now coming on stream. Mr. Obama sneered at expanded drilling as a candidate in 2008 and for most of his term has done little to expand it.
In early 2010, he proposed to open some new areas to drilling but shut that down after the Gulf oil spill. According to the Greater New Orleans Gulf Permits Index for January 31, over the previous three months the feds issued an average of three deep-water drilling permits a month compared to the historical average of seven. Over the same three months, the feds approved an average of 4.7 shallow-water permits a month, compared to the historical average of 14.7.
Approval of an offshore drilling plan now takes 92 days, 31 more than the historical average. And so far in 2012, an average of 23% of all drilling plans have been approved, compared to the average of 73.4%.
Oh, and don't forget the Keystone XL pipeline, which would have increased the delivery of oil from Canada and North Dakota's Bakken Shale to Gulf Coast refineries, replacing oil from Venezuela.
The reality is that most of the increase in U.S. oil and gas production has come despite the Obama Administration. It is flowing from the shale boom, which is the result of private technological advances and investment. Mr. Obama has seen the energy sun rise and is crowing like a rooster that he made it happen.
Mr. Obama yesterday also repeated his proposal that now is the time to raise taxes on oil and gas companies, as if doing so will make them more likely to drill. He must not believe the economic truism that when you tax something you get less of it, including fewer of the new jobs they've created.
***
We'd almost feel sorry for Mr. Obama's gas-price predicament if it weren't a case of rough justice. The President has deliberately sought to raise the price of energy throughout the economy via his cap-and-trade agenda. He is now getting his wish, albeit a little too overtly for political comfort. Mr. Obama has also spent three years blaming George W. Bush for every economic ill. If Mr. Obama now feels frustrated by economic events beyond his control, perhaps he should call Mr. Bush for consolation.
Subject: Petroleum industry; Housing prices; Gasoline prices
People: Obama, Barack
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: 13
Publication year: 2012
Publication date: Feb 27, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923490661
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923490661?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Rising Demand for Oil Spells More Price Pain
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 Feb 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: When European motorists complain of price pain at the gas pump, they may not have seen the worst of it.
Analysts warn that oil could become even more expensive in the second half of the year as supplies struggle to catch up with rising demand.
The cost of a barrel of North Sea Brent crude hit a record before pulling back Thursday when priced in euros and British pounds, two currencies that have been weakening of late. The price hit [euro]93.55 and £79.19.
The euro rebounded against the dollar, climbing to a multimonth high on Friday. But even in dollars, crude prices have been surging. The front-month contract has climbed 13% this month to settle at $125.47 on Friday, its highest close in nearly 10 months and moving closer to the record settlement of $146.08 set in 2008.
Prices could pull back briefly, as demand is at a seasonal low, but many analysts say the broader trend is that prices will continue to rise because of risks to oil supplies. Deutsche Bank analysts said that threat hasn't been this severe since the late 1970s and early 1980s, the time of the Iranian revolution and a war between Iran and Iraq that disrupted oil supplies.
Fears of a disruption now emanate from Iran's threats to close the Strait of Hormuz, the route for a fifth of the world's oil, in response to a European Union embargo on Tehran's oil as way to pressure it to give up its controversial nuclear program. The threat has contributed to a 17% rise in Brent prices since the beginning of the year.
Even if Iran doesn't follow through with its threat, the country is still likely to ship less oil to global markets because of the embargo, which is to take full effect on July 1.
Analysts had expected much of the 600,000 barrels of Iranian oil that the EU consumes each day to simply be diverted to other buyers. But the U.S. is using its own sanctions against Iran's central bank as a stick to force the likely replacements--Asian buyers--to limit their Iranian oil purchases.
Lower sales and declining investment in Iranian oil fields means Iran's production could fall by more than 300,000 barrels a day this year, Vienna-based consultancy JBC Energy GmbH says.
As a result, Brent will likely spike to $135 a barrel this year, analysts at J.P. Morgan Chase now say, well above their previous expected top of $120 a barrel. Goldman Sachs Group said it expects the U.K. contract to rise to $127.50 a barrel over the next 12 months.
Already, disruptions to oil production in Nigeria, Sudan and Yemen have reminded markets of how unreliable oil supplies are. Add a closure to the Strait of Hormuz to the mix, however, and prices may jump to a record.
"Such a catastrophe would be enough to push oil prices to $150" a barrel, says Dale Nijoka, global oil sector leader at consultancy Ernst & Young LLP.
Though experts say Iran couldn't interrupt oil flows for long, such a move would be even more painful to consumers if demand is rebounding. European refineries will come back on line after their usual late-winter and spring maintenance, and weak European economies are expected to gain strength.
The bottom line for demand: Global consumption of oil and liquid fuels should increase by about 1.3 million barrels a day in the third quarter from the first quarter, according to the U.S. Energy Information Administration. But supply will fall by about 310,000 barrels a day in the third quarter from the first.
To be sure, there could be mitigating factors, such as new oil supplies from places such as the United Arab Emirates and the use of government stockpiles, as they did last year for Libyan disruptions.
But even if Saudi Arabia can draw on its spare capacity to make up for losses in Iran and elsewhere, the markets won't necessarily be reassured. The cushion of available oil will grow thin, and an unsettled atmosphere will likely translate into another spiky curve for oil prices this year.
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 27, 2012
column: Market Focus
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923494746
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923494746?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Weighs on Some Asia Markets
Author: Navaratnam, Shri; Puja Rajeev
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 Feb 2012: n/a.
ProQuest document link
Abstract:
Most Asian stock markets ended lower Monday on worries about high oil prices' impact on global growth, with Japanese shares reversing early gains as the yen's rebound led investors to lock in profits.
Full text: SINGAPORE--Asian stock markets were mixed Monday as high global oil prices undermined optimism over Greece and better U.S. data. But Tokyo soared to a six-month high, spurred by the yen's fall to a multi-month low against the U.S. dollar.
Crude oil's jump to a nine-month high near $110 a barrel on Friday raised concerns of fresh head winds for the global economy, and tempered increasing hopes over progress made to resolve debt-strapped Greece's economic woes.
"Central banks around the world have been engaging in phenomenal policy stimulus in response to the European crisis, with moderate inflation smoothing the way," said Sharon Zollner, senior economist at ANZ bank in Wellington in a note. "An oil shock would be a most unwelcome development, throwing the tradeoffs inherent in monetary policy into sharp relief."
Japan's Nikkei Stock Average was up 0.2% at 9663.11, after earlier hitting a six-month high of 9736.11. South Korea's Kospi Composite was off 1.5%, Hong Kong's Hang Seng Index was up 0.3%, China's Shanghai Composite Index was 1.2% higher and India's Sensex was 0.7% lower.
Australia's S&P/ASX 200 ended the day with a 1% loss.
Dow Jones Industrial Average futures were off seven points in electronic trading.
Oil prices took a breather but were still up about 7% from a week ago, with April Nymex crude-oil futures recently down 30 cents at $109.47 per barrel on Globex. The high cost of crude weighed on a host of stocks across the region, but benefitted some others: China Oilfield Services was up 4.8% in Shanghai, while Cnooc was 1.1% higher in Hong Kong.
Fear that high oil prices will crimp U.S. consumer sentiment hit stocks in Hong Kong with business exposure to the U.S. market, with China Merchants Holdings off 2.6% . Inpex in Tokyo lost 0.8% and S-Oil in Seoul fell 4.9%. In Sydney, Oil Search fell 1.4%.
Heavyweight stocks going ex-dividend Monday weighed on the Sydney bourse, with BHP Billiton finishing 2.1% lower and Amcor fallling 3.2%. The political drama playing out in Canberra didn't have any discernible impact on trading, with prime minister Julia Gillard surviving a leadership challenge from rival Kevin Rudd.
In Tokyo, exporters continued to benefit from the yen's fall to a nine-month low, a hugely attractive proposition for the nation ravaged by last year's natural disasters, and after a long period of strength for the Japanese currency severely crimped profits at many companies.
Toyota Motor was up 1.6%, Honda Motor was 2.4% ahead and Sony was 3.5% higher.
Parco was up 12%, still soaring on J. Front Retailing's announcement last week that it will buy a 33% stake in the boutique shopping-mall operator.
Optimism that Greece will continue with its tough reform efforts to contain its crushing debt load reinforced a recent push to buy the euro. "Europe will be served with another dose of (longer term refinancing operation) this week which should further placate the market and we will potentially see euro hit $1.35 in coming days," said Tim Waterer, a senior foreign currency dealer at CMC Markets in a note.
The yen, however, grabbed the early spotlight as it fell against the U.S. dollar on receding safe-haven flows, partly aided by the rising confidence about a credible resolution to Europe's debt woes. The U.S. dollar rose to a nine-month high of ¥81.66 earlier in the session, and was recently at ¥81.16, from ¥81.20 late Friday in New York.
The euro was fetching $1.3451, from $1.3447, and ¥109.15, from ¥109.25.
Spot gold was at $1,774.90 per troy ounce, up $1.30 from its New York settlement on Friday.
Write to Shri Navaratnam at shri.navaratnam@dowjones.com
Credit: By Shri Navaratnam And Puja Rajeev
Subject: Stock exchanges; Investment policy; Investments; Profits
Location: Hong Kong United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 27, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923507409
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923507409?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Exxon Confirms Deals With Iraqi Kurds
Author: Ordonez, Isabel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 Feb 2012: n/a.
ProQuest document link
Abstract:
"Exploration and production activities in the Kurdistan region of Iraq are governed by production sharing contracts negotiated with the regional government of Kurdistan in 2011," Exxon said in its 10-K filed with the Securities and Exchange Commission Friday.
Full text: HOUSTON--Exxon Mobil Corp. confirmed it negotiated exploration and production contracts with Iraq's Kurdistan Regional Government last year.
"Exploration and production activities in the Kurdistan region of Iraq are governed by production sharing contracts negotiated with the regional government of Kurdistan in 2011," Exxon said in its 10-K filed with the Securities and Exchange Commission Friday.
The Irving, Texas-based energy company said the exploration term is for five years with the possibility of two-year extensions, while the production period is 20 years with the right to extend for five years.
The confirmation comes after months of silence by Exxon, which had declined to comment on remarks made by the Kurdistan Regional Government, or KRG, which had said the company signed the deals.
The move has infuriated Iraq's federal government, which considers as invalid any deals signed with the KRG, which in turns states that any and all deals it has signed comply with the country's new constitution.
Some of the blocks in the Exxon-KRG deal are in a hotly contested oil-rich territory claimed by both the central government and the KRG, stretching from the Iranian border in the east to the Syrian border in the northwest.
Early this month, Iraq's federal government said Exxon will be blocked from participating in the fourth licensing round in Iraq. Baghdad has blacklisted companies that maintain deals with the Kurds, excluding them from working elsewhere in Iraq. Among those is New York-based Hess Corp., which was barred last year from competing in the fourth energy auction.
Credit: By Isabel Ordonez
Subject: Petroleum industry
Location: Iraq
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: Securities & Exchange Commission; NAICS: 926150
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 27, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923612829
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923612829?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Snaps Seven-Session Streak
Author: Berthelsen, Christian
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 Feb 2012: n/a.
ProQuest document link
Abstract:
New data show that the amount of speculative investment in the oil market from money managers such as hedge funds has been rising in tandem with barrel prices, and is now nearing the record level set after the outbreak of civil war in Libya last year.
Full text: NEW YORK--Oil futures pulled back Monday, snapping a string of seven straight advances.
But despite the market's pause, few in the market see tensions surrounding Iran, which have powered the recent rally, abating anytime soon.
Light, sweet crude for April delivery settled down $1.21, or 1.1%, at $108.56 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled down $1.30, or 1%, at $124.17 a barrel.
Nymex oil prices hit a nine-month high on Friday, and before Monday's drop had risen 11% since the start of February due to growing tensions between Iran and the West, as well as an improving U.S. economic outlook. Iran, the No. 2 oil producer in the Organization of Petroleum Exporting Countries, has threatened to close the Strait of Hormuz, the route for a fifth of the world's oil, in response to a European Union embargo on Tehran's oil as way to pressure it to give up its controversial nuclear program. Last week, Iran announced it would cut off oil exports to the U.K. and France in retaliation for additional sanctions.
Traders expect concerns about Iran will continue to push futures higher still.
"Obviously there is still major unrest going on the Middle East," said Tony Rosado, a broker at GA Global Markets. "It's not going away anytime soon."
New data show that the amount of speculative investment in the oil market from money managers such as hedge funds has been rising in tandem with barrel prices, and is now nearing the record level set after the outbreak of civil war in Libya last year.
Speculators increased their long position--bets the market will rise--by 17% last week, according to the most recent data from the Commodity Futures Trading Commission, to a notional value of $24.2 billion, Bank of America/Merrill Lynch said in a note.
"There's a lot of speculative length in the market," said Tom Bentz, director of BNP Paribas Prime Brokerage. "Obviously what's driven it up is all the Iran worries primarily, and how much longer we can keep pushing it up on that, we'll see...The path of least resistance still seems to be up."
Still, with prices up so much, some analysts are taking a contrarian position. They caution the market may become poised for a correction. Various technical indicators suggest the market is overbought.
"The ongoing flow of buying is supportive, but the market is also using up its buying potential," Citi Futures Perspective analyst Tim Evans said in a recent note. "The risk of exhaustion and reversal continues to grow."
Policy makers have begun focusing on oil prices now that they have breached $100 a barrel and the threat they could pose to the recovering U.S. economy. Debate has grown over whether the U.S. should tap its strategic reserves to ease supply concerns, though a senior House Democrat, Rep. Steny Hoyer, (D. Md.,) said Monday that supplies are adequate and that speculative trading was behind the price spike.
Front-month March reformulated gasoline blendstock, or RBOB, settled down 2.45 cents, or 0.8%, at $3.1283 a gallon. March heating oil settled down 2.95 cents, or 0.9%, at $3.2864 a gallon.
Write to Christian Berthelsen at christian.berthelsen@dowjones.com
Credit: By Christian Berthelsen
Subject: Petroleum industry; Futures; Crude oil prices
Location: United States--US New York
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 27, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923614172
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923614172?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Cooper Tire & Rubber, ATP Oil & Gas: Biggest Price Gainers (CTB, ATPG)
Author: MARKET DATA STAFF
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 Feb 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Cooper Tire & Rubber Co. topped the list of among common stocks on the New York Stock Exchange at the close. See the.
ATP Oil & Gas Corp. topped the list of among common stocks on the Nasdaq Stock Market. See the.
Go to () for complete coverage.
Credit: By MARKET DATA STAFF
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 27, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923631049
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923631049?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Asian Markets Mostly Gain as Oil Retreats
Author: Harrison, Virginia; Kumar, V Phani
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 Feb 2012: n/a.
ProQuest document link
Abstract:
Most Asian stock markets rose Tuesday as oil prices retreated, with a weakened yen and strong retail sales lifting Japanese stocks despite a fall in technology shares after Elpida Memory's bankruptcy filing.
Full text: Most Asian stock markets rose Tuesday as oil prices retreated, with a weakened yen and strong retail sales lifting Japanese stocks despite a fall in technology shares after Elpida Memory's bankruptcy filing.
Hong Kong's Hang Seng Index added 1.7% to 21568.73, Japan's Nikkei Stock Average gained 0.9% to 9722.52, China's Shanghai Composite advanced 0.2% to 2451.86 and South Korea's Kospi rose 0.6% to 2003.69.
Australia's S&P/ASX 200 index declined 0.1% to 4262.7 as poor earnings reports pressured shares of James Hardie Industries SE and Boral Ltd.
"The oil price has pulled back slightly, which is positive. If the oil price is too high, it's detrimental to parts of the economy and the recovery," said Peter Lai, director at DBS Vickers in Hong Kong. "But investors are waiting for catalysts to go higher and looking for more economic indicators from China."
Nissan Motor dropped 1.1% after the car maker said it would recall 79,275 vehicles over problems with their fuel sensors. But other Tokyo shares picked up the slack, with retail stocks leading the market higher in the afternoon session after news of a 1.9% year-on-year rise for January retail sales. Fast Retailing added 2.1%, Seven & I Holdings gained 1.1% and Takashimaya rose 1.7%.
The yen's decline against the dollar and the euro spurred many exporters, lifting Fanuc Corp. 2%, Nikon 1.9% and Sony 0.7%.
Those gains helped offset weakness in technology stocks, weighed down by chip maker Elpida's bankruptcy filing late Monday. Elpida plummeted 24%, ending limit down. Renesas Electronics fell 3.3% and Advantest lost 1.5%.
But Elpida rivals in the dynamic random-access memory chip business gained on hopes investments in production capacity will fall, boosting prices. In Seoul, Hynix Semiconductor climbed 6.8%, while Samsung Electronics gained 1.2%.
"We expect Hynix's earnings to show a positive inflection point in the second quarter of 2012, driven by a DRAM price recovery, which should help drive a share price recovery," strategists at Deustche Bank wrote in a research note, maintaining their buy recommendation on Hynix.
Samsung, Hynix and Elpida are the world's three largest DRAM-chip producers.
Several airline stocks in the region rose as crude-oil prices declined. Korean Air Lines gained 3.2% in Seoul, Cathay Pacific Airways rose 5.7% in Hong Kong, Qantas Airways added 1.8% in Sydney and All Nippon Airways rose 0.4% in Tokyo.
Among regional stocks that moved on the back of their earnings reports, Hang Seng Bank rose 5.1% in Hong Kong after posting a 12% gain in 2011 profit.
But index heavyweight HSBC Holdings fell 0.7%, tracking the previous day's losses in London, as earnings results overnight showed profit in line with analysts' expectations but costs continuing to rise.
"The result was neutral--it met market expectations, but still some investors are demanding more, and there are too many uncertainties in the euro zone," DBS Vickers's Mr. Lai said.
In Sydney, disappointing results from construction-materials provider James Hardie and Boral sent their shares 4.2% and 2.7% lower, respectively.
Among other movers in Australia, Goodman Fielder. shot up 33% after Singapore-listed Wilmar International said it had bought a 10% stake in the grocery manufacturer.
Billabong International lost 2.3% after the maker and retailer of surf- and snow-wear rejected a sweetened bid from U.S. private-equity firm TPG Capital.
Property shares sagged on mainland Chinese bourses, meanwhile, coinciding with Credit Suisse research citing cuts in prices and pressure on profits. Among the major names, China Vanke fell 0.7% in Shenzhen, while Gemdale dropped 0.7% in Shanghai.
Credit: By Virginia Harrison And V. Phani Kumar
Subject: Stock prices; Profits; Bankruptcy; Semiconductors; Economic indicators; Investments; Automobile industry; American dollar; Production capacity
Location: Hong Kong
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 28, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923640308
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923640308?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Oil Snaps Seven-Session Streak
Author: Berthelsen, Christian
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 Feb 2012: n/a.
ProQuest document link
Abstract:
New data show that the amount of speculative investment in the oil market from money managers such as hedge funds has been rising in tandem with barrel prices, and is now nearing the record level set after the outbreak of civil war in Libya last year.
Full text: NEW YORK--Oil futures pulled back Monday, snapping a string of seven straight advances.
But despite the market's pause, few in the market see tensions surrounding Iran, which have powered the recent rally, abating anytime soon.
Light, sweet crude for April delivery settled down $1.21, or 1.1%, at $108.56 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled down $1.30, or 1%, at $124.17 a barrel.
Nymex oil prices hit a nine-month high on Friday, and before Monday's drop had risen 11% since the start of February due to growing tensions between Iran and the West, as well as an improving U.S. economic outlook. Iran, the No. 2 oil producer in the Organization of Petroleum Exporting Countries, has threatened to close the Strait of Hormuz, the route for a fifth of the world's oil, in response to a European Union embargo on Tehran's oil as way to pressure it to give up its controversial nuclear program. Last week, Iran announced it would cut off oil exports to the U.K. and France in retaliation for additional sanctions.
Traders expect concerns about Iran will continue to push futures higher still.
"Obviously there is still major unrest going on the Middle East," said Tony Rosado, a broker at GA Global Markets. "It's not going away anytime soon."
New data show that the amount of speculative investment in the oil market from money managers such as hedge funds has been rising in tandem with barrel prices, and is now nearing the record level set after the outbreak of civil war in Libya last year.
Speculators increased their long position--bets the market will rise--by 17% last week, according to the most recent data from the Commodity Futures Trading Commission, to a notional value of $24.2 billion, Bank of America/Merrill Lynch said in a note.
"There's a lot of speculative length in the market," said Tom Bentz, director of BNP Paribas Prime Brokerage. "Obviously what's driven it up is all the Iran worries primarily, and how much longer we can keep pushing it up on that, we'll see...The path of least resistance still seems to be up."
Still, with prices up so much, some analysts are taking a contrarian position. They caution the market may become poised for a correction. Various technical indicators suggest the market is overbought.
"The ongoing flow of buying is supportive, but the market is also using up its buying potential," Citi Futures Perspective analyst Tim Evans said in a recent note. "The risk of exhaustion and reversal continues to grow."
Policy makers have begun focusing on oil prices now that they have breached $100 a barrel and the threat they could pose to the recovering U.S. economy. Debate has grown over whether the U.S. should tap its strategic reserves to ease supply concerns, though a senior House Democrat, Rep. Steny Hoyer, (D. Md.,) said Monday that supplies are adequate and that speculative trading was behind the price spike.
Front-month March reformulated gasoline blendstock, or RBOB, settled down 2.45 cents, or 0.8%, at $3.1283 a gallon. March heating oil settled down 2.95 cents, or 0.9%, at $3.2864 a gallon.
Write to Christian Berthelsen at christian.berthelsen@dowjones.com
Credit: By Christian Berthelsen
Subject: Petroleum industry; Futures; Crude oil prices
Location: United States--US New York
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 28, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923640376
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923640376?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Breaks Seven-Session 'Up' Streak
Author: Berthelsen, Christian
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]28 Feb 2012: C.4.
ProQuest document link
Abstract:
New data show the amount of speculative investment in the oil market from money managers such as hedge funds has been rising in tandem with barrel prices and is nearing the record level set after the outbreak of civil war in Libya last year.
Full text: NEW YORK -- Oil futures pulled back, snapping a string of seven consecutive advances.
But, despite the market's pause, few in the market see tensions surrounding Iran, which have powered the recent rally, abating anytime soon.
Light, sweet crude for April delivery settled down $1.21, or 1.1%, at $108.56 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled down $1.30, or 1%, at $124.17 a barrel.
Nymex oil prices hit a nine-month high Friday and, before Monday's drop, had risen 11% since the start of February due to growing tensions between Iran and the West, as well as an improving U.S. economic outlook. Iran, the No. 2 oil producer in the Organization of Petroleum Exporting Countries, has threatened to close the Strait of Hormuz, the route for a fifth of the world's oil, in response to a European Union embargo on Tehran's oil as way to pressure it to give up its nuclear program. Last week, Iran announced it would cut off oil exports to the U.K. and France in retaliation for additional sanctions.
Traders expect concerns about Iran to push futures higher.
"Obviously, there is still major unrest going on the Middle East," said Tony Rosado, a broker at GA Global Markets. "It's not going away anytime soon."
New data show the amount of speculative investment in the oil market from money managers such as hedge funds has been rising in tandem with barrel prices and is nearing the record level set after the outbreak of civil war in Libya last year.
Speculators increased their "long" positions -- bets the market will rise -- by 17% last week, according to the most recent data from the Commodity Futures Trading Commission, to a notional value of $24.2 billion, Bank of America-Merrill Lynch said in a note.
"There's a lot of speculative length in the market," said Tom Bentz, director of BNP Paribas Prime Brokerage. "Obviously, what's driven it up is all the Iran worries primarily, and how much longer we can keep pushing it up on that, we'll see. . . . The path of least resistance still seems to be up."
Still, with prices having risen so much, some analysts are taking a contrarian position. They caution the market may become poised for a correction. Various technical indicators suggest the market is overbought.
"The ongoing flow of buying is supportive, but the market is also using up its buying potential," Citi Futures Perspective analyst Tim Evans said in a recent note. "The risk of exhaustion and reversal continues to grow."
Credit: By Christian Berthelsen
Subject: Petroleum industry; Futures; Commodity prices; Crude oil
Location: New York
Classification: 3400: Investment analysis & personal finance; 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Feb 28, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923714964
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923714964?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
India Mulls Guarantees for Shippers Carrying Iran Oil
Author: Gulati, Nikhil
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 Feb 2012: n/a.
ProQuest document link
Abstract:
Indian shippers usually take covers from European firms, which are now reluctant to provide indemnity for transporting crude from Iran due to the U.S. and the European Union tightening sanctions against the Middle East nation for its alleged program to develop nuclear weapons.
Full text: NEW DELHI -- India will consider steps including providing sovereign guarantees to local shipping companies so that they continue to get insurance cover for transporting crude oil from Iran, the top bureaucrat in the shipping ministry said Tuesday.
"A decision on it will be taken in two to three months," Shipping Secretary K. Mohandas told reporters.
Indian shippers usually take covers from European firms, which are now reluctant to provide indemnity for transporting crude from Iran due to the U.S. and the European Union tightening sanctions against the Middle East nation for its alleged program to develop nuclear weapons.
A full oil embargo by the EU will likely come into effect July 1.
India has said it won't follow sanctions imposed by a country or a bloc and will continue to import crude from Iran.
Global shipping companies such as AP Moller-Maersk A/S, Frontline Ltd. and Teekay Tankers Ltd. Global shipping companies such as AP Moller-Maersk A/S, Frontline Ltd. and Teekay Tankers Ltd. have said their ships won't call at Iranian ports after the EU sanctions are enforced.
Mr. Mohandas said the Indian government may also study the CNF mode--cost, no insurance and freight--in which the buyer, instead of the transporter, is responsible for insurance cost. This mode will allow the buyer to choose a local insurance company of its choice.
Write to Nikhil Gulati at nikhil.gulati@dowjones.com
Credit: By Nikhil Gulati
Subject: Shipping industry; Sanctions
Location: United States--US Middle East
Company / organization: Name: European Union; NAICS: 926110, 928120; Name: Frontline Ltd; NAICS: 424910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 28, 2012
column: India News
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923741183
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923741183?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
EU Sanctions Impede Iran Oil Shipments to Asia
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 Feb 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: LONDON--A European Union oil embargo has started to impede the shipment of Iranian oil to Asia, the latest threat to Tehran's hopes to find new outlets for its top export.
Some Asian shippers say they won't sail to Iran, and Japan's largest tanker-fleet owner said it is assessing whether it will have to stop Iranian oil sailings, because of difficulty maintaining insurance coverage by associations that are subject to EU laws.
Bengt Hermelin, chief executive of Singapore-based tanker company Samco Shipholding Pte., said on Tuesday that the impact of sanctions on insuring ships "will prevent owners, including Samco, from calling Iran."
The EU last month escalated sanctions with a full embargo on Iranian oil imports and a ban on new shipping and insurance for Iranian crude cargoes.
Tighter U.S. banking sanctions also have the potential to affect insurance programs, because they are carried out in U.S. dollars.
After the EU agreed to begin its embargo on July 1, Iran declared it didn't need to sell to Europe--its No. 1 market--because it could find buyers elsewhere. Other top buyers China and India have rejected the oil sanctions, but other Asian buyers such as Japan and South Korea are looking into ways to reduce their dependency on Iranian crude.
But the impact of the Western sanctions is rippling beyond U.S. and European borders because the International Group of P&I Clubs, which pools resources for tanker insurance clubs for 90% of global oil tonnage and is dominant is Asia, is based in London and subject to EU laws.
Frontline Ltd. and Teekay Tankers Ltd., two of the world's largest tanker owners, have headquarters in Bermuda, a U.K. dependency that often applies U.K. laws. They both said this month they were stopping Iranian oil purchases.
Although Samco operates out of Asia, its 11 supertankers are covered by Gard P&I Ltd., a member of the International Group of P&I Clubs. Gard declined to comment on the impact of sanctions on its insurance program.
Meanwhile, shipping companies are considering following suit in a region where Tehran hopes to find clients to make up for lost European sales.
Japan's Mitsui O.S.K. Lines, the country's largest tanker owner, said it may be unable to ship Iranian oil if it can't insure the cargoes.
"We will not be able to provide transport services if P&I insurance coverage is not available," a spokeswoman for the company said. "We will observe future events and carefully determine our response."
The Japan Ship Owners' Mutual Protection & Indemnity Association, which covers Mitsui's tankers, said on Monday that its coverage of Iranian oil voyages will be limited by the EU sanctions because its reinsurance program is based in London.
Shipping Corp. of India is also concerned its sailings to Iran could be affected by the sanctions' impact on insurance, though the Indian government said is looking at solutions to circumvent the problem.
"If no cover is available to shipping lines, shipping of Iran's crude will be affected unless alternative sources of cover are made available," said Sunil Thapar, director of bulk carriers and tankers at the company, adding that its ships are covered by insurance clubs based in the EU.
India's shipping secretary K. Mohandas said on Tuesday that India would consider taking steps including providing sovereign guarantees to local shipping companies to ensure Iranian oil shipments remain covered.
Sanctions on shipping could hinder Iran's attempts to find new buyers in Asia, where it already sells over half of its 2.2 million barrels of daily exports.
U.S. officials have used a planned prohibition against settling oil trades with Iran's central bank to press buyers such as Japan and South Korea to cut their purchases of oil from Tehran.
Meanwhile, the use of locally insured Iranian vessels to ship crude is on the rise in Asia, said Abdolsamad Taghol, general manager of planning at NITC, Iran's largest oil-tanker company.
But an oil-shipping expert said that based on its capacity of 10.5 million deadweight tons and the typical length of Asian voyages, NITC, which is privately owned couldn't cover all Iranian oil exports.
Write to Benoit Faucon at benoit.faucon@dowjones.com
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 28, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923771418
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923771418?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
EU Sanctions Impede Iran Oil Shipments to Asia
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Feb 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: LONDON--European Union sanctions are impeding the shipment of oil to Asia from Iran, in a threat to Tehran's hopes to find new buyers for its top export.
Some Asian shippers say they have stopped sailing to Iran, and Japan's largest tanker-fleet owner said it is assessing whether it will do the same, because of difficulty maintaining insurance coverage by associations that are subject to EU laws.
Bengt Hermelin, chief executive of Singapore-based tanker company Samco Shipholding Pte., said Tuesday that the impact of sanctions on insuring ships "will prevent owners, including Samco, from calling Iran."
The EU in January escalated sanctions with an embargo on Iranian oil imports to take effect July 1, and a ban on new shipping and insurance for Iranian crude cargoes.
Iran responded by declaring it didn't need to sell to the EU--its No. 1 market--because it could find buyers elsewhere. In Asia--where Iran sells over half of its 2.2 million barrels of daily exports--top buyers China and India rejected oil sanctions, but Japan and South Korea are looking into ways to reduce dependency on Iranian crude.
The International Group of P&I Clubs, which pools resources for tanker insurance clubs for 90% of global oil tonnage and is dominant in Asia, is based in London and subject to EU laws.
Tighter U.S. banking sanctions also have the potential to affect insurance programs, because they are carried out in U.S. dollars. U.S. officials have used a planned prohibition against settling oil trades with Iran's central bank to press buyers in Asia to cut their purchases of oil from Tehran.
Frontline Ltd. and Teekay Tankers Ltd., two of the world's largest tanker owners, have headquarters in Bermuda, a U.K. dependency that often applies U.K. laws. Both companies said this month they were stopping Iranian oil purchases.
Although Samco operates out of Asia, its 11 supertankers are covered by Gard P&I Ltd., a member of the International Group of P&I Clubs. Gard declined to comment on the impact of sanctions on its insurance program.
Other Asian shipping companies are considering following suit. Japan's Mitsui O.S.K. Lines, the country's largest tanker owner, said it would be unable to ship Iranian oil if it can't insure the cargoes.
"We will not be able to provide transport services if P&I insurance coverage is not available," a spokeswoman for the company said. "We will observe future events and carefully determine our response."
The Japan Ship Owners' Mutual Protection & Indemnity Association, which covers Mitsui's tankers, said Monday its coverage of Iranian oil voyages would be limited by the EU sanctions because its reinsurance program is based in London.
Shipping Corp. of India is also concerned that sailings to Iran could be affected by the sanctions' impact on insurance, officials said.
"If no cover is available to shipping lines, shipping of Iran's crude will be affected unless alternative sources of cover are made available," said Sunil Thapar, director of bulk carriers and tankers at the company, adding that its ships are covered by insurance clubs based in the EU.
The Indian government said is looking at solutions to circumvent the problem, including providing sovereign guarantees to local shipping companies to ensure Iranian oil shipments remain covered, Secretary K. Mohandas of the Ministry of Shipping said Tuesday.
Meanwhile, the use of locally insured Iranian vessels to ship crude is rising in Asia, said Abdolsamad Taghol, general manager of planning at NITC, Iran's largest oil-tanker company. But NITC, which is privately owned, couldn't cover all Iranian oil exports, based on its capacity and the typical length of Asian voyages, an oil-shipping expert said.
Shipping issues are also affecting Iran's efforts to buy wheat from India. AnIranian delegation that includes central bank representatives is expected in New Delhi this week to discuss the possible sale of $750 million to $900 million in Indian wheat by private traders, industry officials said.
But the two countries will need to get around restrictions on payments--as well as determine a port of delivery.
"I think private traders in India would be willing to supply wheat to Iran, so long as they take delivery at Indian ports," said M.K. Dattaraj, former president of the Roller Flour Millers Federation of India. "Otherwise, logistics can get complicated."
Rajesh Roy
contributed to this article.
Write to Benoit Faucon at benoit.faucon@dowjones.com
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 29, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923855123
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923855123?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: EU Sanctions Impede Tehran's Oil Shipments to Asia
Author: Faucon, Benoit
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]29 Feb 2012: A.16.
ProQuest document link
Abstract:
Bengt Hermelin, chief executive of Singapore-based tanker company Samco Shipholding Pte., said Tuesday that the impact of sanctions on insuring ships "will prevent owners, including Samco, from calling Iran."
Full text: LONDON -- European Union sanctions are impeding the shipment of oil to Asia from Iran, in a threat to Tehran's hopes to find new buyers for its top export.
Some Asian shippers say they have stopped sailing to Iran because of difficulty maintaining insurance coverage by associations that are subject to EU laws.
Bengt Hermelin, chief executive of Singapore-based tanker company Samco Shipholding Pte., said Tuesday that the impact of sanctions on insuring ships "will prevent owners, including Samco, from calling Iran."
The EU in January escalated sanctions with an embargo on oil imports to take effect July 1, and a ban on new shipping and insurance for Iranian crude cargoes.
Iran responded by declaring it didn't need to sell to the EU -- its No. 1 market -- because it could find buyers elsewhere. In Asia -- where Iran sells over half of its 2.2 million barrels of daily exports -- top buyers China and India rejected oil sanctions, but Japan and South Korea are looking into ways to reduce dependency on Iranian crude.
The International Group of P&I Clubs, which pools resources for tanker insurance clubs for 90% of global oil tonnage and is dominant in Asia, is based in London and subject to EU laws.
Frontline Ltd. and Teekay Tankers Ltd., two of the world's largest tanker owners, have headquarters in Bermuda, a U.K. dependency that often applies U.K. laws. Both companies said they were stopping Iranian oil purchases.
Japan's Mitsui O.S.K. Lines, the country's largest tanker owner, said it would be unable to ship Iranian oil if it can't insure the cargoes. The Japan Ship Owners' Mutual Protection & Indemnity Association, which covers Mitsui's tankers, said its coverage of Iranian oil voyages would be limited by EU sanctions because its reinsurance program is based in London.
Shipping Corp. of India is also concerned sailings to Iran could be affected, officials said.
The Indian government said is looking to circumvent the problem, possibly with sovereign guarantees to local shipping companies, shipping secretary K. Mohandas said Tuesday.
Meanwhile, the use of locally insured Iranian vessels to ship crude is rising in Asia, said Abdolsamad Taghol, general manager of planning at NITC, Iran's largest oil-tanker company. But NITC couldn't cover all oil exports, based on its capacity and the typical length of Asian voyages, an oil-shipping expert said.
Credit: By Benoit Faucon
Subject: Petroleum industry; Shipping industry; Insurance coverage; Sanctions
Location: Asia Iran
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.16
Publication year: 2012
Publication date: Feb 29, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923926387
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923926387?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
BOJ Board Member Says High Oil Prices Threaten Economy
Author: Ito, Tatsuo
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Feb 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: FUKUOKA, Japan--A Bank of Japan policy board member on Wednesday raised fresh concerns over the Japanese economy, saying that higher oil prices, coupled with the weakening of the yen, could reduce corporate earnings and damp consumer spending.
"We must pay close attention to further rises in oil prices as it will weigh not only on the Japanese but also on the global economy," Hidetoshi Kamezaki said at a news conference after meeting business executives in Fukuoka, western Japan.
Mr. Kamezaki, one of the nine members of the BOJ's policy-making body, said he was worried about higher energy costs resulting from heightened geopolitical risks in the Middle East, particularly over Iran.
Japan, which relies almost entirely on imports for crude oil and natural gas, is buying more fossil fuels to make up for the drop in electricity generated at nuclear plants. Following the accident at the Fukushima Daiichi nuclear plant last March, only two out of the country's 54 nuclear reactors are in operation.
Mr. Kamezaki was careful not to describe the Japanese currency's recent decline as a "weak yen," instead calling it a "correction of a strong yen."
Mr. Kamezaki said the yen's fall was a result of global investors being more willing to take risks after a period of strong risk-aversion, and said the widening two-year interest rate gap between Japan and the U.S. might also be behind the move.
The BOJ on Feb. 14 surprised the markets by boosting the size of its asset purchase program--the main tool for credit easing amid near zero interest rates--to ¥65 trillion from ¥55 trillion by increasing purchases of Japanese government bonds. It also clarified a near-term inflation goal for overcoming deflation.
Markets have reacted positively to the BOJ's actions, with the dollar briefly hitting a nine-month high of ¥81.66 on Monday, compared with a record low of ¥75.31 marked Oct. 31.
A strong yen in general is bad news for Japan's export-dependent economy, eroding corporate profits earned overseas and increasing deflationary pressures.
Despite concerns over rising fuel costs, Mr. Kamezaki acknowledged that there are positive signs in the Japanese economy, including Wednesday's data showing that industrial output rose 2% in January from the previous month, making the second straight monthly gain.
"The data backs up my view that the economy will return to a mild recovery from early spring," he said.
Earlier, Mr. Kamezaki told local business executives that Japan isn't immune to a Europe-style debt crisis as confidence in the country's government bonds could quickly weaken if concerns over its fiscal state mount.
The European crisis "is not a fire on the other side of the river," he said, using a phrase frequently employed by Japanese policy makers recently.
Japan's fiscal conditions are the worst among developed nations. Its outstanding public debt is around 200% of its annual economic output, but the country has so far avoided a Greece-style crisis as domestic investors hold almost all of its debt.
Japan's debts are also financed by a steady inflow of funds due to a surplus on its current account--the broadest measure of its trade with the rest of the world. Mr. Kamezaki played down the risk of this changing anytime soon, even after the country recorded its first annual trade deficit since 1980 last year.
"The trend of Japan's current account surplus will not change for a while unless the trade deficit grows rapidly," he said.
Write to Tatsuo Ito at tatsuo.ito@dowjones.com
Credit: By Tatsuo Ito
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 29, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 923986947
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/923986947?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. Calls Oil Market 'Increasingly Tight'
Author: Tracy, Tennille
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Feb 2012: n/a.
ProQuest document link
Abstract:
WASHINGTON--The world oil market is growing "increasingly tight" at a time when the U.S. is looking to impose fresh sanctions on Iran over its nuclear program, U.S. energy officials said.
Full text: WASHINGTON--The world oil market is growing "increasingly tight" at a time when the U.S. is looking to impose fresh sanctions on Iran over its nuclear program, U.S. energy officials said.
The U.S. Energy Information Administration on Wednesday released of oil production in countries outside of Iran. In it, the EIA said world oil prices and consumption are climbing and economic growth will continue to fuel that trend. The world has also "experienced a number of supply interruptions" and spare production capacity is "quite modest."
Release of the analysis, requested by Congress, coincided with U.S. plans to impose sanctions on financial institutions that do business with Iran's central bank, a main conduit for that country's oil purchases. The goal is to block Iran from selling oil to countries such as China and India, cutting off a main source of revenue for the Iranian government.
The Obama administration will look to the findings released Wednesday by the EIA to determine how to move forward with new sanctions. The administration has already started discussions with big purchasers of Iranian oil, including China and Japan, which have started to look for alternative supplies.
Congress passed a law imposing the sanctions in the last few days of 2011. The European Union followed up with its own set of sanctions that go into effect later this year.
"There is emerging evidence that some shipments of Iranian crude oil under existing contracts are being curtailed due to the unwillingness of U.S. and EU insurance providers to cover them, even though the EU sanctions only require existing oil contracts to be completely phased out by July 1, 2012," the EIA said.
While the EIA report doesn't provide policy suggestions, it painted a picture of a global oil market that could see challenges when trying to compensate for a loss of Iranian exports. Oil prices have risen considerably in February and is now trading around $107 a barrel.
Iran is the world's fifth-largest producer of liquid fuels, generating about 4.1 million barrels a day. It is also the third-largest exporter, behind Saudi Arabia and Russia.
The EIA estimates that petroleum consumption outpaced production in countries outside of Iran during the first two months of the year. Consumption reached an average of 84.5 million barrels a day while production was an average of 82.9 million barrels a day.
Supply disruptions have resulted from production declines in South Sudan, Syria, Yemen and the North Sea, the EIA said. Spare oil production capacity, meanwhile, is modest given the situation in Iran and other geopolitical uncertainties.
Credit: By Tennille Tracy
Subject: Petroleum industry; Petroleum production; Sanctions
Location: United States--US
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Feb 29, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 924811508
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/924811508?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
More Supply Would Lower Oil Prices, as It Has for Gas
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]01 Mar 2012: n/a.
ProQuest document link
Abstract:
[...] why hasn't the "bumper sticker" strategy worked to increase domestic oil production in the same way it has worked for natural gas? [...] recently, the majority of independent oil and gas producers were focused on exploring for natural gas reserves.
Full text: Regarding your editorial (Feb. 24): In response to rising gasoline prices, President Obama said, "Anyone who tells you we can drill our way out of this problem doesn't know what they're talking about--or just isn't telling you the truth." Then he proceeded to dismiss any suggestion of increasing oil and gas drilling as a "bumper sticker" strategy.
Maybe we should ask why the price of natural gas decreased while oil prices increased. Natural gas is an energy source that relates to oil on an energy-equivalent basis of six thousand cubic feet of natural gas to one barrel of oil; however, at today's price-equivalent basis, you could buy 40 mcf of gas for the same amount you would pay for one barrel of oil.
Why is there such a price disparity between these two sources of energy? The answer is easy--the domestic supply of natural gas has increased dramatically in the past decade because independent oil and gas producers have applied improved technology in the form of horizontal drilling and hydraulic fracturing to discover huge natural-gas reserves throughout the U.S. Although President Obama dismisses the "bumper sticker" strategy of "drill, baby, drill," the evidence suggests that the strategy has worked by supplying us with a long-term supply of natural gas and has also created jobs and economic benefits for the communities where these wells were drilled.
So why hasn't the "bumper sticker" strategy worked to increase domestic oil production in the same way it has worked for natural gas? Until recently, the majority of independent oil and gas producers were focused on exploring for natural gas reserves. This was so successful that it created a large supply of natural gas and reduced its price. Thanks to the free market, independent oil and gas producers are now guided by the price disparity between oil and natural gas to focus their resources on the exploration of oil, and producers are busy drilling oil wells. Rather than talk about penalizing the oil and gas industry through higher taxes and more regulation, the president would be wise to encourage the industry to reinvest its capital in drilling more wells.
Roger Alexander
Midland, Texas
Mr. Alexander works for an independent energy company.
In 2008, future Energy Secretary Steven Chu opined, "Somehow, we have to figure out how to boost the price of gasoline to the levels of Europe." Candidate Barack Obama helpfully chimed in on energy prices in general, "Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket."
Since we are only halfway to the administration's goal of a European $9-$10 per gallon gasoline rate, the president cannot proclaim "mission accomplished." He clearly needs four more years to achieve a target probably desired by only 1% of the population. On the issue of oil prices, he is getting ready to rumble with the 99% who don't favor the European model. Borrowing the president's trademark taunt, "Bring it on!"
Russell Holmes
Rancho Santa Fe, Calif.
I didn't think the editorial was ever going to get around to the Keystone XL pipeline. Looking back on the history of oil price spikes, the price at the pump has always come back down when the administration in Washington has merely issued a threat to decrease U.S. dependency on foreign oil, such as releasing oil stores or increasing our own production.
While the decision on whether or not to allow the Keystone XL pipeline project to go forward was pending, Americans enjoyed a decent spate of relatively stable and lower prices at the pump. Are we to believe that the timing of the run-up in the price of gas, which began within days after President Obama nixed the Keystone XL project, was mere coincidence? His action (which he said was in our "best interest") told the world, and our foreign suppliers of oil in particular, that the U.S. would remain dependent on overseas foreign oil well into the foreseeable future, removing any constraints that might have kept prices down.
Mims Mobley
Greenwood, S.C.
Subject: Natural gas; Petroleum industry; Energy policy; Oil reserves; Pipelines; Gasoline prices; Electric rates
People: Obama, Barack
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 1, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 924788201
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/924788201?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
More Supply Would Lower Oil Prices, as It Has for Gas
Author: Anonymous
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]01 Mar 2012: A.14. [Duplicate]
ProQuest document link
Abstract:
[...] why hasn't the "bumper sticker" strategy worked to increase domestic oil production in the same way it has worked for natural gas? [...] recently, the majority of independent oil and gas producers were focused on exploring for natural gas reserves.
Full text: Regarding your editorial "'Stupid' and Oil Prices" (Feb. 24): In response to rising gasoline prices, President Obama said, "Anyone who tells you we can drill our way out of this problem doesn't know what they're talking about -- or just isn't telling you the truth." Then he proceeded to dismiss any suggestion of increasing oil and gas drilling as a "bumper sticker" strategy.
Maybe we should ask why the price of natural gas decreased while oil prices increased. Natural gas is an energy source that relates to oil on an energy-equivalent basis of six thousand cubic feet of natural gas to one barrel of oil; however, at today's price-equivalent basis, you could buy 40 mcf of gas for the same amount you would pay for one barrel of oil.
Why is there such a price disparity between these two sources of energy? The answer is easy -- the domestic supply of natural gas has increased dramatically in the past decade because independent oil and gas producers have applied improved technology in the form of horizontal drilling and hydraulic fracturing to discover huge natural-gas reserves throughout the U.S. Although President Obama dismisses the "bumper sticker" strategy of "drill, baby, drill," the evidence suggests that the strategy has worked by supplying us with a long-term supply of natural gas and has also created jobs and economic benefits for the communities where these wells were drilled.
So why hasn't the "bumper sticker" strategy worked to increase domestic oil production in the same way it has worked for natural gas? Until recently, the majority of independent oil and gas producers were focused on exploring for natural gas reserves. This was so successful that it created a large supply of natural gas and reduced its price. Thanks to the free market, independent oil and gas producers are now guided by the price disparity between oil and natural gas to focus their resources on the exploration of oil, and producers are busy drilling oil wells. Rather than talk about penalizing the oil and gas industry through higher taxes and more regulation, the president would be wise to encourage the industry to reinvest its capital in drilling more wells.
Roger Alexander
Midland, Texas
Mr. Alexander works for an independent energy company.
---
In 2008, future Energy Secretary Steven Chu opined, "Somehow, we have to figure out how to boost the price of gasoline to the levels of Europe." Candidate Barack Obama helpfully chimed in on energy prices in general, "Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket."
Since we are only halfway to the administration's goal of a European $9-$10 per gallon gasoline rate, the president cannot proclaim "mission accomplished." He clearly needs four more years to achieve a target probably desired by only 1% of the population. On the issue of oil prices, he is getting ready to rumble with the 99% who don't favor the European model. Borrowing the president's trademark taunt, "Bring it on!"
Russell Holmes
Rancho Santa Fe, Calif.
---
I didn't think the editorial was ever going to get around to the Keystone XL pipeline. Looking back on the history of oil price spikes, the price at the pump has always come back down when the administration in Washington has merely issued a threat to decrease U.S. dependency on foreign oil, such as releasing oil stores or increasing our own production.
While the decision on whether or not to allow the Keystone XL pipeline project to go forward was pending, Americans enjoyed a decent spate of relatively stable and lower prices at the pump. Are we to believe that the timing of the run-up in the price of gas, which began within days after President Obama nixed the Keystone XL project, was mere coincidence? His action (which he said was in our "best interest") told the world, and our foreign suppliers of oil in particular, that the U.S. would remain dependent on overseas foreign oil well into the foreseeable future, removing any constraints that might have kept prices down.
Mims Mobley
Greenwood, S.C.
Subject: Natural gas; Petroleum industry; Energy policy; Oil reserves; Pipelines; Gasoline prices; Electric rates
People: Obama, Barack
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.14
Publication year: 2012
Publication date: Mar 1, 2012
Section: Letters to the Editor
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 924933515
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/924933515?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Takeover Fears Hit Argentine Oil Firm
Author: Romig, Shane
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]01 Mar 2012: B.10.
ProQuest document link
Abstract:
President Cristina Kirchner is set to address Congress on Thursday, and investors are worried that she may announce sweeping policy changes in the energy industry, including a partial or full-blown takeover of YPF, whose controlling shareholder is Spain's Repsol YPF SA. "There's something coming, but we don't know what," said Augusto Farina, a trader at Amirante Galitis brokerage.
Full text: BUENOS AIRES -- Shares of YPF SA, Argentina's largest oil-and-gas company, fell as much as 18% Wednesday as speculation the government might nationalize the firm pushed the stock to a nearly three-year low.
President Cristina Kirchner is set to address Congress on Thursday, and investors are worried that she may announce sweeping policy changes in the energy industry, including a partial or full-blown takeover of YPF, whose controlling shareholder is Spain's Repsol YPF SA.
"There's something coming, but we don't know what," said Augusto Farina, a trader at Amirante Galitis brokerage.
A YPF spokesman said the company had no comment on movements in its share price. Presidential spokesman Alfredo Scoccimarro didn't return emails seeking comment.
YPF's American depositary shares closed down 14% at $26.23 in New York, after hitting an intraday low of $25, their lowest since June 2009. Its shares in Buenos Aires closed down 15% at 125 pesos ($28.70).
The stock has declined since late January, when the newspaper Pagina 12, which has close ties to the administration, said the government was considering a nationalization of YPF.
Government officials have refused to comment on the report.
Ms. Kirchner has put increasing pressure on the oil industry in recent months as rising fuel and natural-gas imports erode the country's trade surplus.
The administration accuses oil and gas companies of failing to invest enough in exploration, production and refining. Administration critics, including eight former energy secretaries, say price caps and government regulations are to blame for limited investment and declining output.
Earlier this month, the governors of Argentina's top oil- and gas-producing provinces, most of whom are Kirchner allies, gave energy companies two years to boost output by 15% or face losing their concessions.
But YPF has come under intense scrutiny. It is one of five companies under investigation on accusations of abusing their dominant positions in the fuel market to overcharge buyers. YPF denies the accusations.
Last week, the government accused the company of preventing its representative on the YPF board and three high-ranking government officials from participating in a board meeting.
YPF said it didn't turn the government's board representative away. It said its statutes allow only accredited representatives to participate in meetings.
But Wednesday, national securities regulator CNV voided the board meeting, saying the other directors blocked the government's representative and the officials from attending "without giving a reason or explanation for the unjustified decision."
That incident came a week after authorities briefly banned YPF from conducting foreign-trade operations due to a tax dispute. YPF declined to comment on the tax dispute. But the following day the company said it was experiencing significant problems accessing the foreign-exchange market and importing goods, which jeopardized its investment program and ability to import diesel fuel.
Credit: By Shane Romig
Subject: Petroleum industry; Stock prices; Nationalization
Location: Argentina
Company / organization: Name: RepsolYPF SA; NAICS: 213111, 213112, 324110; Name: YPF SA; NAICS: 211111
Classification: 8510: Petroleum industry; 9173: Latin America; 3100: Capital & debt management
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.10
Publication year: 2012
Publication date: Mar 1, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 924950733
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/924950733?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Chevron Weighs Move Into Russia; U.S. Oil Company, Kremlin Hold Talks on Possible Arctic-Exploration Deal
Author: Gronholt-Pedersen, Jacob
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]01 Mar 2012: n/a.
ProQuest document link
Abstract:
Currently, only state-controlled OAO Gazprom and OAO Rosneft have the rights to develop strategic offshore reserves--they are the projects' license owners and operators; foreign companies such as Exxon are minority partners in joint ventures developing the fields.
Full text: MOSCOW--U.S. oil major Chevron Corp. has held talks with a senior Russian government official on Arctic exploration, as Prime Minister Vladimir Putin hinted he would allow nonstate companies to become operators and gain control of projects in Russia's northern seas.
At a meeting in Moscow late Wednesday, the parties discussed the development of Russia's Arctic reserves and changes to the investment climate and tax regime for oil companies operating in the country, the Ministry for Natural Resources said in a statement Thursday.
"Your country has enormous reserves, and the absence of large projects in the Russian Federation is a big gap in our portfolio," Chevron's Russia chief, Andrew McGrahan, told Deputy Minister for Natural Resources Denis Khramov at the meeting, according to the ministry statement.
Unlike peers such as Exxon Mobil Corp., Royal Dutch Shell PLC and BP PLC, who landed stakes in Russian projects beginning in the 1990s, Chevron failed to gain a foothold in Russia following the breakup of the Soviet Union.
"Chevron has a continuing interest in renewing our resource base around the world, with Russia offering significant growth potential," a Chevron spokeswoman said Thursday. "As with all the investment opportunities we consider around the world, factors such as economic returns, stability of the investment climate and sanctity of contract are central to any decisions we make."
The comments come just a day after Mr. Putin, who is the favorite to win presidential elections Sunday, said nonstate companies should be allowed to explore offshore reserves in order to avoid a drop in Russia's hydrocarbon production. Currently, only state-controlled OAO Gazprom and OAO Rosneft have the rights to develop strategic offshore reserves--they are the projects' license owners and operators; foreign companies such as Exxon are minority partners in joint ventures developing the fields.
Russia has kept a tight grip on its oil and gas reserves during the past decade, but in recent years some deals with Western oil majors have started to take shape.
Last year, Exxon agreed to join Rosneft as minority partner in exploring three licenses in Russia's northern Kara Sea in the Arctic.
In 2010, Chevron teamed up--also with Rosneft--to develop offshore deposits in the Black Sea, although that project ran into problems and Chevron eventually pulled out.
Faced with stagnating oil production, the Russian government made a decision late last year to seek changes to current legislation that would open up access to offshore fields for nonstate companies.
Mr. Khramov said his ministry is preparing the changes, including liberalizing access to offshore reserves and lower taxes. The changes will be reviewed by the government in the second quarter of this year.
"That is a positive sign for foreign investors," said Vladimir Konovalov, executive director of the Petroleum Advisory Forum, a lobby organization of major Western oil and gas companies in Russia.
The Russian Arctic remains largely unexplored, with most geological information from the region dating back to Soviet times. While the government is taking steps to develop hydrocarbons in the region, the projects seem to be moving slowly.
London-based BP ran into problems soon after agreeing a major share swap and Arctic exploration deal with Rosneft a year ago, a deal that was eventually taken over by Texas-based Exxon. And France's Total SA and Norway's Statoil have also encountered delays to their project with Gazprom at the huge Shtokman gas field in the Arctic's Barents Sea.
Credit: By Jacob Gronholt-Pedersen
Subject: Natural gas reserves; Petroleum industry; Oil reserves; Natural gas utilities
Location: United States--US
People: Putin, Vladimir
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 1, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 925334264
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/925334264?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
South Sudan Claims Oil-Field Attacks, Incursion from North
Author: Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]01 Mar 2012: n/a.
ProQuest document link
Abstract:
South Sudan accused Sudan of violating its borders and bombing oil fields in its territory, a charge Khartoum denied, marking an escalation of a conflict between two countries sharply divided over how to share oil revenues.
Full text: South Sudan accused Sudan of violating its borders and bombing oil fields in its territory, a charge Khartoum denied, marking an escalation of a conflict between two countries sharply divided over how to share oil revenues.
Sudan bombed several oil fields in the newly independent South Sudan late Wednesday and then followed the aerial attack with an incursion by several hundred Sudanese infantrymen across the border into Unity state on Thursday, according to Benjamin Marial, South Sudan's information minister. He said the Sudanese troops remained in the country on Thursday.
"Sudanese troops are violating our borders and air space," he said from Juba, South Sudan's capital. Mr. Marial said that some of the targeted oil fields were around 45 miles inside South Sudan. There were no reports of injuries.
The bombing caused leaks to two oil wells in Pariang county, along the north-south border, the Associated Press reported.
The Sudanese government denied any attack on its southern neighbor. Spokesman Rabbie Abdelaty accused South Sudan of backing rebel anti-Khartoum rebels, in violation of a nonaggression pact between the two countries.
"Why would we invade South Sudan when we in the first place allowed them to secede peacefully?" Mr. Abdelaty said.
On its secession in July, South Sudan retained around two-thirds of the country's oil fields, but relied on pipelines and ports in Sudan to ship its 350,000 barrels-a-day of oil output. In January, with the two nations embroiled in a dispute over oil transit fees, South Sudan shut its oil fields and pipelines.
China, the biggest buyer of Sudanese crude, has been trying to mediate the conflict. The kidnapping in late January of 29 Chinese workers in Sudan has complicated that role.
The workers were later released, but Sudan accused its neighbor of supporting the rebel group that carried out the attack--a charge that South Sudan denies.
A north-south civil war raged in Sudan for two decades until 2005, when the two sides agreed to a comprehensive peace agreement that allowed the secession of South Sudan.
Credit: By Nicholas Bariyo
Subject: International relations-US; Oil fields; Pipelines
Location: South Sudan
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 1, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 925628114
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/925628114?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Crude Awakening: Oil Spikes on Saudi Pipeline-Blast Rumor
Author: Said, Summer; Berthelsen, Christian; Pleven, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 Mar 2012: n/a.
ProQuest document link
Abstract:
Global oil supplies are tight already, and if the world needed any more barrels, it would have to get them from members of the Organization of Petroleum Exporting Countries, mainly Saudi Arabia, Mr. Chatterton said.
Full text: Laying bare the impact of investor nerves over rising tensions in Middle East, oil prices spiked late Thursday amid reports of a major pipeline explosion in Saudi Arabia.
Oil for April delivery jumped almost 2% to $110.55 a barrel in after-hours electronic trading, a nine-month high after the two reports, which were both from Middle Eastern media. Senior Saudi officials quickly denied that any explosion had occurred, sending prices back down.
That investors could react so drastically to unverified reports points to the "underlying fear" about a potential supply disruption in the Middle East, said Dave Chatterton, an analyst at Powerline Group.
Global oil supplies are tight already, and if the world needed any more barrels, it would have to get them from members of the Organization of Petroleum Exporting Countries, mainly Saudi Arabia, Mr. Chatterton said. "You don't get any bigger than" the Saudis, he said. "They have all the spare capacity."
Saudi Arabia is the world's largest oil supplier, exporting on average more than seven million barrels a day, according to industry data.
The reports said an explosion destroyed one of the region's main pipelines in the city of Awamiyah in Saudi Arabia's Eastern province, which is home to the majority of the kingdom's oil supplies. The region has been a flashpoint for tensions between Shiite minorities and the established Sunni government.
One of the articles, in the online magazine Arab Digest, was accompanied by photographs of what it said was the pipeline fire. The photos couldn't be authenticated. The site quoted what an unidentified resident of Qatif calling the blazes a message to the U.S. to pressure Saudi Arabia for change.
"The reports are completely untrue. They originated from Facebook and Twitter, and the pipeline is still up and running," one Saudi official said. A second official dubbed the reports "false propaganda."
Nevertheless, the reports quickly filtered through to oil markets in the U.S. and Europe.
In the U.S., most of the action happened after trading on the New York Mercantile Exchange closed. Prices settled up 1.7% to $108.84 a barrel, then rose sharply after hours, when trading is notably thin. Oil quickly raced above $110 a barrel.
In Europe, Brent futures on the ICE Futures Europe exchange hit a four-year high of $128.40, after having closed at $126.20.
When Saudi officials dismissed the reports, oil traded on the Nymex dropped to $109, and Brent eased back below $127.
The reaction of traders shows the uneasy nature of oil markets as geopolitical tension keeps crude prices elevated. Some analysts are saying tensions between the West and Iran, whose nuclear ambitions are at the center of international debate, have added as much as $15 to the barrel price of oil.
"There's a substantial risk premium built into this market," said Peter Donovan, an oil trader and vice president of Vantage Trading. "The fundamentals do not warrant the price being up this high. The price should be lower. However, it's not, and there are some fears out there."
The role of the Middle East in driving oil prices higher this year has confounded many oil buyers who came into 2012 thinking that the European debt problem would keep demand low, pushing down prices. Now, they face the threat of needing to pay far more than expected for the oil and petroleum products they need.
"There are people out there who are uncovered and worried," Powerline's Mr. Chatterton said, referring to oil buyers who may not have foreseen the recent rise in prices when budgeting for purchases and hedges.
The 10% gain for Nymex crude this year also poses a threat to economic growth, which has some analysts focused on the risk that prices also could drop in a hurry at some point.
"While there is clearly an 'Iran' premium built into prices, ultimately high prices will squeeze out marginal demand and result in oil prices correcting lower," analysts at Sanford C. Bernstein said in a research note before Thursday's trading.
Write to Summer Said at summer.said@dowjones.com , Christian Berthelsen at christian.berthelsen@dowjones.com and Liam Pleven at liam.pleven@wsj.com
Credit: By Summer Said, Christian Berthelsen and Liam Pleven
Subject: Pipelines; Petroleum industry; Crude oil prices; Explosions
Location: Saudi Arabia Middle East
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 2, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 925637337
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/925637337?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
A Flex-Fuel Mandate Is Pro-Market; If we produce more oil, OPEC will sell less to keep prices high. So Congress should encourage car makers to look for new alternatives.
Author: McFarlane, Robert C
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 Mar 2012: n/a.
ProQuest document link
Abstract:
For light trucks or automobiles, a better approach lies in using natural gas to make the liquid-fuel methanol, a high-octane, clean and safe fuel (which race-car drivers love) whose spot price is roughly $1.10 a gallon. The Methanol Institute, a private industry group, estimates that after compensating for methanol's lower energy content and adding the cost of distribution, taxes and infrastructure, producers can deliver an amount of fuel equivalent to the energy in a gallon of gasoline for approximately $3.
Full text: The current election cycle and the rising price of gasoline have rekindled interest in energy security and how best to achieve it. We've had these spasms of interest and hand-wringing before--many times. And each time we believed we had identified a way to overcome our vulnerability to the disruption or unaffordable pricing of oil, the price would decline, we would become complacent again, and effective, long-term solutions were forgotten.
This time, however, the stakes go well beyond the price of a fill-up at the pump. They involve a predictable renewed recession and prolonged, severe economic hardship for all Americans. As we tackle this energy challenge again, if the outcome is to be any different it may help to start with a few facts:
* Petroleum products drive 97% of all air, sea and land transportation in our country. Oil is truly the lifeblood of every industrial economy. If goods don't move, revenues stop, jobs are lost and economies collapse. Oil is a strategic commodity, an essential good which if disrupted or priced extravagantly can cause our economy to collapse.
* Unlike other essential commodities such as clothing and food, where we have choices, in transportation fuel we're stuck with petroleum alone. It enjoys a monopoly.
* The price of oil is set by a foreign cartel. The Organization of Petroleum Exporting Countries (OPEC) owns almost 80% of global oil reserves yet produces only 36% of daily global supply. This dominant position enables OPEC to raise or lower their production to maintain the global supply-demand relationship that suits their interest. If U.S. oil companies produce more, OPEC will produce less.
That's why increasing domestic production of oil or increasing fuel efficiency can reduce our trade deficit and the $400 billion (at current oil prices) we send overseas annually, but they won't change the price we pay at the pump. In 2008, when the price of oil went to $147 per barrel, the United Kingdom was self-sufficient thanks to the oil it produced in the North Sea. Yet U.K. truckers went on strike over the extravagant price of diesel, which was driven by the global price of oil. Oil is a fungible commodity traded globally but priced by a cartel.
This is not to say that we shouldn't try to produce more of our own. Of course we should. But that is not enough. To outmaneuver OPEC we need to eliminate oil's monopoly as the only transportation fuel.
In recent years, we've discovered that we are blessed with truly unfathomable amounts of natural gas embedded in shale deposits--primarily located in Pennsylvania, New York, Texas and Oklahoma. Natural gas can be used in various forms to fuel vehicles. Compressed natural gas (CNG) is well-suited to drive long-haul and other fleet vehicles, although it's quite expensive to adapt a truck or car to burn natural gas.
For light trucks or automobiles, a better approach lies in using natural gas to make the liquid-fuel methanol, a high-octane, clean and safe fuel (which race-car drivers love) whose spot price is roughly $1.10 a gallon. New cars and trucks can be adapted to burn methanol, ethanol, gasoline or any combination of the three for less than $100 per vehicle. The Methanol Institute, a private industry group, estimates that after compensating for methanol's lower energy content and adding the cost of distribution, taxes and infrastructure, producers can deliver an amount of fuel equivalent to the energy in a gallon of gasoline for approximately $3.
But we must get busy, because we're about to face additional upward pressure on the price of oil. Former Shell CEO John Hofmeister has predicted that the rapid run-up in demand for oil over the next two to three years--primarily in China and India, and by as much as 10 million barrels per day--may well outstrip supply and raise the price of oil to more than $200 a barrel. A gas price almost double what we're paying now would constitute only a fraction of the impact on our economy. We will go back into recession and stay there for a long time.
Today, you hear candidates for president espousing partial solutions. President Obama calls for unnecessary, expensive tax credits (up to $40,000 per truck) to persuade long-haul vehicle owners to convert to CNG, and he wants to extend similar, though much smaller, tax credits to promote alternative fuels. Former Speaker Newt Gingrich calls for more oil drilling here, which is fine. And yet, as explained earlier, that alone will not have much effect on the price of gasoline.
Let's open our market to good old American competition. Friedrich Hayek and Milton Friedman stressed that the foremost economic duty of government is to eliminate cartel pricing. Bills are now pending in both houses of the Congress (HR 1687 and S1603) that seek to do exactly that by requiring car makers to enable fuel competition in their own product lines--adding flex-fuel, all electric, hybrid electric, or any other way auto makers choose to implement the law.
Thanks to the windfall discovery of incalculable quantities of unconventional gas in our country, we can do this. If Congress acts, we can finally establish energy independence through competition.
Mr. McFarlane served as President Reagan's national security adviser from 1983-85. He is the co-founder of the United States Energy Security Council, a bipartisan nonprofit organization committed to competition and energy security.
Credit: By Robert C. McFarlane
Subject: Recessions; Natural gas; Petroleum industry; Oil reserves; Economic conditions; Energy economics; Gasoline
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 2, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 925638417
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/925638417?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Chevron Weighs Move Into Russia --- U.S. Oil Company, Kremlin Hold Talks on Possible Arctic-Exploration Deal
Author: Gronholt-Pedersen, Jacob
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]02 Mar 2012: B.6.
ProQuest document link
Abstract:
Currently, only state-controlled OAO Gazprom and OAO Rosneft have the rights to develop strategic offshore reserves -- they are the projects' license owners and operators; foreign companies such as Exxon are minority partners in joint ventures developing the fields.
Full text: MOSCOW -- U.S. oil major Chevron Corp. has held talks with a senior Russian government official on Arctic exploration, as Prime Minister Vladimir Putin hinted he would allow nonstate companies to become operators and gain control of projects in Russia's northern seas.
At a meeting in Moscow late Wednesday, the parties discussed the development of Russia's Arctic reserves and changes to the investment climate and tax regime for oil companies operating in the country, the Ministry for Natural Resources said in a statement Thursday.
"Your country has enormous reserves, and the absence of large projects in the Russian Federation is a big gap in our portfolio," Chevron's Russia chief, Andrew McGrahan, told Deputy Minister for Natural Resources Denis Khramov at the meeting, according to the ministry.
Unlike peers such as Exxon Mobil Corp., Royal Dutch Shell PLC and BP PLC, who landed stakes in Russian projects beginning in the 1990s, Chevron failed to gain a foothold in Russia following the breakup of the Soviet Union.
"Chevron has a continuing interest in renewing our resource base around the world, with Russia offering significant growth potential," a Chevron spokeswoman said Thursday. "As with all the investment opportunities we consider around the world, factors such as economic returns, stability of the investment climate and sanctity of contract are central to any decisions we make."
The comments come just a day after Mr. Putin, who is the favorite to win presidential elections on Sunday, said nonstate companies should be allowed to explore offshore reserves in order to avoid a drop in Russia's hydrocarbon production. Currently, only state-controlled OAO Gazprom and OAO Rosneft have the rights to develop strategic offshore reserves -- they are the projects' license owners and operators; foreign companies such as Exxon are minority partners in joint ventures developing the fields.
Russia has kept a tight grip on its oil and gas reserves during the past decade, but in recent years some deals with Western oil majors have started to take shape.
Last year, Exxon agreed to join Rosneft as minority partner in exploring three licenses in Russia's Kara Sea in the Arctic.
In 2010, Chevron teamed up -- also with Rosneft -- to develop offshore deposits in the Black Sea, although that project ran into problems and Chevron eventually pulled out.
Faced with stagnating oil production, the Russian government decided last year to seek changes to legislation that would open up access to offshore fields for nonstate companies.
Mr. Khramov said his ministry is preparing the changes, including liberalizing access to offshore reserves and lower taxes. The changes will be reviewed by the government in the second quarter of this year.
"That is a positive sign for foreign investors," said Vladimir Konovalov, executive director of the Petroleum Advisory Forum, a lobby organization of major Western oil and gas companies in Russia.
The Russian Arctic remains largely unexplored, with most geological information from the region dating back to Soviet times. While the government is taking steps to develop hydrocarbons in the region, the projects seem to be moving slowly.
BP ran into problems soon after agreeing to a major share swap and Arctic exploration deal with Rosneft a year ago, a deal that was eventually taken over by Texas-based Exxon. And France's Total SA and Norway's Statoil have also encountered delays to their project with Gazprom at the huge Shtokman gas field in the Arctic's Barents Sea.
Credit: By Jacob Gronholt-Pedersen
Subject: Natural gas reserves; Oil reserves; Oil exploration; Business government relations
Location: United States--US Arctic region Russia
Company / organization: Name: Chevron Corp; NAICS: 211111, 324110
Classification: 9190: United States; 9176: Eastern Europe; 8510: Petroleum industry
Publication title: Wall Stree t Journal, Eastern edition; New York, N.Y.
Pages: B.6
Publication year: 2012
Publication date: Mar 2, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 925688441
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/925688441?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Saudi Pipeline Rumor Roils Oil
Author: Said, Summer; Berthelsen, Christian; Pleven, Liam
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]02 Mar 2012: C.1.
ProQuest document link
Abstract:
Global oil supplies are tight already, and if the world needed any more barrels, it would have to get them from members of the Organization of Petroleum Exporting Countries, mainly Saudi Arabia, Mr. Chatterton said.
Full text: Laying bare the impact of investor nerves over rising tensions in the Middle East, oil prices spiked late Thursday amid reports of a major pipeline explosion in Saudi Arabia.
Oil for April delivery jumped almost 2% to $110.55 a barrel in after-hours electronic trading, a nine-month high after the two reports, which were both from Middle Eastern media. Senior Saudi officials quickly denied that any explosion had occurred, sending prices back down.
That investors could react so drastically to unverified reports points to the "underlying fear" about a potential supply disruption in the Middle East, said Dave Chatterton, an analyst at Powerline Group.
Global oil supplies are tight already, and if the world needed any more barrels, it would have to get them from members of the Organization of Petroleum Exporting Countries, mainly Saudi Arabia, Mr. Chatterton said. "You don't get any bigger than" the Saudis, he said. "They have all the spare capacity."
Saudi Arabia is the world's largest oil supplier, exporting on average more than seven million barrels a day, according to industry data.
The reports said an explosion destroyed one of the region's main pipelines in the city of Awamiyah in Saudi Arabia's Eastern province, which is home to the majority of the kingdom's oil supplies. The region has been a flashpoint for tensions between Shiite minorities and the established Sunni government.
One of the articles, in the online magazine Arab Digest, was accompanied by photographs of what it said was the pipeline fire. The photos couldn't be authenticated. The site quoted what an unidentified resident of Qatif calling the blazes a message to the U.S. to pressure Saudi Arabia for change.
"The reports are completely untrue. They originated from Facebook and Twitter, and the pipeline is still up and running," one Saudi official said. A second official dubbed the reports "false propaganda."
Nevertheless, the reports quickly filtered through to oil markets in the U.S. and Europe.
In the U.S., most of the action happened after trading on the New York Mercantile Exchange closed. Prices settled up 1.7% to $108.84 a barrel, then rose sharply after hours, when trading is notably thin. Oil quickly raced above $110 a barrel.
In Europe, Brent futures on the ICE Futures Europe exchange hit a four-year high of $128.40, after having closed at $126.20.
When Saudi officials dismissed the reports, oil traded on the Nymex dropped to $109, and Brent eased back below $127.
The reaction of traders shows the uneasy nature of oil markets as geopolitical tension keeps crude prices elevated. Some analysts are saying tensions between the West and Iran, whose nuclear ambitions are at the center of international debate, have added as much as $15 to the barrel price of oil.
"There's a substantial risk premium built into this market," said Peter Donovan, an oil trader and vice president of Vantage Trading. "The fundamentals do not warrant the price being up this high. The price should be lower. However, it's not, and there are some fears out there."
The role of the Middle East in driving oil prices higher this year has confounded many oil buyers who came into 2012 thinking that the European debt problem would keep demand low, pushing down prices. Now, they face the threat of needing to pay far more than expected for the oil and petroleum products they need.
"There are people out there who are uncovered and worried," Powerline's Mr. Chatterton said, referring to oil buyers who may not have foreseen the recent rise in prices when budgeting for purchases and hedges.
The 10% gain for Nymex crude this year also poses a threat to economic growth, which has some analysts focused on the risk that prices also could drop in a hurry at some point.
"While there is clearly an 'Iran' premium built into prices, ultimately high prices will squeeze out marginal demand and result in oil prices correcting lower," analysts at Sanford C. Bernstein said in a research note before Thursday's trading.
Credit: By Summer Said, Christian Berthelsen and Liam Pleven
Subject: Pipelines; Petroleum industry; Explosions; Speculation; Commodity markets; Crude oil prices
Location: Saudi Arabia Middle East
Classification: 9178: Middle East; 1510: Energy resources; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.1
Publication year: 2012
Publication date: Mar 2, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 925688601
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/925688601?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Jitters Fade, as Does Its Price
Author: Strumpf, Dan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 Mar 2012: n/a.
ProQuest document link
Abstract:
The source of worry most recently has been Iran, whose nuclear program has provoked a standoff that analysts have said could lead to a halt of exports, military conflict or disruption of maritime traffic in the Strait of Hormuz, a major oil conduit.
Full text: Oil prices retreated as fears of a supply disruption in Saudi Arabia eased and broader markets pulled back.
Crude oil gave back ground following Thursday's after-hours rally, prompted by reports of an oil pipeline explosion in Saudi Arabia. Saudi officials later denied the reports on Thursday, and oil prices spent Friday in a steady slide.
"There's just a little bit of relaxation from the run-up yesterday," said Kyle Cooper, managing partner at IAF Energy Advisors in Houston. "Crude had gotten to be pretty extended."
Light, sweet crude for April delivery dropped $2.14, or 2%, to settle at $106.70 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange fell $2.55, or 2%, to $123.65.
Crude prices also were pulled lower by weaker stocks, which traders often turn to for guidance about the broader economy. Friday's retreat sent oil prices into negative territory for the week, with Nymex crude down 2.8% over the last five sessions.
The oil market has been closely attuned to the possibility of supply disruptions. The source of worry most recently has been Iran, whose nuclear program has provoked a standoff that analysts have said could lead to a halt of exports, military conflict or disruption of maritime traffic in the Strait of Hormuz, a major oil conduit.
On Monday, President Barack Obama is scheduled to meet with Israeli Prime Minister Benjamin Netanyahu, and the two are likely to discuss the next steps regarding Iran. Oil-market participants are worried that Israel will launch a unilateral strike on Iran's nuclear facilities, prompting a broader conflict.
Saudi Arabia's importance to the oil market, however, is arguably greater. The country produces nearly 10 million barrels a day, dwarfing Iran's daily production of 3.5 million barrels, and exports more oil than any other country.
"The market reacted so quickly, which really demonstrated the underlying nervousness that exists in the marketplace," said Dominick Chirichella, an analyst at the Energy Management Institute in New York. "If anything real happens, this thing will jump $15, $20 in a heartbeat."
The episode in Saudi Arabia called to mind previous oil-supply scares in the kingdom. In February 2006, Saudi authorities thwarted an attack at the Abqaiq facility, one of the world's biggest crude-oil processing centers. Even though the attack was foiled, oil prices surged 4% following the incident.
Prices rose again late that year after international naval forces were deployed to the Persian Gulf to protect Ras Tanura, the site of the world's largest offshore oil terminal, because of threats of attacks.
Front-month April reformulated gasoline blendstock, or RBOB, settled down 7.96 cents, or 2.4%, to $3.2721 a gallon. April heating oil settled 7.35 cents lower, or 2.2%, at $3.2018 a gallon.
Credit: By Dan Strumpf
Subject: Petroleum industry; Crude oil prices; Energy management
Location: Saudi Arabia
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 2, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 925691369
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/925691369?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Oil Jitters Fade, As Does Its Price
Author: Strumpf, Dan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]03 Mar 2012: B.4.
ProQuest document link
Abstract:
The source of worry most recently has been Iran, whose nuclear program has provoked a standoff that analysts have said could lead to a halt of exports, military conflict or disruption of maritime traffic in the Strait of Hormuz, a major oil conduit.
Full text: Oil prices retreated as fears of a supply disruption in Saudi Arabia eased and broader markets pulled back.
Crude oil gave back ground following Thursday's after-hours rally, prompted by reports of an oil pipeline explosion in Saudi Arabia. Saudi officials denied the reports later on Thursday, and oil prices spent Friday in a steady slide.
"There's just a little bit of relaxation from the run-up yesterday," said Kyle Cooper, managing partner at IAF Energy Advisors in Houston. "Crude had gotten to be pretty extended."
Light, sweet crude for April delivery dropped $2.14, or 2%, to settle at $106.70 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange fell $2.55, or 2%, to $123.65.
Crude prices also were pulled lower by weaker stocks, which traders often turn to for guidance about the broader economy. Friday's retreat sent oil prices into negative territory for the week, with Nymex crude down 2.8% over the past five sessions.
The oil market has been closely attuned to the possibility of supply disruptions. The source of worry most recently has been Iran, whose nuclear program has provoked a standoff that analysts have said could lead to a halt of exports, military conflict or disruption of maritime traffic in the Strait of Hormuz, a major oil conduit.
On Monday, President Barack Obama is scheduled to meet with Israeli Prime Minister Benjamin Netanyahu, and the two are likely to discuss the next steps regarding Iran. Oil-market participants are worried that Israel will launch a unilateral strike on Iran's nuclear facilities, prompting a broader conflict.
Saudi Arabia's importance to the oil market, however, is arguably greater. The country produces nearly 10 million barrels a day, dwarfing Iran's daily production of 3.5 million barrels, and exports more oil than any other country.
"The market reacted so quickly, which really demonstrated the underlying nervousness that exists in the marketplace," said Dominick Chirichella, an analyst at the Energy Management Institute in New York. "If anything real happens, this thing will jump $15, $20 in a heartbeat."
The episode in Saudi Arabia called to mind previous oil-supply scares in the kingdom.
In February 2006, Saudi authorities thwarted an attack at the Abqaiq facility, one of the world's biggest crude-oil processing centers. Even though the attack was foiled, oil prices surged 4% following the incident.
Prices rose again late that year after international naval forces were deployed to the Persian Gulf to protect Ras Tanura, the site of the world's largest offshore oil terminal, because of threats of attacks.
Front-month April reformulated gasoline blendstock, or RBOB, settled down 7.96 cents, or 2.4%, to $3.2721 a gallon.
Credit: By Dan Strumpf
Subject: Commodity markets; Futures trading; Crude oil prices; Commodity prices
Location: United States--US
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.4
Publication year: 2012
Publication date: Mar 3, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 925889657
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/925889657?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Japan and Spain Reduce Iranian Oil Imports
Author: Faucon, Benoît; Said, Summer
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: LONDON--Japan and Spain said this week they had reduced Iranian oil imports and switched to Saudi crude, providing the first evidence that some of Iran's largest customer nations are reducing their reliance ahead of stifling sanctions this summer.
The disclosures come as Iran's customers are rushing to sign new supply deals with rival producers, triggering expectations that the Islamic Republic's overall shipments--now broadly stable--could fall by the summer.
The United Kingdom and France had previously stopped buying oil from Iran, though neither had made Iranian crude purchases on the same scale as Japan and Spain in recent months.
"Saudi exports surged recently [to nine million barrels of oil a day] because some customers are preparing for what might happen [this summer] with regards to Iran," a senior Saudi oil official said this week.
An arm of the U.S. Department of Energy warned Wednesday that the oil market is tightening partly because of the problems faced by Iran, the world's third-largest oil exporter. That risks pushing up the price motorists pay at the pump, the U.S. Energy Information Administration said.
Iran's oil sales to Japan, its third-largest customer, fell 12% in January compared with a year earlier, data from Tokyo's Ministry of Finance showed Tuesday. Tehran's oil was partly displaced by Saudi Arabia, whose exports to Japan shot up 19.6% in the period.
Spanish imports of Iranian crude--one of Iran's top three clients in the European Union--fell by 37% in December on a monthly basis, and Saudi Arabia filled much of that shortfall, according to data released Monday by Madrid's strategic hydrocarbons reserve board Cores. The December figures are the most recently available from Cores.
Japan and Spain didn't say they had cut their Iranian oil purchases because of sanctions, but the moves have occurred as the West ratchets up pressure on Iran's controversial nuclear program. The U.S. is set to ban all oil trades with Iran's central bank, beginning in June. The European Union is then set to embargo all Iranian oil from July 1.
Washington is using the measure as a stick to force Japan and South Korea to consider cuts on Iranian oil supplies or risk being shut out of business on Wall Street.
Yet even before Iran is hammered by these unprecedented measures, narrower sanctions on Iranian banks, oil shipments and insurance that came into force in January are hitting Iran's oil trades. India and China have struggled to find methods to bypass the new banking sanctions while some shippers in Asia refuse to load Iran's crude because they use EU insurance.
"There is emerging evidence that some shipments of Iranian crude oil under existing contracts are being curtailed due to the unwillingness of U.S. and EU insurance providers to cover them," the EIA said Wednesday.
While Iran faces challenges to its oil sales, its customers are offering to buy more crude from rivals in coming months.
India, Iran's second-largest oil buyer, has contacted Saudi Arabia and Iraq in recent days as it seeks fresh supplies for expanding refiners in its new financial year starting in April, according to Indian oil minister Jaipal Reddy.
Even so, Mr. Reddy said India expects its crude imports from the Islamic Republic to be at normal levels, not higher, in the coming months.
For now, Iran says its crude-oil exports are stable at 2.2 million barrels a day.
An oil-tracking expert, who confirmed the shipments were broadly stable, said cuts in oil purchases by some countries were made up by higher Iranian short-term storage at sea, which it counts as exports, and increased buying by others on a temporary basis.
Shipping brokerage ICAP said Friday that Iran is temporarily storing oil outside its territorial waters on four very large crude carriers, each capable of carrying two million barrels of oil. Iran had no short-term floating storage two weeks ago, according to ICAP.
But such mitigating factors may be short-lived. There is a risk temporary storage may become permanent as Iran faces challenges to selling its crude.
The lack of new demand from non-EU buyers casts doubt on Iran's claim that it can find replacements for sales lost due to Brussels' ban.
Trevor Houser, a partner at New York-based economic research firm Rhodium Group, said in a note Wednesday that he expects 650,000 to 775,000 barrels a day of Iranian crude "will be looking for a new home" by the summer.
Ehsan Ul-Haq, a senior staff consultant at U.K.-based KBC Advanced Technologies PLC, forecasts an even larger drop in Tehran's oil exports. He said they would fall by about half to 1.1 million or 1.2 million barrels a day by early May.
Iran's oil minister Rostam Ghasemi appeared to acknowledge the problem when he said last month that the country planned to curb crude-oil exports.
But if Iran's exports decline, as many experts expect, then other oil producers such as Saudi Arabia will need to draw on their own spare production capacity, reducing the cushion of available oil production to uncomfortable levels and boosting global oil prices.
The EIA said Wednesday that global spare oil production capacity was at 2.5 million barrels a day, its lowest level since late 2008. That level is "modest" when "considered in the context of current geopolitical uncertainties, including, but not limited to, the situation in Iran," the administration said.
The EIA defines spare capacity as the amount of additional oil production that can be brought onstream within 30 days and sustained for at least 90 days.
"Low spare oil production capacity tends to be associated with high oil prices and high oil price volatility," it said.
Sarah Kent contributed to this article.
Write to Benoît Faucon at benoit.faucon@dowjones.com and Summer Said at summer.said@dowjones.com
Credit: By Benoît Faucon And Summer Said
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 3, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926027955
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926027955?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
U.S. News: BP Reaches Settlement Over Damage From Oil Spill
Author: Fowler, Tom
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]03 Mar 2012: A.2.
ProQuest document link
Abstract:
In a court order Friday night, U.S. District Judge Carl Barbier of the Eastern District of Louisiana said Magistrate Judge Sally Shushan, who was meeting with the parties, has now advised the Court that Plaintiffs' counsel and counsel for BP have reached an agreement on the terms of a proposed class settlement which will be submitted to the Court for approval . . . .
Full text: BP PLC has settled out-of-court with lawyers acting on behalf of thousands of individuals and businesses affected by the Deepwater Horizon disaster. Terms of the deal weren't immediately available.
In a court order Friday night, U.S. District Judge Carl Barbier of the Eastern District of Louisiana said Magistrate Judge Sally Shushan, who was meeting with the parties, "has now advised the Court that Plaintiffs' counsel and counsel for BP have reached an agreement on the terms of a proposed class settlement which will be submitted to the Court for approval . . . . "
As a result, Judge Barbier adjourned the start of a civil trial that was set to start Monday.
The settlement comes five days after an 11th-hour decision to delay the start of a consolidated trial to determine culpability for the explosion of a BP-operated rig that killed 11 and unleashed an 87-day oil spill, the biggest offshore spill in U.S. history.
The Wall Street Journal reported previously that the settlement talks were focused around the balance of a $20 billion fund that BP had set up to compensate Gulf Coast residents and businesses impacted by the spill, which could total around $14 billion. The money may also include a sum equal to what plaintiffs believed they could have won from the trial in punitive damages.
BP has paid some $6.1 billion to more than 200,000 individuals and businesses through the Gulf Coast Claims Facility. An additional $400 million in payments have been offered by the fund but haven't yet been completed.
Credit: By Tom Fowler
Subject: Settlements & damages; Trials; Oil spills
Location: United States--US
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.2
Publication year: 2012
Publication date: Mar 3, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926192554
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926192554?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
BP, Plaintiffs Reach Settlement in Gulf Oil Spill Case
Author: Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 Mar 2012: n/a.
ProQuest document link
Abstract:
"The proposed settlement represents significant progress toward resolving issues from the Deepwater Horizon accident and contributing further to economic and environmental restoration efforts along the Gulf Coast," said Bob Dudley, BP Group CEO, in a statement.
Full text: BP PLC has agreed to a settlement with thousands of individuals and businesses affected by the Deepwater Horizon oil spill that the company estimates will cost it about $7.8 billion.
The settlement, which must be approved by a judge before it goes into effect, will create two classes of claims: economic-loss claims and medical claims.
Those under the economic-loss category will include businesses, property owners and individuals along the Gulf of Mexico who sustained economic damage from the 87-day oil spill, the biggest offshore spill in U.S. history.
The medical claims class will include a wide range of individuals who may have health problems because of the spill, including tens of thousands of clean-up workers. Those individuals may be eligible for medical consultation services for the next 21 years.
While the settlement does not put a cap on the total payments BP will make, the company estimates it will cost about $7.8 billion to cover the claims, including about $2.3 billion to help resolve economic-loss claims related to the Gulf seafood industry.
"This settlement will provide a full measure of compensation to hundreds of thousands--in a transparent and expeditious manner under rigorous judicial oversight," said Stephen Herman and James Roy, attorneys for the plaintiff's group in a statement. "It does the greatest amount of good for the greatest number of people."
BP said the payments would come from the balance of a $20 billion fund it set up previously to compensate Gulf Coast residents and businesses affected by the spill. The company said it didn't expect to increase the $37.2 billion charge it previously recorded in its financial statements for spill-related costs.
"The proposed settlement represents significant progress toward resolving issues from the Deepwater Horizon accident and contributing further to economic and environmental restoration efforts along the Gulf Coast," said Bob Dudley, BP Group CEO, in a statement.
The settlement doesn't cover claims against BP by the U.S. Department of Justice or other federal agencies for violations of the Clean Water Act or by states and local governments. BP has been in off-and-on discussions with the government over those issues in the past.
A Justice Department spokesman said he hoped a settlement would "provide swift and sure compensation to those harmed by the Deepwater Horizon oil spill," but he reiterated comments made by Attorney General Eric Holder before Congress recently that the government would continue to pursue the full range of claims against the companies involved.
"Although we remain open to a fair and just settlement, we are fully prepared to try the case," spokesman Wyn Hornbuckle said in a statement.
BP has paid some $6.1 billion to more than 200,000 individuals and businesses through the Gulf Coast Claims Facility, a process overseen by Washington, D.C. attorney Kenneth Feinberg, who was appointed to the post by the government. An additional $400 million in payments have been offered by the fund but haven't yet been completed.
The GCCF will be dismantled following the settlement, but a new system for reviewing and approving claims will be established that will be run by the plaintiffs' attorneys and overseen by the courts.
Late Friday, U.S. District Judge Carl Barbier of the Eastern District of Louisiana said that because the settlement "would likely result in a realignment of the parties," the civil trial set to start Monday would be adjourned so the sides could reassess their positions. No new date was set.
The settlement doesn't resolve claims the plaintiffs may make against Transocean, the owner of the Deepwater Horizon rig; cement contractor Halliburton, or blowout preventer-manufacturer Cameron.
BP has filed cross-claims with those companies claiming they are partially culpable for the accident--claims those companies have denied.
A spokesman for Transocean said the settlement does "not change the facts of this case and we are fully prepared to argue the merits of our case based on those facts."
A spokeswoman for Halliburton said the company will continue to defend its position that it is not at fault in the accident.
Write to Tom Fowler at tom.fowler@wsj.com
Credit: By Tom Fowler
Subject: Oil spills; Litigation; Settlements & damages
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 3, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926410665
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926410665?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
BP, Plaintiffs Reach Settlement in Gulf Oil Spill Case
Author: Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]04 Mar 2012: n/a.
ProQuest document link
Abstract:
"The proposed settlement represents significant progress toward resolving issues from the Deepwater Horizon accident and contributing further to economic and environmental restoration efforts along the Gulf Coast," said Bob Dudley, BP Group CEO, in a statement.
Full text: BP PLC has agreed to a settlement with thousands of individuals and businesses affected by the Deepwater Horizon oil spill that the company estimates will cost it about $7.8 billion.
The settlement, which must be approved by a judge before it goes into effect, will create two classes of claims: economic-loss claims and medical claims.
Those under the economic-loss category will include businesses, property owners and individuals along the Gulf of Mexico who sustained economic damage from the 87-day oil spill, the biggest offshore spill in U.S. history.
The medical claims class will include a wide range of individuals who may have health problems because of the spill, including tens of thousands of clean-up workers. Those individuals may be eligible for medical consultation services for the next 21 years.
While the settlement does not put a cap on the total payments BP will make, the company estimates it will cost about $7.8 billion to cover the claims, including about $2.3 billion to help resolve economic-loss claims related to the Gulf seafood industry.
"This settlement will provide a full measure of compensation to hundreds of thousands--in a transparent and expeditious manner under rigorous judicial oversight," said Stephen Herman and James Roy, attorneys for the plaintiff's group in a statement. "It does the greatest amount of good for the greatest number of people."
BP said the payments would come from the balance of a $20 billion fund it set up previously to compensate Gulf Coast residents and businesses affected by the spill. The company said it didn't expect to increase the $37.2 billion charge it previously recorded in its financial statements for spill-related costs.
"The proposed settlement represents significant progress toward resolving issues from the Deepwater Horizon accident and contributing further to economic and environmental restoration efforts along the Gulf Coast," said Bob Dudley, BP Group CEO, in a statement.
The settlement doesn't cover claims against BP by the U.S. Department of Justice or other federal agencies for violations of the Clean Water Act or by states and local governments. BP has been in off-and-on discussions with the government over those issues in the past.
A Justice Department spokesman said he hoped a settlement would "provide swift and sure compensation to those harmed by the Deepwater Horizon oil spill," but he reiterated comments made by Attorney General Eric Holder before Congress recently that the government would continue to pursue the full range of claims against the companies involved.
"Although we remain open to a fair and just settlement, we are fully prepared to try the case," spokesman Wyn Hornbuckle said in a statement.
BP has paid some $6.1 billion to more than 200,000 individuals and businesses through the Gulf Coast Claims Facility, a process overseen by Washington, D.C. attorney Kenneth Feinberg, who was appointed to the post by the government. An additional $400 million in payments have been offered by the fund but haven't yet been completed.
The GCCF will be dismantled following the settlement, but a new system for reviewing and approving claims will be established that will be run by the plaintiffs' attorneys and overseen by the courts.
Late Friday, U.S. District Judge Carl Barbier of the Eastern District of Louisiana said that because the settlement "would likely result in a realignment of the parties," the civil trial set to start Monday would be adjourned so the sides could reassess their positions. No new date was set.
The settlement doesn't resolve claims the plaintiffs may make against Transocean, the owner of the Deepwater Horizon rig; cement contractor Halliburton, or blowout preventer-manufacturer Cameron.
BP has filed cross-claims with those companies claiming they are partially culpable for the accident--claims those companies have denied.
A spokesman for Transocean said the settlement does "not change the facts of this case and we are fully prepared to argue the merits of our case based on those facts."
A spokeswoman for Halliburton said the company will continue to defend its position that it is not at fault in the accident.
Write to Tom Fowler at tom.fowler@wsj.com
Credit: By Tom Fowler
Subject: Oil spills; Litigation; Settlements & damages
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 4, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926052719
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926052719?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
The Week Ahead; Looking Into Energy Industry's Future; Officials and Executives to Gather in Houston to Discuss Oil Prices
Author: González, Ángel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]04 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: The globe's energy elite is gearing up for its own version of Davos--sans the skiing.
Starting Monday, some of the world's top energy officials and executives will gather at IHS Cambridge Energy Research Associates' annual CERA Week conference in Houston.
The conference, which provides a barometer of the industry, comes at a critical time. Fears that Iran may disrupt crude supplies have pushed global oil future prices to 10-month highs.
Daniel Yergin--the author of Pulitzer Prize-winning oil-history book "The Prize," and IHS CERA's chairman--said that rising oil prices in 2008 helped spark the global recession--and the current upswing is unsettling.
"We're in a different economic circumstance but I think clearly people in Washington are worried," Mr. Yergin said in an interview.
Powerful oil executives for years have chosen CERA Week to make important announcements. Exxon Mobil Corp., the world's largest publicly traded oil company, used it as a platform when--in front of thousands of industry executives and hundreds of reporters--it openly softened its skepticism on global warming in 2007. This year, Exxon Chief Executive Rex Tillerson will ring in on government-industry relationships, said Mr. Yergin.
Royal Dutch Shell PLC CEO Peter Voser, Eni SpA CEO Paolo Scaroni, Dow Chemical Co. CEO Andrew Liveris, Statoil ASA CEO Helge Lund and General Electric Co. CEO Jeffrey Immelt will also air their views on a wide variety of industry-related topics.
The governors of Ohio and Colorado, John Kasich and John Hickenlooper respectively, will also participate, as well as Daniel Poneman, deputy U.S. secretary of energy.
In addition to the possibility of high crude prices destroying demand in a budding economic recovery, these energy aristocrats are faced with what Mr. Yergin said is a changing energy landscape.
For instance, the U.S. is once again--for the first time in decades--flexing its muscles as an energy producer.
Statoil's North America head Bill Maloney said CERA Week comes as industry observers are seriously pondering whether the U.S. has the potential to be energy independent. "People haven't had that serious discussion since World War II," Mr. Maloney, who will speak at the conference, said in an interview. "The only thing that's dampening the enthusiasm in the energy industry is where the natural-gas price is." Abundant supplies and disappointing consumption have pushed natural-gas prices to 10-year lows earlier this year. Much of that additional fuel has come from shale drilling.
Vast amounts of oil and gas are being unlocked by injecting high-pressure water into shale rock formations--and the extracted fuel is "changing the political dialogue in energy," Mr. Yergin said. The Obama administration, which began very focused on renewables, now talks about hydrocarbon sources of energy, like oil and natural gas, as critical for jobs and economic growth. Meanwhile, the specter of rising gasoline prices is going to be a "very central issue in the political campaign" for the U.S. presidency, Mr. Yergin said.
When combined with growing oil production in Canada and Brazil, the U.S. energy bounty is reshaping the flow of global oil, Mr. Yergin said. And it is providing some relief from what could possibly be even higher oil prices as the West deals with Iran's nuclear ambitions. "This is not a miracle offset, but it's an offset," he said.
Another issue to be discussed: the future of nuclear energy. It has been nearly a year since a massive earthquake in Japan created a nuclear crisis there--and dashed growing hopes that the nuclear industry would see a major renaissance in the U.S. and Western Europe. Mr. Yergin believes now is the time to revisit the safety--and future--of nuclear power. With all of the questions surrounding the industry, it isn't surprising that the 31st incarnation of the CERA Week conference is titled "The Quest"--the same as Mr. Yergin's latest book, which was launched last year.
The Week Ahead looks at coming corporate events.
Credit: By Ángel González
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 4, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926079357
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926079357?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
For Europe, Costly Oil Could Be 'the New Greece'
Author: Kent, Sarah
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]04 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Concerns over the surging cost of Brent crude are growing as analysts warn that Europe could be at the center of an oil-price shock.
Rising oil prices have leapt ahead of the long-running euro-zone debt crisis as the most pressing problem facing the global economy, according to some analysts. HSBC labeled oil's remorseless climb "the new Greece," in a nod that worries over global contagion from Europe have receded for now.
Higher oil prices are expected to weigh heavily on the Continent's sluggish economy, while supply disruptions and resilient crude demand in emerging markets mean relief from lower prices will be slow in coming.
Consumers in some areas of Europe are already paying record prices for oil at the pump, after Brent reached records in euro and sterling terms in recent weeks. That feeds into higher prices for other goods as well as reducing consumers' disposable income.
The fraught relationship between Iran and the West has left the market nervous about supply disruptions, while domestic upheaval in South Sudan, Syria and Yemen have already dented exports of oil from those countries this year.
Brent hit [euro]94.80 and £79.09 a barrel Thursday before retreating on Friday after Saudi officials denied a report from an Iranian news agency of a pipeline blast in Saudi Arabia. The front-month Brent contract for April delivery fell $2.55, or 2%, to settle at $123.65 on Friday, still its fourth-highest close of 2012 and up 15% this year.
Neil Dutta, a U.S. economist at Bank of AmericaMerrill Lynch, described the impact of high oil prices on the global economy as "an unambiguous negative" and said Europe is more likely to fall into a deeper recession as a result.
Analysts at UBS estimate that each $10 rise in the price of oil equates to a 0.2 to 0.3 percentage point hit to European growth if the price increase is purely driven by supply disruptions. Because expectations of stronger demand have also contributed to this year's higher prices, the pain may not be this severe, they said.
Still, the impact on the economy is already becoming apparent.
The inflation rate rose to 2.7% in February, from 2.6% in January, according to preliminary figures from Eurostat, the European Union's statistics agency, further above the European Central Bank's target of slightly less than 2%.
In the U.K., manufacturers' costs for raw goods rose strongly in February, largely because of higher oil prices, while new orders slowed, according to a survey of purchasing managers.
"If this combination of rising costs and weak demand persists, sustaining output growth and job creation will become increasingly difficult," said Rob Dobson, senior economist at Markit, the data company that produced the survey.
Moreover, increasingly tight sanctions on Iran are likely to hit oil supply to Europe the hardest. The region, which is a significant buyer of Iranian crude, will impose a full embargo on the country's oil beginning July 1.
"You're talking about [Europe being] the epicenter of the crisis," Mr. Dutta said.
Italy, Spain and Greece all rely on Iran for a significant proportion of their oil needs.
The power of European consumers to influence the global oil market through weaker demand is limited, as soaring growth in industrializing Asian economies has shifted the drive of oil demand eastward.
"We would need a demand slump across the board like in 2008 to see a sharp price decline, especially given price-supporting factors, such as supply risks and ample liquidity" provided by central banks that has encouraged some to buy riskier assets, such as commodities, said Carsten Fritsch, an analyst at Commerzbank.
Analysts at Bank of AmericaMerrill Lynch said in a note published last week, that $130-a-barrel should be seen as a key threshold for Brent, above which oil prices could help trigger a global recession. However, other analysts said the squeeze point was likely higher.
Alex Brittain contributed to this article.
Credit: By Sarah Kent
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 4, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926083328
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926083328?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Gives Economy Both Barrels
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]04 Mar 2012: n/a.
ProQuest document link
Abstract:
The U.S. shows more resilience, helped by cheap natural gas and rising domestic oil output. According to RBC Capital Markets, at $4 a gallon, the average driver's 2012 gasoline bill would be the highest in real terms since 1980.
Full text: Most drivers are familiar with the nagging refrain of "Are we there yet?" But with gasoline heading back to $4 a gallon on average, it takes on more urgency: Oil can't go much higher without derailing the economy.
Brent crude oil is back above $120 a barrel. Looked at on a 12-month rolling average, it is now 6% above its prior 2008 peak. U.S. gasoline demand is down almost 7% year-on-year. This year, Europe is forecast to consume 10% less oil than it did in 2008. Global demand is still forecast to rise, but only in emerging markets.
Oil's high price greases this transfer of demand from the West to the rest. While mature economies are forced to brainstorm efficiencies, emerging markets offset the pain with faster economic growth and, often, consumer subsidies.
At some point, though, oil prices overwhelm everyone. Efficiencies take time to develop: The faster way to lower consumption is recession. In emerging markets, high oil prices stoke inflation and make subsidies unmanageable.
There are signs of this already. Weak European economies importing oil, such as Greece's, suffer most. Priced in euros, Brent has breached its earlier 2008 peak already. The U.S. shows more resilience, helped by cheap natural gas and rising domestic oil output. Industry, notably auto makers and airlines, have also retooled for a world of high oil prices.
But the U.S. also has its limit. According to RBC Capital Markets, at $4 a gallon, the average driver's 2012 gasoline bill would be the highest in real terms since 1980. Based on gasoline's current price structure, $4 a gallon implies an oil price of $128 a barrel.
That is very close to BofA Merrill Lynch's estimate of the $130 tipping point for the world economy. At that level, says strategist Francisco Blanch, energy costs would equate to 9% of global gross domestic product, a point also reached in the dire years of 2008 and 1980.
Other asset markets betray oil-price pressures. After jumping in January, airline stocks fell sharply. Meanwhile, UBS strategist Bhanu Baweja cites the recent rollover in the Dow Jones Transportation Average. He also points out that inflation in emerging markets such as India, South Korea, Mexico, Brazil and Turkey is already close to or above central-bank targets. Higher oil prices could force them to take action.
And after January's rally, copper prices are stalling in a repeat of last year. Copper faltered in February 2011, when oil jumped not on optimism but on Libyan unrest. At that point, oil went from being a symptom of economic recovery to a threat to it.
Today, oil trades 35% above the cost of producing the world's most expensive barrel, according to Sanford C. Bernstein. That premium to the marginal cost of output speaks more to fear of supply shocks combined with a dash of easy monetary policy than expectations of sunny times ahead.
The danger that the oil rally chokes off growth, and thereby sows the seeds of its own eventual correction, is clear.
Write to Liam Denning at liam.denning@wsj.com
Credit: By Liam Denning
Subject: Petroleum industry; Economic growth; Gasoline; Recessions; Gross Domestic Product--GDP
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 4, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926083331
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926083331?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iraqi South Oil Official Allegedly Took Bribes
Author: Hassan Hafidh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 Mar 2012: n/a.
ProQuest document link
Abstract:
The investigation is now focused on the head of a department at South Oil Co.--Iraq's largest state-owned oil company--who allegedly received bribes, said Uday Awad, a leading member of the parliament's oil and energy committee, who also represents the largest parliamentarian bloc, the Shiite National Alliance.
Full text: A department head at Iraq's South Oil Co. has fled from the country after being accused of accepting bribes paid by a subsidiary of Australian construction firm Leighton Holdings Ltd. to help it secure contracts in southern Iraq, two Iraqi lawmakers said Monday.
The investigation has advanced since Thursday, when the Iraqi Oil Ministry's inspector general told Dow Jones Newswires it wasn't yet clear whether Iraqi parties were involved in the bribes allegedly paid by Leighton to secure Iraqi contracts, and that no conclusions had been reached.
A Leighton Holdings spokesman Monday said, "We are precluded from saying anything or responding as this matter is subject to a federal police investigation."
Leighton Holdings last month said it had voluntarily alerted Australian federal police to possible corruption by Leighton Offshore in Iraq.
The investigation is now focused on the head of a department at South Oil Co.--Iraq's largest state-owned oil company--who allegedly received bribes, said Uday Awad, a leading member of the parliament's oil and energy committee, who also represents the largest parliamentarian bloc, the Shiite National Alliance.
Mr. Awad, however, said that the head of the SOC department, whom he declined to name because the investigation is ongoing, could have played the role of a front man for other senior officials to receive the bribes. He said the senior SOC official has fled from Iraq to a neighboring country.
A group of Iraqi parliament members recently visited the South Oil Co. in Basra, where the company's director general told them the accused individual has been identified and is under investigation, Mr. Awad said.
Mansor al-Timimi, a leading member of parliament from Basra in southern Iraq, which is home to SOC headquarters, also said the SOC senior official who is under investigation had already left Iraq.
A South Oil Co. official Monday said the oil ministry had investigated the SOC department head, and that the man had been moved from his post before he left Iraq.
"We are hearing that he has already fled the country," the SOC official said.
The Iraqi oil ministry wasn't available for comment.
Caroline Henshaw in Sydney contributed to this article.
Credit: By Hassan Hafidh
Subject: Iraq War-2003; Criminal investigations; Bribery
Location: Iraq
Company / organization: Name: South Oil Co; NAICS: 211111; Name: Leighton Holdings Ltd; NAICS: 551114; Name: Dow Jones Newswires; NAICS: 519110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 5, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926180303
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926180303?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Democrats to CFTC: Rein In Speculative Oil Trades
Author: Tracy, Tennille
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 Mar 2012: n/a.
ProQuest document link
Abstract:
WASHINGTON--Democrats are urging the Obama administration to take swift action to reduce speculative trading in the oil markets as crude prices hover around $107 a barrel and gasoline climbs to about $3.80 a gallon. on Monday, nearly 70 House and Senate lawmakers pressed the commission to enforce caps on speculative trading adopted in October under the Dodd-Frank financial-overhaul law.
Full text: WASHINGTON--Democrats are urging the Obama administration to take swift action to reduce speculative trading in the oil markets as crude prices hover around $107 a barrel and gasoline climbs to about $3.80 a gallon.
on Monday, nearly 70 House and Senate lawmakers pressed the commission to enforce caps on speculative trading adopted in October under the Dodd-Frank financial-overhaul law. The lawmakers said in their letter that it was irresponsible to delay enforcement in light of rising energy costs.
"We have a responsibility to ensure that the price of oil is no longer allowed to be driven up by the same Wall Street speculators who caused the devastating recession that working families are now experiencing," said the lawmakers, led by Sen. Bernie Sanders (I., Vt.), a vocal critic of speculative trading in the oil markets.
The CFTC said it looks forward to responding to the letter.
The role of speculative traders in the oil markets has been debated for several years. In 2008, when crude prices spiked to $147 a barrel, lawmakers said Wall Street traders were inflating the prices for their own personal gain. Some energy experts counter that speculative traders have no real impact on global energy prices.
Position limits on speculative trading were passed by the CFTC in October, but enforcement has been delayed because of lingering questions over swaps, a complex financial instrument.
Facing high gas prices during a re-election campaign, President Obama has played down the need and effectiveness of short-term solutions. During recent speeches on energy policy, President Obama has conveyed the idea that oil prices are determined by global forces that develop over several years.
Write to Tennille Tracy at tennille.tracy@dowjones.com
Credit: By Tennille Tracy
Subject: Petroleum industry; Legislators; Prices
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 5, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926189815
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926189815?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Sudan, South Sudan Resume Oil Talks
Author: Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 Mar 2012: n/a.
ProQuest document link
Abstract:
According to Kirr, South Sudan isn't ready to accept Sudan's demand of $32 in transit fees per barrel of oil. Since South Sudan halted oil shipments, a lifeline for both countries; tensions have been mounting, resulting in clashes along the common border.
Full text: KAMPALA, Uganda--South Sudan and Sudan are set to resume negotiations Tuesday over disputed oil-transit fees as tensions escalate along their common border, officials said Monday.
A delegation from South Sudan, led by the chief negotiator, Pagan Amum, flew to Addis Ababa, the Ethiopian capital, Monday for talks with Sudanese government officials as the two sides seek a common ground on the dispute, Atif Kirr, the spokesman of South Sudan's ruling Sudan People's Liberation Movement party, told Dow Jones Newswires.
"The negotiators will look at the new proposals from both sides," he said, adding that talks are likely to run until the end of the week.
State-run Sudanese Media Center quoted Al-Zubair Ahmed Al-Hassan, a member of Sudan's negotiating team, as saying that their delegation is considering important strategic arrangements expected to contribute toward finding a solution to the spat.
"The upcoming round of talks is preceded by lengthy study and consultations on the possibility of reaching solutions," he was quoted as saying. "The Sudanese government delegation is fully prepared to exert maximum possible efforts to settle the outstanding issues between the two parties."
Unlike previous talks, this round of negotiations is expected to focus only on the oil issue.
The spat over transit fees escalated in January after Sudan confiscated oil worth $815 million belonging to its Southern neighbor. The newly independent nation promptly halted shipments of as much as 350,000 barrels of oil a day through Sudanese pipelines and ports.
Analysts expect little headway during this week's talks as both sides maintain rigid negotiating positions.
Talks last month broke down after South Sudan accused Sudan of confiscating more oil shipments that had remained in pipelines and storage facilities.
According to Kirr, South Sudan isn't ready to accept Sudan's demand of $32 in transit fees per barrel of oil.
Since South Sudan halted oil shipments, a lifeline for both countries; tensions have been mounting, resulting in clashes along the common border.
Last week, South Sudan accused Sudan of bombing its oil fields in Unity state, a charge denied by Sudan. A week earlier, Sudan had accused South Sudanese troops of invading its Jua region along the poorly defined border.
Aid agencies say that both countries continue to amass troops along their common borders, despite the nonaggression pact signed by the two former civil war foes last month.
Malaysia's state-owned oil-and-gas firm Petroliam Nasional Bhd, one of the largest producers of oil in South Sudan, said Monday that its likely to experience production challenges this year because of the oil-transit spat. The company's 135,000 barrels a day of oil production has been shut since January because of the dispute.
Write to Nicholas Bariyo at nicholas.bariyo@dowjones.com
Credit: By Nicholas Bariyo
Subject: Petroleum industry; International relations-US; Energy economics; Petroleum production
Location: South Sudan
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 5, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926191170
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926191170?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Gives Economy Both Barrels
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 Mar 2012: n/a.
ProQuest document link
Abstract:
The U.S. shows more resilience, helped by cheap natural gas and rising domestic oil output. According to RBC Capital Markets, at $4 a gallon, the average driver's 2012 gasoline bill would be the highest in real terms since 1980.
Full text: Most drivers are familiar with the nagging refrain of "Are we there yet?" But with gasoline heading back to $4 a gallon on average, it takes on more urgency: Oil can't go much higher without derailing the economy.
Brent crude oil is back above $120 a barrel. Looked at on a 12-month rolling average, it is now 6% above its prior 2008 peak. U.S. gasoline demand is down almost 7% year-on-year. This year, Europe is forecast to consume 10% less oil than it did in 2008. Global demand is still forecast to rise, but only in emerging markets.
Oil's high price greases this transfer of demand from the West to the rest. While mature economies are forced to brainstorm efficiencies, emerging markets offset the pain with faster economic growth and, often, consumer subsidies.
At some point, though, oil prices overwhelm everyone. Efficiencies take time to develop: The faster way to lower consumption is recession. In emerging markets, high oil prices stoke inflation and make subsidies unmanageable.
There are signs of this already. Weak European economies importing oil, such as Greece's, suffer most. Priced in euros, Brent has breached its earlier 2008 peak already. The U.S. shows more resilience, helped by cheap natural gas and rising domestic oil output. Industry, notably auto makers and airlines, have also retooled for a world of high oil prices.
But the U.S. also has its limit. According to RBC Capital Markets, at $4 a gallon, the average driver's 2012 gasoline bill would be the highest in real terms since 1980. Based on gasoline's current price structure, $4 a gallon implies an oil price of $128 a barrel.
That is very close to BofA Merrill Lynch's estimate of the $130 tipping point for the world economy. At that level, says strategist Francisco Blanch, energy costs would equate to 9% of global gross domestic product, a point also reached in the dire years of 2008 and 1980.
Other asset markets betray oil-price pressures. After jumping in January, airline stocks fell sharply. Meanwhile, UBS strategist Bhanu Baweja cites the recent rollover in the Dow Jones Transportation Average. He also points out that inflation in emerging markets such as India, South Korea, Mexico, Brazil and Turkey is already close to or above central-bank targets. Higher oil prices could force them to take action.
And after January's rally, copper prices are stalling in a repeat of last year. Copper faltered in February 2011, when oil jumped not on optimism but on Libyan unrest. At that point, oil went from being a symptom of economic recovery to a threat to it.
Today, oil trades 35% above the cost of producing the world's most expensive barrel, according to Sanford C. Bernstein. That premium to the marginal cost of output speaks more to fear of supply shocks combined with a dash of easy monetary policy than expectations of sunny times ahead.
The danger that the oil rally chokes off growth, and thereby sows the seeds of its own eventual correction, is clear.
Write to Liam Denning at liam.denning@wsj.com
Credit: By Liam Denning
Subject: Petroleum industry; Economic growth; Gasoline; Recessions; Gross Domestic Product--GDP
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 5, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926212977
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926212977?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
South Sudan to Get Oil Out With Trucks
Author: Gross, Jenny
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 Mar 2012: n/a.
ProQuest document link
Abstract:
LONDON--South Sudan is planning to export by road at least 10% of its 350,000 barrels-a-day crude oil production while alternative infrastructure is put in place, said Stephen Dhieu Dau, minister for petroleum and mining, without giving a time frame for when this would start.
Full text: LONDON--South Sudan is planning to export by road at least 10% of its 350,000 barrels-a-day crude oil production while alternative infrastructure is put in place, said Stephen Dhieu Dau, minister for petroleum and mining, without giving a time frame for when this would start.
The landlocked country, which sells its crude to refiners in China and Malaysia, has shut down its entire oil output amid a dispute with neighboring Sudan over oil-export transit fees, a move that has contributed to global oil prices in recent days hitting highs last seen in July 2008.
Mr. Dau said the government was planning to use trucks to transport a minimum of 35,000 barrels a day of its production to Kenya's coastal city of Mombasa and to the coast of Djibouti, while pipelines in Kenya and Ethiopia were being built, although he said the plan to export crude by land wasn't yet finalized.
Eric Reeves, an analyst on Sudan and South Sudan and professor at Smith College in Massachusetts, said poor roads between the oil-rich Upper Nile and Unity states would make transport by truck extremely difficult.
"I don't know what the roads can bear, I doubt it is very much, but on the other hand if you are as cash starved as the South is, you are going to do anything you can," said Mr. Reeves.
South Sudan receives 98% of its total revenue from oil, according to the U.S. Department of Energy.
South Sudan and Sudan were scheduled to resume talks Tuesday over oil-transit fees, though analysts are doubtful an agreement can be reached. Last week South Sudan accused Sudan of bombing its oil fields, a charge Khartoum denied, further ratcheting up tensions between the East Africa neighbors, who split into two countries in July.
Also, South Sudan in January accused Sudan of stealing $815 million of its crude oil since December, a charge also denied by Sudan.
South Sudan, which relies on infrastructure and pipelines in Sudan to transport its oil to the sea, has said it will pay less than $1 a barrel in accordance with international norms, while Sudan is asking for $32.20 a barrel.
Meanwhile, South Sudan will by June reach an agreement with companies looking to finance an alternative pipeline in Kenya, Mr. Dau said. The country is in talks with companies in China, Japan, Europe, South Korea and the U.S. about financing a pipeline running through Kenya and another through Ethiopia to Djibouti, he said, without disclosing which companies were involved.
Mr. Dau said in a phone interview, that the pipeline could be built in as little as 12 months.
"We know there are challenges, but we are trying our best because this project is a priority for the nation," he said.
He said the pipeline that traversed Kenya would carry the Nile Blend grade of crude, while the pipeline through Ethiopia would carry Dar Blend.
Mr. Dau also said the government is in talks with trading house Vitol Holding BV to build a refinery in South Sudan, also to be completed within 12 months.
Credit: By Jenny Gross
Subject: Pipelines; Petroleum industry
Location: South Sudan
Company / organization: Name: Smith College; NAICS: 611310
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 6, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926413143
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926413143?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Exxon Asks Iraq for More Time on Kurdish Deal
Author: Hassan Hafidh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 Mar 2012: n/a.
ProQuest document link
Abstract:
The KRG has signed nearly 50 oil and gas deals with international oil companies, mostly second-tier or wildcat explorers, and was hopeful that Exxon's presence would entice other majors.
Full text: Exxon Mobil Corp. has asked the Iraqi central government to give it "few more days" to decide whether or not it will cancel an exploration deal with Iraqi Kurdistan, a deal which Baghdad strongly opposes, a spokesman for Iraq's Deputy Prime Minister for Energy Hussein al-Shahristani said Tuesday.
Iraq has asked the U.S. giant to choose between its deal with the semi-autonomous northern Iraqi region and its central-government contract to develop the 370,000 barrels-a-day West Qurna Phase 1. The impasse means Exxon has also been barred from Iraq's fourth oil-and-gas licensing auction, scheduled for May.
The Iraqi government considers as invalid any deals signed with the Kurdistan Regional Government, or KRG, which in turn insists that such deals comply with the country's constitution. The KRG has signed nearly 50 oil-and-gas deals with international oil companies, mostly second-tier or wildcat explorers, and was hopeful that Exxon's presence would entice other majors.
"[Exxon] has asked the Deputy Prime Minister to give it some more days in order to decide its stance on the contract it signed with Kurdistan," Faisal Abdullah, a spokesman for the Iraqi Oil Ministry, told Dow Jones Newswires. Mr. Abdullah said Exxon's request was submitted last week by a company representative who met with Mr. Shahristani in Baghdad.
The Iraqi government has sent Exxon Mobil three letters asking it to choose between its deal to explore six areas in Kurdistan, and its contract to develop West Qurna Phase 1, which has proven reserves of 8.7 billion barrels.
Mr. Abdullah said the central government is waiting for Exxon's response to its letters, after which Bagdhad will make a decision on the matter.
Last month, Iraq barred Exxon from bidding in its fourth licensing auction in which 12 promising exploration blocks are up for grabs. Exxon has also been excluded from a contract worth up to $10 billion to build a joint water-injection project in southern Iraq.
In December, Iraq's Prime Minister Nouri al-Maliki met with senior Exxon executives during a visit to the U.S., and said afterward that the Irving, Texas-based company had promised to reconsider its dealings with the KRG.
Some of the blocks in the Exxon-KRG deal are in a hotly contested oil-rich territory claimed by both the central government and the KRG, stretching from the Iranian border in the east to the Syrian border in the northwest.
Baghdad has already blacklisted companies that maintain deals with the Kurds, excluding them from working elsewhere in Iraq. Among those is New York, N.Y.-based Hess Corp., which has also been barred from competing in the fourth energy auction.
Tuesday's comments by the Iraqi government led to a large sell-off in shares of Gulf Keystone Petroleum Ltd., which is active in Iraqi Kurdistan. The London-listed explorer has been seen as a potential takeover target following Exxon Mobil's agreement with the KRG, and analysts said the sharp fall in its share price was a sign that some speculative takeover premium was leaking away.
Isabel Ordonez in Houston and James Herron in London contributed to this article.
Credit: By Hassan Hafidh
Subject: Petroleum industry; Prime ministers; Iraq War-2003
Location: United States--US
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 6, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926413860
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926413860?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Taking Stock of a Texas-Size Oil Bet
Author: Jannarone, John
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Investors betting on veteran deal maker Floyd Wilson could see their oil riches get watered down.
After selling Petrohawk Energy, where he was chief executive, to BHP Billiton for $12 billion last year, Mr. Wilson went to run RAM Energy Resources, since renamed Halcón Resources. The plan: issue stock and equity derivatives to shore up Halcón's balance sheet and allow it to acquire assets. The stock has tripled since the deal was announced in December.
Investors may be missing one risk: potentially heavy dilution. According to Halcón's latest filing, it has 99 million shares outstanding. That implies an enterprise value, including net debt, of $949 million, or 13.4 times forecast 2012 earnings before interest, taxes, depreciation and amortization.
But assuming conversion of all recently issued convertible bonds, preferred shares and warrants, the share count would surge to 242 million. If the current share price held, the company's enterprise value would be $1.6 billion, or an eye-watering 22 times Ebitda. The implication is that the stock price would need to fall to accommodate this big increase in the share count.
The potential dilution may be apparent to those following Halcón closely, but others may need to wait until it reports first-quarter results. Even then, some of the potential dilution may not be reflected because the convertibles can't be exercised for two years and warrants receive a special accounting treatment until they are exercised.
Still, it is important to note that all of the securities allow holders to buy stock from the company below the current stock price of $10.24. The $275 million in convertibles and $165 million in warrants both have strike prices of $4.50. The $400 million in preferred securities have a strike price of $9.
Certainly, some investors won't mind a Texas-size valuation if they believe Mr. Wilson can work his magic once again. But before placing bets, it is worth drilling into the share count.
Write to John Jannarone at john.jannarone@wsj.com
Credit: By John Jannarone
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 6, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926433589
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926433589?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Obama Calls for Scrutiny of Possible Oil Speculation
Author: Favole, Jared A
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 Mar 2012: n/a.
ProQuest document link
Abstract:
Gas prices have risen more than 8% in recent months to $3.76 for the average price of a regular gallon of gas, prompting criticism of the president's energy policies and fears that people are illicitly benefiting from the rise.
Full text: WASHINGTON--President Obama said he has asked Attorney General Eric Holder to pay attention to possible price speculation in the oil markets as rising gas costs are raising questions about his handling of the economy.
The president, in his first news conference since November, said he has asked Mr. Holder to "reconstitute" a year-old task force to look into potential oil-price speculation.
"Do you think the president of the United States going into re-election wants gas prices to go up higher?" President Obama said.
Gas prices have risen more than 8% in recent months to $3.76 for the average price of a regular gallon of gas, prompting criticism of the president's energy policies and fears that people are illicitly benefiting from the rise.
President Obama has said the rise isn't the result of his policies, but mostly because of increased demand in countries such as China and fears about a potential military conflict with Iran.
The president said he wants an "all-of-the-above" approach to energy that includes solar, wind and other renewable energies. Republicans have called for increased domestic oil drilling, which President Obama has called a "bumper sticker--it's not a strategy to solve our energy challenge."
Nearly 70 House and Senate lawmakers this week pressed the Commodity Futures Trading Commission to enforce caps on speculative trading adopted in October, saying that it was irresponsible to delay enforcement in light of rising energy costs.
The president said he wants gas prices lower because high prices "hurt families.
"I meet folks every day who have to drive a long way to get to work," he said. "And then filling up this gas tank gets more and more painful, and it's a tax out of their pocketbooks, out of their paychecks."
Tennille Tracy contributed to this article.
Credit: By Jared A. Favole
Subject: Price increases
Location: United States--US
People: Obama, Barack Holder, Eric H Jr
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 6, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926441745
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926441745?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
America Is Stuck With the Mideast; Global oil markets and global commerce mean that American presidents will simply not be able to set this region off to the side.
Author: Walter Russell Mead
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Mar 2012: n/a.
ProQuest document link
Abstract:
In recent weeks, rising Middle East tensions have helped drive up the price of gasoline in the U.S. More price increases will anger voters, scare consumers, and could well knock the nascent U.S. economic recovery on its head. Even as the U.S. reduces its direct dependence on Middle East oil, the global nature of the world oil market, and the effect of supply insecurity in other major markets, which affect our economy given the globalization of commerce, means that American presidents will simply not be able to set this region off to the side.
Full text: The Middle East is on fire. As waves of populist, ethnic and religious unrest sweep the region, long-established regimes totter like ninepins, violent conflicts explode in once-quiet countries, and all the rules seem up for grabs.
The Israeli-Palestinian peace process is on life support and Iran is marching steadily toward obtaining a nuclear weapon. And even as President Obama assures us that he has Israel's back and "will not countenance" Iran getting a nuclear weapon, as he did this week, his administration speaks about "leading from behind" and of a "pivot toward Asia."
Many observers see all this as reflecting a sharp decline in American power. But the reality is more complicated and less dramatic. The reality is that the United States remains the paramount power in the region and will remain committed to it for a long time to come.
In all the tumult and upheaval, it's easy to miss the main point: America's interests in the Middle East remain simple and in relatively good shape. The U.S. wants a balance of power in the region that prevents any power or coalition of powers inside or outside the region from being able to block the flow of oil to world markets by military means. It wants Israel to be secure. And in the middle to long term, it hopes to see the establishment of stable, democratic governments that can foster economic growth and peace.
If it must, the U.S. will act directly and on its own to achieve these goals. But given its global responsibilities and the multitude of issues in which it is concerned, the U.S. by nature is a burden-sharing rather than a limelight-hogging power. It prefers to work with allies and partners, preferably regional partners.
In today's Middle East, core U.S. goals enjoy wide, even unprecedented support. As the Sunni Arab world joins hands with Europe, pushes back against Iran, and works to overthrow Syria's Bashar al-Assad, a strong coalition has formed around Washington's most urgent regional priority--the Iranian drive for regional hegemony capped by its nuclear program.
France and the Arab League cursed the U.S. when it invaded Iraq in 2003; in 2011 they seconded and promoted the overthrow of Libya's Gadhafi. Turkey hesitated but joined. Now, as the crisis in Syria sharpens once again, U.S. objectives command enormous support across the region.
If this is decline, we could use more of it.
Yet those who believe the U.S. can now turn its full attention on Asia, ignoring the unhappy Middle East, miss the degree to which U.S. interests remain deeply bound up in the fate of the region. In recent weeks, rising Middle East tensions have helped drive up the price of gasoline in the U.S. More price increases will anger voters, scare consumers, and could well knock the nascent U.S. economic recovery on its head.
For President Obama, those developments would pretty much doom his re-election efforts. The same will be true of his successors. Even as the U.S. reduces its direct dependence on Middle East oil, the global nature of the world oil market, and the effect of supply insecurity in other major markets, which affect our economy given the globalization of commerce, means that American presidents will simply not be able to set this region off to the side. It is easier to pivot toward Asia than to pivot away from the Middle East. The reality is that the U.S. will have to walk and chew gum at the same time.
The U.S. government first began to play a major role in Middle East power politics after World War II. (As late as World War I, the U.S. stayed resolutely away, refusing to declare war on the Ottoman Empire and rejecting proffered League of Nations mandates over Armenia and Palestine.) That role has never been particularly pleasant. During much of the Cold War, public opinion in much of the Middle East favored the Soviets. America's relations with Israel were never popular in the Arab nations. Friendly regimes left over from the British era toppled in many countries, yielding to radical and anti-American juntas and dictators.
The U.S. changed alliances many times during the Cold War. Egypt started out as a pro-Western country, shifted to radical socialist nationalism, and came back to the West in the late 1970s. Iraq and Iran turned from staunch allies of the U.S. to bitter opponents. The Gulf states and the Saudis had little love for the U.S., but their interests lay so close to ours that most of the time alliances prospered even if friendship soured.
Today the grounds of alliance are once again shifting, and in unpredictable ways. Turkey and the U.S. are closer than they were three years ago; Egypt and the U.S. are further apart. The Saudis if anything are impatient with U.S. moderation on Iran; here they and the Israelis are reciting from the same book of prayers.
Should political conditions change in Iran, the kaleidoscope could change again. Before 1979, the U.S. and Iran were close allies; new leadership in Tehran might seek to rebuild the relationship. The Sunni world will likely divide if the Iranian threat diminishes, and as usual, some Sunni states will want U.S. support to protect them from others.
For now at least, the past looks like a good predictor for the next phase of American engagement with the Middle East. Often hated, rarely loved, the U.S. remains indispensable to the region's balance of power and to the security of the vulnerable oil-producing states on the Gulf. There are many people in the Middle East who would like the U.S. to bow out of the region, and there are many people in the U.S. who would like very much to leave.
For now, both groups must learn to accept disappointment.
Mr. Mead is a professor of foreign affairs and humanities at Bard College. His blog, , appears at the American Interest Online.
Credit: By Walter Russell Mead
Subject: Nuclear weapons
Location: United States--US Middle East
People: Obama, Barack
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 7, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926437590
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926437590?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Ties That Bind Oil and Dollar Snap; Traditionally, Crude Fell When Greenback Rose, but Global Influences Have Changed Relationship
Author: Berthelsen, Christian
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Mar 2012: n/a.
ProQuest document link
Abstract:
The surge in oil prices, caused by fears Iran could block oil shipments or halt production in the event of military conflict, coincided with a deepening of Europe's debt crisis, which bolstered the dollar as the euro flagged.
Full text: Rising tensions between Iran and the West are overwhelming a bedrock principle that has dominated the oil market for nearly a decade: Oil prices move in the opposite direction of the dollar.
U.S. oil prices have climbed 12% since early November, with most of those gains coming after U.N. inspectors issued a report saying they suspected Iran was renewing efforts to produce nuclear weapons. The dollar also has strengthened over that period, gaining 4.8% as measured by the ICE U.S. Dollar Index, which weighs the dollar against a basket of other currencies.
The shift has occurred amid a collision between the two investments: The surge in oil prices, caused by fears Iran could block oil shipments or halt production in the event of military conflict, coincided with a deepening of Europe's debt crisis, which bolstered the dollar as the euro flagged. It is unusual because a higher dollar makes dollar-denominated oil more expensive for those buying in other currencies, reducing demand.
It has thrown some trading strategies into disarray. John Kilduff, founding partner of hedge fund Again Capital, says he has at times adjusted his firm's position in oil futures daily based on movements in the dollar, but began disregarding it in December as Iran tensions drove oil prices up and the pairing no longer held. Without the indicator to guide investment direction, his fund has trimmed oil holdings 20%.
"It's disconcerting, when a trade like that works until it doesn't," Mr. Kilduff says.
In recent years, the correlation between oil and the dollar often reached as much as minus-0.9. A reading of minus-1 would mean they move in opposite directions. A reading of 1 means two assets move the same way, while a zero means they have no connection.
Right now, the correlation is 0.3, meaning they more often move in the same direction.
"What relationship?" quipped Alan Ruskin, global head of foreign-exchange strategy for the Group of 10 industrial nations at Deutsche Bank. "The correlation has substantially broken down."
To be sure, many factors can affect the values of both crude oil and the dollar--and correlations can snap back into place quickly. On Tuesday, for example, the historical relationship reasserted itself. The dollar index rose 0.6% on nervousness over the Greek debt restructuring, and oil for April delivery dropped 1.9%, to $104.70 a barrel on the New York Mercantile Exchange.
Some traders say they expect the historical relationship to revert to the mean as soon as Iranian tensions cool. "We see an [inverse] correlation today, so things seem to be righting themselves," Rich Ilczyszyn, oil broker and chief executive of brokerage firm iitrader.com, said Tuesday. "The Iranian situation is starting to loosen up. That may be the cue for the trade to get back to normal."
The last time the relationship broke to this extent, in 2009 and early 2010, investors were betting on an economic recovery that strengthened both commodities and the greenback. That lasted until mid-2010, when riskier assets such as oil sold off amid euro-zone debt woes and investors sought haven in the dollar.
But it is another kind of decoupling this time around, with oil and currencies taking different cues, analysts say. Iran's threat to global oil supplies and continued euro zone woes are likely to dictate oil prices and the dollar's direction for the time being. Already, Iranian officials have threatened to shut down the Persian Gulf's Strait of Hormuz, through which a third of the world's seaborne crude shipments pass. And European nations that import Iranian crude are scrambling to replace those barrels before a European Union ban kicks in.
"As long as Iran is using its oil as a bargaining chip, we will see more irrational plays and more speculative plays" in the oil market, regardless of the dollar's direction, said Hamza Khan, an analyst with research firm the Schork Group. "That will lead to the correlation hovering around zero."
The relationship between the dollar and Brent oil futures, the European benchmark, also has weakened, but to a lesser extent, dropping from -0.8 last June 1 to -0.3 now. Brent on Tuesday declined 1.5% to $121.98 a barrel.
Some investors say the significance of the tie between oil and the dollar was exaggerated, but the trade endured because it became a self-fulfilling prophecy as more people piled in.
"It was only a matter of time until it began to break down," said Mark Vonderheide, managing partner of Geneva Energy Markets, noting the factors that drive oil prices are too complex to be distilled into an exchange rate. "It's getting back to reality now."
Credit: By Christian Berthelsen
Subject: Debt restructuring; Petroleum industry
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 7, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: Engli sh
Document type: News
ProQuest document ID: 926437608
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926437608?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Commodities & Currencies: Ties That Bind Oil and Dollar Snap --- Traditionally, Crude Fell When Greenback Rose, but Global Influences Have Changed Relationship
Author: Berthelsen, Christian
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]07 Mar 2012: C.4.
ProQuest document link
Abstract:
The surge in oil prices, caused by fears Iran could block oil shipments or halt production in the event of military conflict, coincided with a deepening of Europe's debt crisis, which bolstered the dollar as the euro flagged.
Full text: Rising tensions between Iran and the West are overwhelming a bedrock principle that has dominated the oil market for nearly a decade: Oil prices move in the opposite direction of the dollar.
U.S. oil prices have climbed 12% since early November, with most of those gains coming after U.N. inspectors issued a report saying they suspected Iran was renewing efforts to produce nuclear weapons. The dollar also has strengthened over that period, gaining 4.8% as measured by the ICE U.S. Dollar Index, which weighs the dollar against a basket of other currencies.
The shift has occurred amid a collision between the two investments: The surge in oil prices, caused by fears Iran could block oil shipments or halt production in the event of military conflict, coincided with a deepening of Europe's debt crisis, which bolstered the dollar as the euro flagged. It is unusual because a higher dollar makes dollar-denominated oil more expensive for those buying in other currencies, reducing demand.
It has thrown some trading strategies into disarray. John Kilduff, founding partner of hedge fund Again Capital, says he has at times adjusted his firm's position in oil futures daily based on movements in the dollar, but began disregarding it in December as Iran tensions drove oil prices up and the pairing no longer held. Without the indicator to guide investment direction, his fund has trimmed oil holdings 20%.
"It's disconcerting, when a trade like that works until it doesn't," Mr. Kilduff says.
In recent years, the correlation between oil and the dollar often reached as much as minus-0.9. A reading of minus-1 would mean they move in opposite directions. A reading of 1 means two assets move the same way, while a zero means they have no connection.
Right now, the correlation is 0.3, meaning they more often move in the same direction.
"What relationship?" quipped Alan Ruskin, global head of foreign-exchange strategy for the Group of 10 industrial nations at Deutsche Bank. "The correlation has substantially broken down."
To be sure, many factors can affect the values of both crude oil and the dollar -- and correlations can snap back into place quickly. On Tuesday, for example, the historical relationship reasserted itself. The dollar index rose 0.6% on nervousness over the Greek debt restructuring, and oil for April delivery dropped 1.9%, to $104.70 a barrel on the New York Mercantile Exchange.
Some traders say they expect the historical relationship to revert to the mean as soon as Iranian tensions cool. "We see an [inverse] correlation today, so things seem to be righting themselves," Rich Ilczyszyn, oil broker and chief executive of brokerage firm iitrader.com, said Tuesday. "The Iranian situation is starting to loosen up. That may be the cue for the trade to get back to normal."
The last time the relationship broke to this extent, in 2009 and early 2010, investors were betting on an economic recovery that strengthened both commodities and the greenback. That lasted until mid-2010, when riskier assets such as oil sold off amid euro-zone debt woes and investors sought haven in the dollar.
But it is another kind of decoupling this time around, with oil and currencies taking different cues, analysts say. Iran's threat to global oil supplies and continued euro zone woes are likely to dictate oil prices and the dollar's direction for the time being.
The relationship between the dollar and Brent oil futures, the European benchmark, also has weakened, but to a lesser extent, dropping from -0.8 last June 1 to -0.3 now. Brent on Tuesday declined 1.5% to $121.98 a barrel.
Credit: By Christian Berthelsen
Subject: Debt restructuring; Petroleum industry; Crude oil prices; American dollar
Location: United States--US Iran
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Mar 7, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Bank ing And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926497857
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926497857?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Japan, U.S. in 'Final' Talks on Iran Oil Cuts
Author: Iwata, Mari
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Mar 2012: n/a.
ProQuest document link
Abstract:
TOKYO--Japan is in "final stage" talks with the U.S. on cutting its imports of Iranian crude oil, Japan's foreign minister said Wednesday, as the country seeks an exemption from U.S. sanctions on Iran that it says will damage its economy.
Full text: TOKYO--Japan is in "final stage" talks with the U.S. on cutting its imports of Iranian crude oil, Japan's foreign minister said Wednesday, as the country seeks an exemption from U.S. sanctions on Iran that it says will damage its economy.
Koichiro Gemba declined at a news conference to say when or by how much Japan will reduce its imports of Iranian oil, citing a possible destabilizing impact on commodities markets.
The comments come after months of talks between Tokyo and Washington over a Japanese waiver from U.S. sanctions against Iran.
The U.S. announced in February that it would take steps against foreign financial institutions in the U.S. that have dealings with Iran's central bank--the central clearing house for the country's oil transactions.
Washington is trying to pressure Iran amid growing concern that the country is trying to develop nuclear weapons. Iran has said that its nuclear program is for peaceful purposes.
In January, Japanese Prime Minister Yoshihiko Noda told U.S. Treasury Secretary Tim Geithner that such sanctions could seriously weaken Japan's economy. Officials from the two sides have met frequently over the past two months to negotiate a reduction in Japanese imports of Iranian oil in exchange for a waiver from the measures.
To date, Japan's foreign ministry hasn't publicly committed to any specific oil-import reductions from Iran.
The country's oil imports from Iran fell 12% in January compared with a year earlier, much steeper than the 2.1% decline in the total import volume in the month, government data show. The decline is the result of purchasers' attempts to diversify supplies, as well as falling demand due to the weakened economy.
Japanese oil refiners and trading companies have been carefully watching the progress of negotiations, as many contracts under which they import Iranian crude expire March 31, the end of Japan's financial year.
Yasushi Kimura, president of Japan's largest refiner by capacity, JX Nippon Oil & Energy Corp., said recently that he wants to know the government's decision soon so the company can decide whether to renew its term contracts with the Middle Eastern country.
Japan imported 3.6 million barrels of crude oil per day in 2011, with Iranian crude accounting for 8.7%, down from 9.8% in 2010, according to the Ministry of Finance.
In February, a South Korean official told Dow Jones Newswires that the country has won an exemption from U.S. sanctions against Iran and that talks are continuing on cuts to its Iranian oil imports.
Write to Mari Iwata at mari.iwata@dowjones.com
Credit: By Mari Iwata
Subject: Petroleum industry; Sanctions
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 7, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926541296
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926541296?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Crude Oil Gains 1.4%
Author: DiColo, Jerry A
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Mar 2012: n/a.
ProQuest document link
Abstract:
The report on the Fed and Greek debt trumped government data that showed a continued dropoff in U.S. fuel consumption coupled with a smaller increase in crude inventories than analysts and an industry group had forecast.
Full text: NEW YORK--Crude-oil futures prices followed other markets higher Wednesday on speculation about potential Federal Reserve easing measures and increasing commitments by investors to swap Greek debt.
Light, sweet crude for April delivery rose $1.46, or 1.4%, to settle at $106.16 a barrel on the New York Mercantile Exchange, bouncing back from as low as $104.35 earlier in the session. Brent crude on the ICE futures exchange traded $1.85 higher at $124.17 a barrel.
A broad market rally pulled oil higher after a Wall Street Journal report that the U.S. Federal Reserve has added to its potential options with regard to future bond-buying programs, though it hasn't decided to embark on another round of so-called "quantitative easing."
Meanwhile, investors were encouraged by progress on a deal to swap Greek debt, which lowered concerns of further euro-zone economic turmoil that has already cut growth in the region.
Worries about the euro-zone debt crisis have helped to restrain oil prices in recent months, though tensions with Iran have pushed prices in the other direction, with crude hitting a nine-month high of nearly $110 a barrel at the end of February.
Analysts said that both factors continue to create big swings in the oil market.
"The situation with Greek debt is not resolved, Iran is not resolved, and as long as things remain murky, they have the ability to engender a great deal of volatility," said Jason Schenker, head of Prestige Economics.
The report on the Fed and Greek debt trumped government data that showed a continued dropoff in U.S. fuel consumption coupled with a smaller increase in crude inventories than analysts and an industry group had forecast.
The weekly report from the U.S. Energy Information Administration showed declines in demand for gasoline and distillate, a category that includes heating oil and diesel fuel. The data suggested that high prices are only adding to a long-term trend of declining domestic fuel consumption.
EIA data showed four-week gasoline demand fell 7.8% from a year earlier, the biggest ever year-over-year decline since records began in 1991.
Still, crude-oil inventories rose by a modest 800,000 barrels, a relief for some traders after the American Petroleum Institute, an industry group, said late Tuesday that stockpiles rose by 4.6 million barrels last week.
Tony Rosado, a broker with GA Global Markets, cautioned that weak demand and rising stockpiles should keep a lid on prices.
"We seem to be well-supplied," he said.
Front-month April reformulated gasoline blendstock, or RBOB, settled 5.75 cents higher at $3.2874 a gallon. April heating oil settled 3.12 cents higher at $3.2194 a gallon.
Credit: By Jerry A. DiColo
Subject: Petroleum industry; Eurozone
Location: New York
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 7, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926555784
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926555784?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Meet the Nervous Oil Speculators
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Mar 2012: n/a.
ProQuest document link
Abstract:
[...] at least one group of speculators isn't buying into the oil rally: investors in oil and gas company stocks.
Full text: In a familiar ritual, President Barack Obama has called for another crackdown on oil speculators. But at least one group of speculators isn't buying into the oil rally: investors in oil and gas company stocks.
Until March 1, the SIG Oil Exploration & Production index (ticker: EPX) tracked this year's rally in Brent crude oil pretty closely. Since then, they have parted ways. Brent is now up by more than 10%, while the EPX has gained just 5%.
The timing is telling. March 1 happened to be the day that erroneous reports of a Saudi Arabian pipeline explosion caused a brief spike in oil prices. Those frenzied few hours of trading laid bare that fear of a supply disruption is buoying oil prices.
For oil and gas producers, such spikes are briefly exhilarating but portend a letdown. Oil and gas equities aren't valued on Nymex's daily swings, but views about medium-to-long-term energy prices. So oil prices rising on the back of strong economic growth, suggesting energy demand will keep rising sustainably, are best. But with Europe's economy dragging, U.S. gasoline demand last week down 8% year-on-year and China moderating its economic-growth targets, this is hardly the case.
So bullish speculation in oil futures today is largely predicated on a supply shock, not rising demand. Those forces, rather than any White House task force, will ultimately undercut oil prices. That is the message from oil and gas producer stocks.
Write to Liam Denning at liam.denning@wsj.com
Credit: By Liam Denning
Subject: Petroleum industry
People: Obama, Barack
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 7, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926574753
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926574753?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The Nervous Oil Speculators
Author: Denning, Liam
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]08 Mar 2012: C.12.
ProQuest document link
Abstract:
[...] at least one group of speculators isn't buying into the oil rally: investors in oil and gas company stocks.
Full text: [Financial Analysis and Commentary]
In a familiar ritual, President Barack Obama has called for another crackdown on oil speculators. But at least one group of speculators isn't buying into the oil rally: investors in oil and gas company stocks.
Until March 1, the SIG Oil Exploration & Production index tracked this year's rally in Brent crude oil pretty closely. Since then, they have parted ways. Brent is now up by more than 10%, while the EPX has gained just 5%.
The timing is telling. March 1 happened to be the day that erroneous reports of a Saudi Arabian pipeline explosion caused a brief spike in oil prices. Those frenzied few hours of trading laid bare that fear of a supply disruption is buoying the market.
For oil producers, such spikes act like drugs: brief exhilaration followed by an unwelcome come-down. Oil and gas equities are valued less on Nymex's daily swings and more on views about medium-to-long-term energy prices. So oil prices rising on the back of strong economic growth, suggesting energy demand will keep rising sustainably, are best. But with Europe's economy weak, U.S. gasoline demand last week down 8% year on year and China moderating its economic-growth targets, this is hardly the case.
So bullish speculation in oil futures today is largely predicated on a supply shock, not rising demand. Those forces, rather than any White House task force, will ultimately undercut oil prices. That is the message from oil and gas producer stocks.
Credit: By Liam Denning
Subject: Petroleum industry; Speculation; Futures trading; Natural gas industry; Crude oil prices
Location: United States--US
People: Obama, Barack
Classification: 9190: United States; 3400: Investment analysis & personal finance; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.12
Publication year: 2012
Publication date: Mar 8, 2012
column: Heard on the Street
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926634740
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926634740?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Rips U.S. Push on Fracking Oversight; CEO Says Regulators' Efforts Threaten Domestic Output
Author: Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 Mar 2012: n/a.
ProQuest document link
Abstract:
Federal efforts to expand oversight of oil and gas drilling are threatening to derail development of U.S. energy without necessarily improving safety, Exxon Mobil Corp. Chief Executive Rex Tillerson said Thursday.
Full text: Federal efforts to expand oversight of oil and gas drilling are threatening to derail development of U.S. energy without necessarily improving safety, Exxon Mobil Corp. Chief Executive Rex Tillerson said Thursday.
The push by the Environmental Protection Agency and a handful of other agencies to have a say in the controversial drilling technique known as hydraulic fracturing, or "fracking," has had little impact so far on energy giant Exxon, Mr. Tillerson said in an interview following the company's analysts meeting in New York on Thursday.
But the federal effort is hampering state-level regulators, who are primarily responsible for overseeing oil and gas operations and in some cases may be putting off updating rules for fear that they will be overruled by federal laws in the coming years, he said.
An EPA spokesman couldn't be reached to comment.
"Our regulatory process has become so complicated by so many duplicative agencies, by so many mandates from Congress, that now it is become a way to stop things from happening," Mr. Tillerson said. "There are a 1,000 ways you can be told 'no' in this country. So people who want to stop activity have a willing partner in the regulatory process and court system."
It is a message Mr. Tillerson is expected to repeat Friday morning when he delivers a keynote address at the CERA Week conference in Houston, an annual event that draws thousands of energy-industry officials.
During Thursday's meeting, one of the few events during the year where Mr. Tillerson fields questions directly from analysts and reporters, Exxon also said it will maintain its record capital spending levels of about $37 billion per year through 2016, for a total of $185 billion. The estimate is significantly higher than the range the company provided last year of $33 billion to $37 billion a year through 2015. Exxon, based in Irving, Texas, is the largest gas producer in the U.S. and the world's largest publicly traded oil company.
The bulk of Exxon's investment is going to be spent on massive capital projects world-wide, the company said, with a total of 21 major oil and gas projects beginning production between 2012 and 2014. In the meantime, however, the company said its 2012 production would dip by about 3%.
The size of the decline came as a surprise to a number of analysts, including Simmons & Co.'s Guy Baber, who said he was forecasting a 2% drop.
"This is just another example of the industry needing to spend far more just to generate the same, or lower, production output," Mr. Baber said in an email.
Despite weak natural-gas prices, which have reached their lowest level in a decade amid a glut of the fuel source, Exxon says it is making money on its natural-gas operations and doesn't need to dial back on gas drilling, as many of its competitors have done.
Mr. Tillerson said the company continued to consider acquiring individual assets, such as acreage in particular exploration and production areas, as opposed to entire companies.
"But you never rule out anything," he said.
Write to Tom Fowler at tom.fowler@wsj.com
Credit: By Tom Fowler
Subject: Petroleum industry; Hydraulic fracturing; Capital expenditures; Natural gas
Location: United States--US
People: Tillerson, Rex W
Company / organization: Name: Environmental Protection Agency--EPA; NAICS: 924110; Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 8, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926802089
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926802089?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Rises Optimism Over Greek Debt Deal
Author: Bird, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 Mar 2012: n/a.
ProQuest document link
Abstract:
[...] Asian buyers are showing stepped-up interest in North Sea barrels, underpinning prices, as the U.S.-led push for sanctions on Iran has some buyers limiting purchases from that nation, which is the second-biggest oil producer in the Organization of Petroleum Exporting Countries.
Full text: NEW YORK--Crude-oil futures prices settled higher Thursday on growing optimism that the Greek debt-swap deal will be approved, and on rising stocks.
Major Greek and European banks have signaled support for the plan, apparently smoothing its approval. Greece is set to announce the results Friday.
The euro was buoyed by the developments, pushing the dollar down and sparking bargain-buying in oil futures by investors using other currencies.
"There is a feeling that if the Greek situation is sorted out, that would solve all the problems in Europe," said Matt Smith, analyst at Summit Energy. But there is strong concern that North Sea Brent crude prices, nearing the $130-a-barrel level where they last settled in July 2008, could deal a blow to the global economy. Brent traded to record highs Thursday in euro and British pound terms.
Light, sweet crude oil for April delivery on the New York Mercantile Exchange was up 42 cents, at $106.58 a barrel.
ICE North Sea Brent crude for April settled $1.32 higher, at a one-month high of $125.44 a barrel. The spread between the contracts also hit a one-month high of $18.86 a barrel at the settlement.
Gains in the European benchmark, North Sea Brent crude were larger than those registered in the U.S. benchmark crude, amid signs that physical supplies of North Sea crude will be tighter in April than in March. Meanwhile, Asian buyers are showing stepped-up interest in North Sea barrels, underpinning prices, as the U.S.-led push for sanctions on Iran has some buyers limiting purchases from that nation, which is the second-biggest oil producer in the Organization of Petroleum Exporting Countries.
U.S. gasoline prices are liked to Brent prices, and futures settled at levels that suggest a $4-a-gallon national average soon at the pump.
April reformulated gasoline blendstock futures settled 2.66 cents higher at $3.314 a gallon. Given the traditional 70-cent-a-gallon differential between futures and retail prices, this suggests a potential return to an average $4 a gallon at the retail level. Prices came within 3.5 cents of that level last May and haven't topped that mark since July 2008. Government forecasters said this week they expect prices for the month of May to average just below that level.
Rising prices, which have hit monthly record highs since October, are steering a sharp drop in gasoline use. U.S. data released Wednesday showed demand in the last four weeks posted a 7.8% decline from the same period last year. That's the biggest year-on-year decline in any four-week period since 1991.
Heating oil for April delivery settled 5.01 cents higher at $3.2695 a gallon.
Write to David Bird at david.bird@dowjones.com
Credit: By David Bird
Subject: Petroleum industry; Gasoline prices; Futures
Location: United States--US New York
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 8, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926803344
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926803344?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon's Joke on Gas Drillers
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 Mar 2012: n/a.
ProQuest document link
Abstract:
Exxon claims XTO now sits on 82 trillion cubic feet equivalent of resources, which equates to more than three years of the entire gas consumption of the U.S. at the current rate of demand.
Full text: Kicking off Exxon Mobil's latest analyst day, Chief Executive Rex Tillerson joked that New York's springlike temperature Thursday was "wonderful for a visit" but "really bad for natural-gas prices." The punch line is that Exxon itself is bad for gas prices.
On slide 97 of Exxon's presentation, a chart advertised the 81% expansion in the resources of XTO, the U.S. shale-gas business Exxon acquired for $41 billion in 2010. Exxon claims XTO now sits on 82 trillion cubic feet equivalent of resources, which equates to more than three years of the entire gas consumption of the U.S. at the current rate of demand.
As today's moribund U.S. gas prices show, the early stages of the shale gas renaissance are characterized by the rapid expansion of reserves, far outpacing demand. The entry of heavyweights like Exxon to the business exacerbates this by expanding reserves, driving down costs--and exporting the technology and expertise to do the same thing in places ranging from Canada to Argentina.
For smaller producers, all that extra gas in the ground delays ever further the day that demand catches up with supply and gas prices rise. Exxon, meanwhile, can spend its time becoming a lower-cost competitor and finding even more reserves.
In other words, Exxon can afford to play the long game. It can even laugh about it.
Write to Liam Denning at liam.denning@wsj.com
Credit: By Liam Denning
Subject: Natural gas
Location: United States--US New York
People: Tillerson, Rex W
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 8, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926820148
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926820148?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Exxon Rips U.S. Push on Fracking Oversight; CEO Says Regulators' Efforts Threaten Domestic Output
Author: Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 Mar 2012: n/a.
ProQuest document link
Abstract:
A White House spokesman said that "the President has been clear about the importance of domestic oil and gas production, including the central role safe and responsible natural gas development will play in our energy future."
Full text: Federal efforts to expand oversight of oil and gas drilling are threatening to derail development of U.S. energy without necessarily improving safety, Exxon Mobil Corp. Chief Executive Rex Tillerson said Thursday.
The push by the Environmental Protection Agency and a handful of other agencies to have a say in the controversial drilling technique known as hydraulic fracturing, or "fracking," has had little impact so far on energy giant Exxon, Mr. Tillerson said in an interview following the company's analysts meeting in New York on Thursday.
But the federal effort is hampering state-level regulators, who are primarily responsible for overseeing oil and gas operations and in some cases may be putting off updating rules for fear that they will be overruled by federal laws in the coming years, he said.
"Our regulatory process has become so complicated by so many duplicative agencies, by so many mandates from Congress, that now it is become a way to stop things from happening," Mr. Tillerson said. "There are a 1,000 ways you can be told 'no' in this country. So people who want to stop activity have a willing partner in the regulatory process and court system."
It is a message Mr. Tillerson is expected to repeat Friday morning when he delivers a keynote address at the CERA Week conference in Houston, an annual event that draws thousands of energy-industry officials.
A White House spokesman said that "the President has been clear about the importance of domestic oil and gas production, including the central role safe and responsible natural gas development will play in our energy future." He added that the "administration is in the process of developing sensible standards to protect air and water quality, based on important input from stakeholders including industry."
During Thursday's meeting, one of the few events during the year where Mr. Tillerson fields questions directly from analysts and reporters, Exxon also said it will maintain its record capital spending levels of about $37 billion per year through 2016, for a total of $185 billion. The estimate is significantly higher than the range the company provided last year of $33 billion to $37 billion a year through 2015. Exxon, based in Irving, Texas, is the largest gas producer in the U.S. and the world's largest publicly traded oil company.
The bulk of Exxon's investment is going to be spent on massive capital projects world-wide, the company said, with a total of 21 major oil and gas projects beginning production between 2012 and 2014. In the meantime, however, the company said its 2012 production would dip by about 3%.
The size of the decline came as a surprise to a number of analysts, including Simmons & Co.'s Guy Baber, who said he was forecasting a 2% drop.
"This is just another example of the industry needing to spend far more just to generate the same, or lower, production output," Mr. Baber said in an email.
Despite weak natural-gas prices, which have reached their lowest level in a decade amid a glut of the fuel source, Exxon says it is making money on its natural-gas operations and doesn't need to dial back on gas drilling, as many of its competitors have done.
Mr. Tillerson said the company continued to consider acquiring individual assets, such as acreage in particular exploration and production areas, as opposed to entire companies.
"But you never rule out anything," he said.
Write to Tom Fowler at tom.fowler@wsj.com
Credit: By Tom Fowler
Subject: Petroleum industry; Hydraulic fracturing; Capital expenditures; Natural gas
Location: United States--US
People: Tillerson, Rex W
Company / organization: Name: Environmental Protection Agency--EPA; NAICS: 924110; Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 9, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926830953
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926830953?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Corporate News: Exxon Rips U.S. Push on Fracking Oversight
Author: Fowler, Tom
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]09 Mar 2012: B.3.
ProQuest document link
Abstract:
A White House spokesman said that "the President has been clear about the importance of domestic oil and gas production, including the central role safe and responsible natural gas development will play in our energy future."
Full text: Federal efforts to expand oversight of oil and gas drilling are threatening to derail development of U.S. energy without necessarily improving safety, Exxon Mobil Corp. Chief Executive Rex Tillerson said Thursday.
The push by the Environmental Protection Agency and a handful of other agencies to have a say in the controversial drilling technique known as hydraulic fracturing, or "fracking," has had little impact so far on energy giant Exxon, Mr. Tillerson said in an interview following the company's analysts meeting in New York on Thursday.
But the federal effort is hampering state-level regulators, who are primarily responsible for overseeing oil and gas operations and in some cases may be putting off updating rules for fear they will be overruled by federal laws in coming years, he said.
"Our regulatory process has become so complicated by so many duplicative agencies, by so many mandates from Congress, that now it is become a way to stop things from happening," Mr. Tillerson said. "There are a 1,000 ways you can be told 'no' in this country. So people who want to stop activity have a willing partner in the regulatory process and court system."
It is a message Mr. Tillerson is expected to repeat Friday morning when he delivers a keynote address at the CERA Week conference in Houston, an annual event that draws thousands of energy-industry officials.
A White House spokesman said that "the President has been clear about the importance of domestic oil and gas production, including the central role safe and responsible natural gas development will play in our energy future." He added that the "administration is in the process of developing sensible standards to protect air and water quality."
During Thursday's meeting, one of the few events during the year where Mr. Tillerson fields questions directly from analysts and reporters, Exxon also said it will maintain its record capital spending levels of about $37 billion per year through 2016, for a total of $185 billion. The estimate is significantly higher than the range the company provided last year of $33 billion to $37 billion a year through 2015. Exxon, based in Irving, Texas, is the largest gas producer in the U.S. and the world's largest publicly traded oil company.
The bulk of Exxon's investment is going to be spent on massive capital projects world-wide, the company said, with a total of 21 major oil and gas projects beginning production between 2012 and 2014. In the meantime, however, the company said its 2012 production would dip by about 3%.
The size of the decline came as a surprise to a number of analysts, including Simmons & Co.'s Guy Baber, who said he was forecasting a 2% drop.
"This is just another example of the industry needing to spend far more just to generate the same, or lower, production output," Mr. Baber said in an email.
Despite weak natural-gas prices, which have reached their lowest level in a decade amid a glut of the fuel source, Exxon says it is making money on its natural-gas operations and doesn't need to dial back on gas drilling, as many of its competitors have done.
Mr. Tillerson said the company continued to consider acquiring individual assets, such as acreage in particular exploration and production areas, as opposed to entire companies.
"But you never rule out anything," he said.
Credit: By Tom Fowler
Subject: Petroleum industry; Hydraulic fracturing; Federal regulation
Location: United States--US
People: Tillerson, Rex W
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Classification: 4310: Regulation; 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.3
Publication year: 2012
Publication date: Mar 9, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926867634
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926867634?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Repro duced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon to Seek Unified Fracking-Disclosure Rules
Author: Ordonez, Isabel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 Mar 2012: n/a.
ProQuest document link
Abstract:
Exxon and other large international oil companies have recently acquired large shale-land positions in countries such as Poland that they believe could have similar potential as the U.S. But several European countries have recently banned hydraulic fracturing due to environmental concerns.
Full text: HOUSTON--Exxon Mobil Corp. will ask energy-industry partners and governments in Europe to have the same level of disclosure on hydraulic fracturing achieved in the U.S., Chief Executive Rex Tillerson said Friday.
Exxon Mobil, the world's largest publicly traded oil company, will also work to shed light on concerns about hydraulic fracturing as a cause of irregular seismic activity, he said.
"We will be calling on our government and industry partners to implement in Europe the same level of openness and accountability that FracFocus has delivered in the United States," Mr. Tillerson said at a speech delivered at the IHS CERA conference here. "Unconventional gas development holds tremendous promise in many places in Europe. But we want policy makers and the public to be confident in these proven technologies."
FracFocus.org is an industry-supported website where companies can register and disclose the chemicals they use in hydraulic fracturing, or "fracking." The drilling technique involves sending pressurized water and other materials deep underground to release oil and natural gas trapped within rock formations. Hydraulic fracturing has allowed companies to tap vast new reserves of oil and natural gas, but critics have said the process harms the environment.
Exxon and other large international oil companies have recently acquired large shale-land positions in countries such as Poland that they believe could have similar potential as the U.S. But several European countries have recently banned hydraulic fracturing due to environmental concerns.
"An initiative similar to FracFocus in Europe will allow citizens and communities to begin their consideration of this technology with a strong factual foundation," Mr. Tillerson said. "We believe that will lead to open and fruitful discussion about the risks we manage and the benefits we foresee for shale and tight-sand gas-and-oil development in Europe."
Irving, Texas-based Exxon will also help solve concerns about hydraulic fracturing as a cause of earthquakes, Mr. Tillerson said. "We will support the use of sound science to inform reasonable regulatory frameworks," he said.
But although Exxon supports disclosure and smart regulations, the company said the involvement of the federal government in hydraulic fracturing, which has been regulated by local governments, poses a threat to shale development in the U.S.
"Political considerations based on two- and four-year electoral cycles are a significant hindrance to long-term planning and investment, which can affect jobs and competitiveness for decades," Mr. Tillerson said. "This type of dysfunctional regulation is holding back the American economic recovery, growth and global competitiveness."
Shale-gas development on a global scale is still nascent, but the industry it confident that the resources are "significant" enough that, if developed, they could change the world's energy landscape, Mr.Tillerson said. Lack of infrastructure and the massive number of skilled people needed to develop shale resources are the major hurdles, he added.
Separately, Exxon expects world-wide deep-water production to double by 2040, Mr. Tillerson said.
Om Thursday in New York, Mr. Tillerson said his company remains committed to working in both Kurdistan and southern Iraq, despite pressure from the Iraqi central government to have the company cancel its work in autonomous Kurdistan.
"We're committed to both of those developments and indicated to the government our intention to continue our commitments in both West Qurna (southern Iraq) and Kurdistan," Mr. Tillerson said Thursday in a press conference at the New York Stock Exchange, where the company was holding its annual analyst meeting.
"The country has a lot of issues that it is dealing with that have yet to be resolved. We want to be helpful in that regard and not be a distraction to that, so beyond that I don't think we'll be making any further comments," Mr. Tillerson said.
Tom Fowler contributed to this article.
Write to Isabel Ordonez at Isabel.ordonez@dowjones.com
Credit: By Isabel Ordonez
Subject: Hydraulic fracturing; Petroleum industry; Hydraulics; Natural gas
Location: United States--US
People: Tillerson, Rex W
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 9, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 926949400
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/926949400?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Saudi Arabia Reluctant to Replace Iran Oil
Author: Said, Summer
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 Mar 2012: n/a.
ProQuest document link
Abstract:
The remarks could be an attempt by Saudi Arabia to avoid confrontation with rival producer Iran after an OPEC meeting in June failed to agree, amid bitter discord, over whether to increase oil production, raising questions about the group's credibility.
Full text: KUWAIT CITY--Saudi Arabia, the world's largest oil exporter, is prepared to fill any gap in world oil markets caused by sanctions against Iran, but will do so only reluctantly, an official from the Gulf state said Monday.
"We don't want to replace Iranian oil, and we never said we wanted to. We will step in and fill any gap in the market if needed," said the oil official. "No one is happy with the current situation about the Iranian sanctions. Neither the Americans, the Europeans or Asians are pleased with it."
Saudi Arabia's oil minister, Ali al-Naimi, previously said the Gulf state isn't seeking to replace Iranian crude should foreign sanctions be imposed on Iran, but it could immediately ramp up production by about two million barrels a day if customers were to want more oil.
The kingdom will respond to its customers' demands for more oil, but "it doesn't want to get involved in the politics behind the sanctions," the Saudi official clarified Monday.
The official's comments come ahead of a meeting this week in Kuwait City that will be attended by Iran's oil minister. The meeting is organized by the International Energy Forum, an independent organization based in Riyadh that works with the Organization of Petroleum Exporting Countries, the International Energy Agency, and transit oil countries.
The remarks could be an attempt by Saudi Arabia to avoid confrontation with rival producer Iran after an OPEC meeting in June failed to agree, amid bitter discord, over whether to increase oil production, raising questions about the group's credibility.
Meanwhile, Kuwait intends to boost oil production to four million barrels a day by 2020, Kuwaiti Oil Minister Hani Hussein said Monday in a statement posted on Kuwait's news agency Kuna.
Kuwait is against any new rises in oil prices, "which could be useful in the short run, but surely harmful on the middle and long run," Mr. Hussein said Sunday, on the opening day of the energy forum in Kuwait.
Threat of closure of the Strait of Hormuz, the euro zone's continuing debt problems, speculation and increasing oil prices are all factors that Mr. Hussein cited in what he described as "very critical circumstances across the world, especially the uprising-hit Arab region."
Saudi Arabia's oil output was 9.8 million barrels per day in February, steady with January, and is seen continuing at current high levels amid recent efforts by some countries to switch to crude from the kingdom ahead of stifling sanctions on Iran and its exports later this year.
As the European Union's July 1 deadline for its oil embargo on Iran draws nearer, Japan and Spain have reduced their imports of Iranian crude by 12% and 37% respectively. Neither country has given potential sanctions as a reason for switching producers.
Saudi Arabia's output rose dramatically in November to 10.047 million barrels per day--the highest level in three decades--from 9.362 million barrels per day a month earlier on higher demand from Asia.
Iman Dawoud in Dubai contributed to this article.
Write to Summer Said at summer.said@dowjones.com
Credit: By Summer Said
Subject: Petroleum industry; Petroleum production; Sanctions; Meetings
Location: Saudi Arabia
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 12, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Documenttype: News
ProQuest document ID: 927584755
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/927584755?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Oil Producers Start Worrying About High Prices
Author: Faucon, Benoît; Said, Summer; Hassan Hafidh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 Mar 2012: n/a.
ProQuest document link
Abstract:
KUWAIT CITY--The world's top oil producers are preparing to meet with consumers at a two-day energy summit in Kuwait starting Tuesday, but some of the producers are voicing concern that rising oil prices may backfire by jeopardizing a global economic recovery.
Full text: KUWAIT CITY--The world's top oil producers, preparing to meet with consumers at an energy summit in Kuwait, voiced concern that rising oil prices could jeopardize a global economic recovery.
The comments contrast with previous statements by members of the Organization of Petroleum Exporting Countries that the economy can cope with current oil prices.
While buoyant oil prices are boosting revenue for oil producers, some members of OPEC also say they realize further spikes could hit demand for their crude and ultimately push prices downward.
"When the price is high, it's not good" for oil exporters as well as consumers, Angolan Oil Minister José Maria Botelho de Vasconcelos said ahead of the two-day International Energy Forum.
A fresh rise in international oil prices would harm producers in the medium term, Hani Hussein, the Kuwait oil minister, told the country's official news agency.
Crude prices in New York trading Monday were up 7.6% since the start of the year after Iran threatened to block the Strait of Hormuz, a narrow corridor used to ship a fifth of the world's oil supplies, in response to U.S. sanctions and a European Union decision to ban oil imports from Iran.
Nervousness about rising prices intensified at the beginning of March, reports that a Saudi pipeline had been blown up pushed Brent prices to their highest levels since 2008, when oil reached $147 a barrel and high prices were blamed for worsening the global recession. Prices retreated after Saudi officials dismissed the reports.
Nymex crude oil for April delivery lost $1.06 a barrel, or 0.99%, to close Monday at $106.34 a barrel.
Saudi Arabia, the world's largest oil exporter, is "slightly worried about recent oil price hikes as it isn't based on market fundamentals," a top official from the kingdom said.
Though producers have yet to hit the panic button, there are fears prices may be getting closer to the danger zone. In its monthly report last week, OPEC said U.S. oil consumption data for December showed the worst contraction observed since July 2009. Preliminary data for January and February 2012 have displayed similar drops.
For now, the decline in the West has been offset by Chinese purchases on international oil markets. But the Asian nation has been filling up its crude-oil and products storage in January. That means it could draw into stockpiles and cut imports if it finds global oil too pricey.
A Saudi official said Monday that the kingdom is prepared to fill any gap in world oil markets caused by sanctions against Iran, but will do so only reluctantly.
"We don't want to replace Iranian oil, and we never said we wanted to. We will step in and fill any gap in the market if needed," the oil official said.
Saudi Arabia's oil minister, Ali al-Naimi, has said the Gulf state could immediately ramp up production by about two million barrels a day if customers were to want more oil.
The kingdom will respond to its customers' demands for more oil, but "it doesn't want to get involved in the politics behind the sanctions," the Saudi official said Monday.
The remarks could be an attempt by Saudi Arabia to avoid confrontation with rival producer Iran after an OPEC meeting in June failed to agree, amid bitter discord, over whether to increase oil production.
Saudi Arabia's oil output rose in November to 10.047 million barrels a day--the highest level in three decades--and was steady at 9.8 million barrels in January and February. Saudi output is seen continuing at current high levels amid high demand from Asia.
Write to Benoît Faucon at benoit.faucon@dowjones.com , Summer Said at summer.said@dowjones.com and Hassan Hafidh at hassan.hafidh@wsj.com
Credit: By Benoît Faucon, Summer Said and Hassan Hafidh
Subject: Petroleum industry; Petroleum production; Crude oil prices; Recessions; Sanctions
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 12, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 927596257
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/927596257?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. Bancorp, Exxon Mobil: Money Flow Leaders (USB, XOM)
Author: MARKET DATA STAFF
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: U.S. Bancorp topped the list in late trading for, which tracks stocks that fell in price but had the largest inflow of money. See the.
Exxon Mobil Corp. topped the list for, which tracks stocks that rose in price but had the largest outflow of money. See the.
Go to () for complete coverage.
Credit: By MARKET DATA STAFF
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 12, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 927597816
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/927597816?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Producers Worry About Impact of High Prices on Economy, Demand
Author: Faucon, Benoît; Said, Summer; Hassan Hafidh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: KUWAIT CITY--Representatives of some of the world's top oil producers, preparing to meet with consumers at an energy summit in Kuwait, voiced concern that rising oil prices could jeopardize a global economic recovery.
"When the price is high, it's not good" for oil exporters as well as consumers, Angolan Oil Minister José Maria Botelho de Vasconcelos said before the two-day International Energy Forum.
Buoyant prices have boosted revenue for producers, but some members of the Organization of Petroleum Exporting Countries say they realize further spikes could hit demand for their crude and ultimately push prices down.
Kuwait Oil Minister Hani Hussein told his country's official news agency that a fresh rise in oil prices would harm producers in the medium term.
Such views contrast with earlier statements by members of OPEC that the global economy could cope with current prices.
Crude in New York trading Monday was up 7.6% since the start of the year, when Iran threatened to block the Strait of Hormuz, a narrow corridor used to ship a fifth of the world's oil supplies, in response to U.S. and European Union sanctions.
Nervousness about rising prices intensified at the beginning of March when reports that a Saudi pipeline had been blown up pushed Brent prices to their highest levels in four years. Prices retreated after Saudi officials dismissed the reports. On Monday, Nymex crude oil for April delivery lost $1.06 a barrel, or 0.99%, to close at $106.34 a barrel.
Saudi Arabia, the world's largest oil exporter, is "slightly worried about recent oil price hikes as it isn't based on market fundamentals," a top official from the kingdom said.
In its monthly report last week, OPEC said U.S. oil consumption data for December showed the worst contraction observed since July 2009. Preliminary data for January and February have displayed similar drops.
For now, the decline in the West has been offset by Chinese purchases on international oil markets. But the Asian nation has been filling up its crude-oil and products storage in January. That means it could draw into stockpiles and cut imports if it finds global oil too pricey.
A Saudi official said Monday that the kingdom is prepared to fill any gap in world oil markets caused by sanctions against Iran, but will do so only reluctantly.
"We don't want to replace Iranian oil, and we never said we wanted to. We will step in and fill any gap in the market if needed," the oil official said.
Saudi Arabia's oil minister, Ali al-Naimi, has said the Gulf state could immediately ramp up production by about two million barrels a day if customers were to want more oil.
The kingdom will respond to its customers' demands for more oil, but "it doesn't want to get involved in the politics behind the sanctions," the Saudi official said Monday.
The remarks could be an attempt by Saudi Arabia to avoid confrontation with rival producer Iran after an OPEC meeting in June failed to agree, amid bitter discord, over whether to increase oil production.
Write to Benoît Faucon at benoit.faucon@dowjones.com, Summer Said at summer.said@dowjones.com and Hassan Hafidh at hassan.hafidh@wsj.com
Credit: By Benoît Faucon, Summer Said and Hassan Hafidh
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 13, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 927606631
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/927606631?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
India Minister: Oil Firms Not Hurt by Iran Sanctions
Author: Sharma, Rakesh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: NEW DELHI -- India's state-run oil companies haven't been hurt by sanctions imposed on Iran by the U.S. and European Union, Junior Oil Minister R.P.N. Singh said Tuesday.
"At present, there is no financial implication of the sanctions on our oil public sector undertakings," R.P.N. Singh told lawmakers in a written reply in the upper house of Parliament.
Mr. Singh said India hasn't asked for any exemption from the sanctions, as it isn't under any obligation to observe unilateral sanctions by any country.
He added that India is trying to diversify its sources of crude-oil imports to reduce dependence on any particular region.
Write to Rakesh Sharma at rakesh.sharma@dowjones.com
Credit: By Rakesh Sharma
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 13, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 927673971
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/927673971?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Chevron Says Oil, Gas Output to Jump by 2017
Author: Ordonez, Isabel; Berthelsen, Christian
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Mar 2012: n/a.
ProQuest document link
Abstract:
The company has in place several production-sharing contracts with foreign governments that give more production to national oil companies--and less to international oil companies--when oil prices rise.
Full text: Chevron Corp. said Tuesday its oil-and-gas production will inch up this year but it expects output to jump 20% in five years as massive liquefied-natural-gas projects in Australia begin operations.
During the company's annual meeting with analysts in New York, Chevron executives said production will rise 0.26% to 2.68 million barrels of oil equivalent per day this year and to 3.3 million barrels of oil equivalent per day by the end of 2017. Those estimates are up from the 2.67 million barrels of oil equivalent per day Chevron produced in 2011. The 2017 projection is based on an oil price average of $79 a barrel, the company said.
Chevron, based in San Ramon, Calif., and the second-largest U.S. oil company by market value after Exxon Mobil Corp., said annual production could vary depending on oil prices. The company has in place several production-sharing contracts with foreign governments that give more production to national oil companies--and less to international oil companies--when oil prices rise.
Chevron's future growth will be driven by a handful of large oil and gas projects world-wide. The liquefied-natural-gas Gorgon project in Australia is on track to start production in 2014 and still expected to cost $37 billion, the company said. Construction of development wells is expected to start this year.
Chevron's $29 billion Wheatstone LNG project, also in Australia, is scheduled to start production in 2016.
The first shipment of Chevron's LNG project in Angola is expected in the second quarter and the project is expected to reach peak production of 175,000 barrels of oil equivalent per day.
Asked about the possibility that company could use some of its abundant cash--$15 billion--to increase dividends or make acquisitions, Chevron Chief Executive John Watson said the company's priority is to fund a string of capital projects. The executive, however, hinted things could change once these projects advance. "I don't want to pile up cash on the balance sheet indefinitely," Mr. Watson said. "As we get closer to those projects on line, our need to carry cash on our balance sheet will diminish."
Chevron also answered questions about its outlook for Brazil, where it is facing legal actions from authorities related to an offshore oil spill in November. "It remains to be seen what the future holds for our business there," Mr. Watson said. "We need to be treated fairly and we need to be treated consistently. The rhetoric has been very high."
Chevron, which has already been fined more than $50 million for the spill, said it believes its employees reacted timely and responsibly to the incident.
In Brazil on Tuesday, the new head of the country's National Petroleum Agency, or ANP, said oil regulators aren't ready to allow Chevron to resume offshore drilling because it hasn't proved that the risk of accidents has been reduced. Chevron submitted its report on the accident to ANP officials last week, but regulators didn't agree with the company's conclusion about the causes, ANP Director Magda Chambriard told reporters.
Chevron also said that outside the U.S., it is trying to develop shale gas in countries where there is a market for natural gas, such as Poland, Argentina and China. It said it has begun drilling for unconventional oil and gas resources in China as part of a joint study with China Petrochemical Corp., known as Sinopec Group, which covers 940,000 acres.
In Argentina, the company plans to start exploratory drilling this year in the 110,000 acres it has in El Trapial, while it plans to start its second well in Poland this quarter. The company plans to begin exploration drilling in Romania this year.
Company executives, however, warned global shale-gas exploration is nascent and still uncertain. Unlike the U.S., where companies have already drilled many wells allowing them to understand shale formations, international drilling is beginning and the performance of the formation is basically unknown, executives said.
Speaking to reporters on the sidelines of the meeting, Mr. Watson said low natural-gas prices "have surprised everyone" and that he believes the supply glut caused by the development of shale gas in the U.S. will continue "for some time." Natural-gas prices fell to a fresh decade-low last week below $2.40 per British thermal unit.
Mr. Watson attributed high oil prices to "financial money moving into commodities", international events and a "tightness" in the global supply-demand equilibrium.
The company confirmed that its capital-expenditure budget for this year is expected to be $32.7 billion.
Jeff Fick contributed to this article.
Credit: By Isabel Ordonez And Christian Berthelsen
Subject: Petroleum industry; Balance sheets; Oil spills; Offshore drilling
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 13, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 927748673
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/927748673?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Big Oil, Bigger Taxes; The industry sends more money to Washington than to shareholders.
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]14 Mar 2012: n/a.
ProQuest document link
Abstract:
Crunching Compustat North America numbers, API estimates that the average effective tax rate for oil and gas companies is 41.1% for 2010--i.e., taxes as a share of net income.
Full text: President Obama says he wants to end subsidies for what he calls "the fuel of the past," but lucky for him oil and gas will be the fuels of the future too. His budget-deficit blowout would be so much worse without Big Oil, because the truth is that this industry is subsidizing the government.
Much, much worse, actually. The federal Energy Information Administration reports that the industry paid some $35.7 billion in corporate income taxes in 2009, the latest year for which data are available. That alone is about 10% of non-defense discretionary spending--and it would cover a lot of Solyndras. That figure also doesn't count excise taxes, state taxes and rents, royalties, fees and bonus payments. All told, the government rakes in $86 million from oil and gas every day--far more than from any other business.
Not paying their "fair share"? Here's a staggering fact: The Tax Foundation estimates that, between 1981 and 2008, oil and gas companies sent more dollars to Washington and the state capitols than they earned in profits for shareholders.
Exxon Mobil, the world's largest oil and gas company, says that in the five years prior to 2010 it paid about $59 billion in total U.S. taxes, while it earned . . . $40.5 billion domestically. Another way of putting it is that for every dollar of net U.S. profits between 2006 and 2010, the company incurred $1.45 in taxes. Exxon's 2010 tax bill was three times larger than its domestic profits. The company can stay in business because it operates globally and earned a total net income after tax of $30.5 billion in 2010 on revenues of $370.1 billion.
Meanwhile, Mr. Obama's 2013 budget--like its 2012, 2011 and 2010 vintages--includes a dozen-odd tax increases that would raise the industry's liability by $44 billion over the next decade, according to the White House, and by $85 billion, according to the trade group the American Petroleum Institute (API). At any rate, the President's economists ought to be weeping for joy for the revenue windfall from an industry that grew 4.5% in 2011, compared to overall GDP growth of 1.7%.
Crunching Compustat North America numbers, API estimates that the average effective tax rate for oil and gas companies is 41.1% for 2010--i.e., taxes as a share of net income. That is broadly in line with the Energy Information Administration's estimates for "major energy producers." By the same measure, other manufacturers on the S&P Industrial index pay an effective rate of 26.5%.
Specific oil and gas investments are also taxed at higher rates than other energy plays, which were surveyed in a 2009 paper by economist Gilbert Metcalf, now a deputy assistant Treasury secretary. He found that oil drilling (for an integrated company) clocks in at a 15.2% tax rate, refining at 19.1% and building a natural gas pipeline at 27%.
For comparison, nuclear power comes in at minus-99.5%, wind at minus-163.8% and solar thermal at minus-244.7%--and that's before the 2009 Obama-Pelosi stimulus. In other words, the taxpayer loses more the more each of these power sources produces.
As for the "subsidies" that Mr. Obama says the oil industry receives, these aren't direct cash handouts like those that go to the green lobby. They're deductions from taxes that cover the cost of doing business and earning income to tax in the first place. Most of them are available to other manufacturers.
What Mr. Obama really means is that he wants to put the risky and capital-intensive process of finding, extracting and producing oil and gas at a competitive disadvantage against other businesses. He does so because he ultimately wants to make them more expensive than his favorites in the wind, solar and ethanol industries.
Why he would still want to do this amid the political panic over $4 per gallon gasoline is a mystery. Even Mr. Obama now claims to want lower gas prices, commenting recently that "Do you think the President of the United States going into re-election wants gas prices to go up higher?" Too bad his every policy choice, and especially his tax agenda, would lead to higher prices.
Subject: Tax rates; Natural gas utilities; Economic development; Excise taxes; Tax increases; Net income
People: Obama, Barack
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 14, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 927758293
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/927758293?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
IEA Warns on Global Oil Supply
Author: Herron, James
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]14 Mar 2012: n/a.
ProQuest document link
Abstract:
LONDON--The International Energy Agency warned Wednesday that oil markets are in for a bumpy ride after global oil supply fell by 200,000 barrels a day in February, despite Saudi Arabian production hitting a 30-year high.
Full text: LONDON--The International Energy Agency warned Wednesday that oil markets are in for a bumpy ride after global oil supply fell by 200,000 barrels a day in February, despite Saudi Arabian production hitting a 30-year high.
Numerous supply problems in countries as far apart as Canada and South Sudan more than offset the extra 315,000 barrels a day that took production of the Organization of Petroleum Exporting Countries to a three-year high in February, the IEA said in its monthly report.
This loss of supply comes as sanctions against Iran's central bank are already having a pronounced impact on its oil trade, said the agency.
"Exports of Iranian crude could ultimately be curtailed by around 800,000 to 1 million barrels a day from midyear onwards," it said. "Almost all of Iran's buyers will inevitably scale back volumes in order to avoid falling foul of sanctions."
Oil inventories in Europe and the Pacific--the two areas that will be most affected by sanctions against Iranian oil--are already very tight and there is evidence that consumers are curbing their consumption due to high prices, said the IEA, which represents the interests of major energy-importing rich countries.
Despite this, industry analysts said the impact of sanctions on Iran can still be more than offset by the rest of OPEC, which is already producing 1.3 million barrels a day more oil than the world currently needs.
"We expect other OPEC countries to continue to increase their own production levels," both from existing spare capacity and new projects, said Oswald Clint of Bernstein Research.
Saudi Arabia has already started doing this, but offsetting Iran without pushing spare oil supply capacity too low, "hinges on Iraq, Libya and Nigeria, which is a trio of fairly unstable countries," said Samuel Ciszuk of KBC Energy Economics. This will keep some risk premium in the oil price, he said.
Oil futures ticked up off earlier lows following the IEA report, but remained down on the day due in part to the stronger dollar. The April Brent contract on London's ICE futures exchange was recently down 13 cents at $126.09 a barrel.
A number of European countries have already halted imports of Iranian crude ahead of the July ban and shipping data show that much of the extra 150,000 to 300,000 barrels a day of Saudi exports in February went to Europe and Africa, the IEA said. "Market reports suggest Saudi output will increase in the coming months...incremental volumes might be targeted at Atlantic Basin customers."
An official from Saudi Arabia said Monday that the kingdom is prepared to fill any gap in world oil markets caused by sanctions against Iran, albeit reluctantly. "We don't want to replace Iranian oil and we never said we wanted to. We will step in and fill any gap in the market if needed," the oil official, who asked not to be named, said.
The 500,000 barrel a day drop in oil production outside OPEC in February had many causes, the IEA said. Bad weather hampered the North Sea and maintenance disrupted Canadian oil output; violence hurt production in Syria, Colombia and Yemen; a political dispute between South Sudan and Sudan threatens a prolonged outage there, the IEA said.
The agency forecast that non-OPEC oil supply will still grow by 730,000 barrels a day by the end of 2012, meeting almost all of the anticipated increase in demand, but warned of real risks to this target.
Write to James Herron at james.herron@dowjones.com
Credit: By James Herron
Subject: Petroleum industry; Petroleum production; Sanctions; Energy economics
Location: South Sudan
Company / organization: Name: International Energy Agency; NAICS: 928120; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 14, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 927865375
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/927865375?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
OPEC Blames Speculators for High Oil Prices
Author: Said, Summer; Hassan Hafidh; Faucon, Benoit
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]14 Mar 2012: n/a.
ProQuest document link
Abstract:
The International Energy Agency, however, said Wednesday in its monthly report that global oil supply fell by 200,000 barrels a day in February, despite Saudi Arabian production hitting a 30-year high, as supply from countries outside the Organization of Petroleum Exporting Countries fell by 500,000 barrels a day, putting extra pressure on OPEC's already slim spare production capacity.
Full text: KUWAIT CITY--Leaders of some of the world's largest oil-producing nations Wednesday pinned current high oil prices primarily on market speculators, just as consuming nations warned that the current increased output levels are being more than offset by supply problems.
Brent crude oil prices are up around 17% this year, and in early March hit highs last seen in July 2008. Fears over a loss of Iranian oil supplies amid rising tension with the West over its nuclear program, in addition to supply losses from South Sudan, Yemen, Syria and the North Sea, have fueled concerns over whether tightened global oil supply can meet demand.
Addressing the International Energy Forum of major oil producers and consumers here, Saudi Oil Minister Ali al-Naimi said growing interest in energy commodities as an asset class had increased market speculation, which was based on guesswork that oil supply would be constrained in the future. He blamed speculators' focus on oil futures, without taking delivery of physical oil, for causing volatile price distortions.
Mr. Naimi said the physical oil market is "generally balanced, and there is ample production and refining capacity."
"Saudi Arabia and others remain poised to make good any shortfalls--perceived or real--in crude oil supply," Mr. Naimi said, according to a copy of his remarks, which he made outside the presence of reporters.
The International Energy Agency, however, said Wednesday in its monthly report that global oil supply fell by 200,000 barrels a day in February, despite Saudi Arabian production hitting a 30-year high, as supply from countries outside the Organization of Petroleum Exporting Countries fell by 500,000 barrels a day, putting extra pressure on OPEC's already slim spare production capacity.
Mr. Naimi's speech didn't tackle Iranian threats to close the strategic Strait of Hormuz, through which Persian Gulf producers export around one-fifth of the world's oil supplies, or the disruption such a move would cause a spike in the crude markets.
Iran's Oil Minister Rostam Ghasemi blamed sanctions and the political use of oil by consumer nations for endangering global energy security and contributing to volatile oil prices, saying major energy consumers use oil "as a political tool against oil-producing countries." But U.S. Deputy Energy Secretary Daniel Poneman said Iran's noncompliance with international nuclear safeguards is the underlying case of current oil-market instability.
In recent months, the West has been ratcheting up sanctions on Iran's oil sector over Tehran's nuclear program.
South Korea, for instance, is considering reducing its crude oil imports from sanctions-hit Iran and is in talks with the United Arab Emirates to secure more oil-field contracts, the country's vice minister of knowledge economy said. But Mr. Ghasemi, whose country is the world's fourth-largest crude exporter, also joined Abdalla Salem el-Badri, secretary general of the Organization of Petroleum Exporting Countries, and Mr. al-Naimi in blaming speculation for current high prices.
"The role of oil exchange market in market fluctuations and price volatility cannot be overlooked," he said.
Write to Summer Said at summer.said@dowjones.com, Hassan Hafidh at hassan.hafidh@wsj.com and Benoit Faucon at benoit.faucon@dowjones.com
Credit: By Summer Said, Hassan Hafidh and Benoit Faucon
Subject: Petroleum industry; Crude oil prices; Sanctions; Speculation; Production capacity
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 14, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 927928829
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/927928829?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Rebel Attacks Plague Colombia's Oil Sector
Author: Crowe, Darcy
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]14 Mar 2012: n/a.
ProQuest document link
Abstract:
"Investors are taking notice again of the security situation in the country," said Charle Gamba, chief executive of Calgary oil firm Canacol Energy Ltd. Canacol produced around 13,400 barrels of oil per day in 2011, an example of the small oil firms that have helped boost Colombia's total oil output by braving parts of the country where the military only started to regain control a few years ago.
Full text: BOGOTA--An old threat has resurfaced in Colombia that could derail its booming oil sector: a series of crippling attacks by Marxist rebels against pipelines and oil-truck convoys that the military has been unable to stop.
The new wave of attacks, most of them perpetrated by the Revolutionary Armed Forces of Colombia, or FARC, a half-century-old insurgency, comes just as the government plans to auction 109 oil blocks that are expected to attract some of the largest private oil companies in the world.
This week, two drivers in an oil truck convoy were killed by a roadside bomb that authorities believe was planted by the FARC. A few weeks earlier a smaller guerrilla group, known as ELN, kidnapped and later released unharmed 11 people working for a company building what will be the country's largest oil pipeline.
After reaching a historic low of 31 reported pipeline bombings in 2010, attacks surged to 84 pipeline bombings last year. So far this year there have been 22 attacks.
"Investors are taking notice again of the security situation in the country," said Charle Gamba, chief executive of Calgary oil firm Canacol Energy Ltd.
Canacol produced around 13,400 barrels of oil per day in 2011, an example of the small oil firms that have helped boost Colombia's total oil output by braving parts of the country where the military only started to regain control a few years ago. Gamba said his company is making efforts to work closely with the military to improve security measures.
The Colombian military has responded to the attacks by deploying armored vehicles and bomb-sniffing dogs to protect oil-truck convoys.
Jorge Bedoya, deputy defense minister, said the government will add 5,000 soldiers to the 25,000 soldiers now in the next two years to guard oil operations. Additionally, the government has created joint task forces in some of the areas that are suffering the most frequent bombings and is deploying electronic surveillance systems to protect pipelines.
"We acknowledge how complex the situation is and we are working side by side with the companies," Mr. Bedoya said. "We are taking the necessary measures to make sure international investors feel safe."
A decade ago, Colombia's oil industry was at a standstill because large oil fields were inaccessible, surrounded by the FARC rebels. Exploration was too risky as companies feared that their geologists would be kidnapped for million-dollar ransoms.
A U.S.-backed military offensive begun in 2002 by then-President Alvaro Uribe helped secure much of the countryside, driving the FARC deep into the mountains and allowing companies to start pumping oil from existing fields and to explore in some remote areas.
The improved security was accompanied by market-friendly policies designed to attract international investors, a stark contrast to the nationalization of oil industries in other countries in the region, such as Venezuela.
The result was a surge in oil production, with output nearly doubling since 2007, and Colombia is now on the brink of producing 1 million barrels per day, a goal which President Juan Manuel Santos has presented as a milestone for the industry.
The rebels have taken notice and now seem to be focusing their efforts on attacking pipelines and oil infrastructure. The rebels "have changed their strategy," said Marcela Segade, a manager with research firm PFC Energy. "Their attacks are shorter, more intense and more frequent."
The country is already paying the price for this new wave of attacks. Production in February was 896,000 barrels of oil per day, the lowest output figure in half a year, as companies were unable to ship their oil because of pipeline bombings.
If the bombings don't stop, the attacks could threaten the country's oil output surge in the long term, Segade said.
The surge in bombings comes as Colombia is lauding the security gains of the last decade to potential bidders in an auction to be completed by the end of this year.
The auction is an essential part of the country's efforts to boost its reserves, which need to be replenished at a faster pace to keep up with the higher production.
Alejandro Martinez, president of the Colombian Oil Association, which represents multinational oil firms, said some of the world's largest private oil companies are expected to participate in the auction.
"For the industry to be successful we need to stop these bombings," Martinez said. The military is making efforts to fend off the hit-and-run attacks by the rebels but "we want more and better security measures," he said.
Write to Darcy Crowe at darcy.crowe@dowjones.com
Credit: By Darcy Crowe
Subject: Petroleum industry; Petroleum production
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 14, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 927945773
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/927945773?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Big Oil, Bigger Taxes; The industry sends more money to Washington than to shareholders.
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 Mar 2012: 11.
ProQuest document link
Abstract:
Crunching Compustat North America numbers, API estimates that the average effective tax rate for oil and gas companies is 41.1% for 2010--i.e., taxes as a share of net income.
Full text: President Obama says he wants to end subsidies for what he calls "the fuel of the past," but lucky for him oil and gas will be the fuels of the future too. His budget-deficit blowout would be so much worse without Big Oil, because the truth is that this industry is subsidizing the government.
Much, much worse, actually. The federal Energy Information Administration reports that the industry paid some $35.7 billion in corporate income taxes in 2009, the latest year for which data are available. That alone is about 10% of non-defense discretionary spending--and it would cover a lot of Solyndras. That figure also doesn't count excise taxes, state taxes and rents, royalties, fees and bonus payments. All told, the government rakes in $86 million from oil and gas every day--far more than from any other business.
Not paying their "fair share"? Here's a staggering fact: The Tax Foundation estimates that, between 1981 and 2008, oil and gas companies sent more dollars to Washington and the state capitols than they earned in profits for shareholders.
Exxon Mobil, the world's largest oil and gas company, says that in the five years prior to 2010 it paid about $59 billion in total U.S. taxes, while it earned . . . $40.5 billion domestically. Another way of putting it is that for every dollar of net U.S. profits between 2006 and 2010, the company incurred $1.45 in taxes. Exxon's 2010 tax bill was three times larger than its domestic profits. The company can stay in business because it operates globally and earned a total net income after tax of $30.5 billion in 2010 on revenues of $370.1 billion.
Meanwhile, Mr. Obama's 2013 budget--like its 2012, 2011 and 2010 vintages--includes a dozen-odd tax increases that would raise the industry's liability by $44 billion over the next decade, according to the White House, and by $85 billion, according to the trade group the American Petroleum Institute (API). At any rate, the President's economists ought to be weeping for joy for the revenue windfall from an industry that grew 4.5% in 2011, compared to overall GDP growth of 1.7%.
Crunching Compustat North America numbers, API estimates that the average effective tax rate for oil and gas companies is 41.1% for 2010--i.e., taxes as a share of net income. That is broadly in line with the Energy Information Administration's estimates for "major energy producers." By the same measure, other manufacturers on the S&P Industrial index pay an effective rate of 26.5%.
Specific oil and gas investments are also taxed at higher rates than other energy plays, which were surveyed in a 2009 paper by economist Gilbert Metcalf, now a deputy assistant Treasury secretary. He found that oil drilling (for an integrated company) clocks in at a 15.2% tax rate, refining at 19.1% and building a natural gas pipeline at 27%.
For comparison, nuclear power comes in at minus-99.5%, wind at minus-163.8% and solar thermal at minus-244.7%--and that's before the 2009 Obama-Pelosi stimulus. In other words, the taxpayer loses more the more each of these power sources produces.
As for the "subsidies" that Mr. Obama says the oil industry receives, these aren't direct cash handouts like those that go to the green lobby. They're deductions from taxes that cover the cost of doing business and earning income to tax in the first place. Most of them are available to other manufacturers.
What Mr. Obama really means is that he wants to put the risky and capital-intensive process of finding, extracting and producing oil and gas at a competitive disadvantage against other businesses. He does so because he ultimately wants to make them more expensive than his favorites in the wind, solar and ethanol industries.
Why he would still want to do this amid the political panic over $4 per gallon gasoline is a mystery. Even Mr. Obama now claims to want lower gas prices, commenting recently that "Do you think the President of the United States going into re-election wants gas prices to go up higher?" Too bad his every policy choice, and especially his tax agenda, would lead to higher prices.
Subject: Tax rates; Natural gas utilities; Economic development; Excise taxes; Tax increases; Net income
People: Obama, Barack
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: 11
Publication year: 2012
Publication date: Mar 15, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 927928754
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/927928754?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S.: No Deal to Release Oil Reserves
Author: Favole, Jared A; Tracy, Tennille; Bird, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 Mar 2012: n/a.
ProQuest document link
Abstract:
High oil prices are driving gasoline prices to record levels for this time of year, raising the pressure on President Barack Obama to take steps--such as tapping the Strategic Petroleum Reserve--to temper gasoline's rise before it stunts the tentative economic recovery.
Full text: The Obama administration hasn't reached an agreement with the U.K. to release crude oil from its emergency reserves and a report suggesting otherwise was inaccurate, White House spokesman Jay Carney said Thursday.
U.S. crude futures fell as much as $1.58 from an intraday high of $106.18 a barrel after Reuters reported that Britain expects the U.S. to move soon to open its emergency oil reserves amid rising prices. Reuters quoted U.K. officials saying they expected the request soon and said the U.K. would cooperate with the move.
Reports of such a deal are "inaccurate" and "false," Mr. Carney said. He added that it was wrong to say there was a timetable for an agreement. People familiar with the U.K. position in the talks said they don't believe such an agreement has been made.
Light, sweet crude oil for April delivery--the U.S. crude-oil benchmark--recently traded at 32 cents lower, or 0.3% at $105.07 a barrel on the New York Mercantile Exchange.
The possibility of a release of oil reserves put the crude market on edge. "With this idea in the back of its mind," said Carl Larry of the Oil Outlooks and Opinions newsletter, "I think the market's going to be a little sketchy going forward. Nobody wants to take a risk" and bet on higher prices.
The Reuters report came a day after President Obama and British Prime Minister David Cameron agreed to keep open discussions about a possible release of oil held in emergency stockpiles, which have been used in the past to reduce prices or compensate for a supply disruption, a U.K. official familiar with the talks said Thursday. Mr. Cameron and President Obama didn't come to any conclusions, a U.S. official said.
The meeting came as oil prices remain high and the International Energy Agency warned that sanctions against Iran could remove as much as one million barrels a day of oil production from an already tight market.
Western powers will impose the strictest sanctions yet on Iran this summer, to pressure the country over its nuclear program. The European Union has agreed to ban all imports of oil from Iran from July 1, and both the EU and the U.S. will tightly restrict transactions with Iran's central bank, further constricting the country's ability to trade oil. Japan and South Korea have also said they will seek to reduce their imports of oil from Iran.
The IEA estimated Wednesday in its monthly oil market report that the EU ban, combined with action from other countries and financial sanctions, could remove between 800,000 and 1 million barrels a day of Iranian oil from the market. With gasoline prices already at all-time highs in much of Europe, and becoming a hot issue in the U.S. presidential election, many industry analysts have begun to speculate that consumer nations could release oil from emergency stocks this summer to blunt the affect of sanctions.
High oil prices--and high prices at the gasoline pumps--often lead to calls for President Obama to sell some of the 700 million barrels of oil locked in the country's Strategic Petroleum Reserves. Requests for an SPR sale within the U.S. have become even more intense this year as President Obama and lawmakers on both sides of the aisle face re-election. Recent polls show President Obama's popularity dropping as gas prices rise.
The U.S. could open its strategic reserves at a moment's notice. But historically it has preferred to do it in conjunction with its allies as a show of unity and to maximize market impact.
The U.S. was the linchpin of a move by the International Energy Agency in June 2011 to release 60 million barrels of crude oil from its Strategic Petroleum Reserve amid concerns over a supply shortage caused by the Libyan civil war. The U.S. provided half of the emergency oil released.
A decision to sell the strategic reserves, however, would be controversial. Many energy experts say the emergency supplies should only be used in instances where there are significant disruptions in global supplies. Responding to growing support for an SPR sale last month, Sen. Lisa Murkowski (R., Alaska), ranking member on the Senate energy committee, said such a move would be "shortsighted and irresponsible."
"Rising gas prices are painful for all of us, but the SPR is our nation's insurance policy against serious oil supply disruptions, not a political lever to be pulled when rising prices at the pump make life uncomfortable for the White House," Sen. Murkowski said.
U.S. Deputy Energy Secretary Daniel Poneman said Wednesday that the U.S. is constantly monitoring whether a release is necessary from its Strategic Petroleum Reserve. "The president has been very clear, we have every tool available at our disposal," Mr. Poneman said on the sidelines of the International Energy Forum in Kuwait City. "We are going to keep consulting with our partners globally and the [IEA] to see what tools we need to be using."
The executive director of the IEA, Maria van der Hoeven, said Wednesday that an emergency release isn't imminent. "There is a tightening market, there is no doubt about that" as oil inventories are below the five-year average, she said. "At this moment there is no need to use [emergency oil stores]."
The IEA can initiate an emergency stock release in as little as 24 hours, according to documents posted on its website. If the agency believes a severe supply disruption is looming, or if such a disruption actually occurs, its executive director consults with senior energy officials from member countries to decide if a stock release is required.
If a release is necessary, all IEA member countries are notified and, if none object, oil stocks can be released onto the market within 15 days.
It is far from certain whether sanctions against Iran will result in a disruption of similar scale. Many industry observers, including influential analysts at Goldman Sachs, have argued that Iran will be able to sell oil banned by the EU to other countries, such as China, resulting in little net loss in global oil supply.
James Herron and Cassell Bryan-Low in London, Min-Jeong Lee in Seoul, Benoît Faucon in Kuwait City and Laurence Norman in Brusselscontributed to this article.
Credit: Jared A. Favole; Tennille Tracy; David Bird
Subject: Petroleum industry; Oil reserves; Petroleum production; Crude oil prices
Location: United States--US
People: Cameron, David
Company / organization: Name: International Energy Agency; NAICS: 928120; Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 15, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928035660
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928035660?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Pares Losses After U.S. Denies Reserves Report
Author: Bird, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 Mar 2012: n/a.
ProQuest document link
Abstract:
The U.S. was the linchpin of a move by the International Energy Agency in June 2011 to release 60 million barrels of crude oil from its Strategic Petroleum Reserve amid concerns over a supply shortage caused by the Libyan civil war.
Full text: NEW YORK--Crude-oil futures trimmed losses near midday after a U.S. official called inaccurate a report that the U.S. would soon release oil from its emergency stockpile.
Prices earlier fell sharply after a report that the U.K. expects the U.S. to move soon to open its emergency oil reserves amid rising prices. Reuters quoted U.K. officials saying they expected the request soon and said the U.S. would cooperate with the move.
Nymex April light, sweet crude oil was trading 52 cents lower at $104.91 a barrel after the U.S. official's comment. It had swung from a 50-cent gain to a loss of about $1 on the initial report. Crude traded down to the lowest intraday level since Feb. 17, at $103.78 and earlier hit a high of $106.18 a barrel.
April Brent crude was $1.45 lower at $123.52 a barrel, after moving in a range of $120.97 to $125.35 a barrel.
Brent crude-oil prices have recently traded to their near their highest levels since 2008 and gasoline prices in the U.S. have climbed and are widely expected to top $4 a gallon nationwide for the first time since summer 2008.
The U.S. was the linchpin of a move by the International Energy Agency in June 2011 to release 60 million barrels of crude oil from its Strategic Petroleum Reserve amid concerns over a supply shortage caused by the Libyan civil war. The U.S. provided half of the emergency oil released.
Rising prices amid worries about a potential cutoff in Iranian oil supplies, as Western sanctions tighten, has stirred market chatter than a similar release may be forthcoming.
Credit: By David Bird
Subject: Crude oil prices; Strategic petroleum reserve; Petroleum industry
Location: United States--US United Kingdom--UK New York
Company / organization: Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 15, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928054455
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928054455?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
A Strategic Oil Leak
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 Mar 2012: n/a.
ProQuest document link
Abstract:
Besides being commander-in-chief, the president's power to release oil from the Strategic Petroleum Reserve sometimes makes the occupant of the Oval Office the gas-pumper-in-chief.
Full text: Besides being commander-in-chief, the president's power to release oil from the Strategic Petroleum Reserve sometimes makes the occupant of the Oval Office the gas-pumper-in-chief. Or bluffer-in-chief.
Oil prices dropped sharply--and briefly--on Thursday amid reports citing unnamed British sources that the U.S. and the U.K. had agreed to coordinate on releasing strategic reserves. The White House later denied that any formal agreement or timetable had been set, leading oil prices to recover their poise.
Oil prices gyrating to unconfirmed reports are nothing new: Look at how prices spiked on March 1 amid false reports of a Saudi Arabian pipeline explosion.
But even a hint of a possible reserves release can serve a wider purpose for governments: It provides a reminder that those reserves exist. And they are formidable.
At almost 696 million barrels, they can supply a maximum of 4.4 million barrels a day--about half of U.S. net imports--for more than five months. Total oil inventories, including commercial stocks, for the industrialized world stood at 4.1 billion barrels at the end of 2011.
One audience for this message sits in Tehran. Any talk of Washington coordinating with its allies about oil releases serves to remind Iran that the West is preparing for possible further action over its suspected nuclear-weapons program. Iran's real power is its potential to disrupt the economy by fomenting an oil-price spike. Strategic reserves provide a form of deterrence.
The other audience sits in the world's commodity-trading pits. Based on Sanford C. Bernstein estimates of the marginal cost of oil production, the geopolitical premium in the Brent price is about $30 a barrel right now. Reminding the market that a strategic cushion exists--without necessarily deploying it--provides a check on that premium rising even further.
Write to Liam Denning at liam.denning@wsj.com
Credit: By Liam Denning
Subject: Petroleum industry; Strategic petroleum reserve
Location: United States--US United Kingdom--UK
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 15, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928158056
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928158056?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Argentina Plans to Launch Charges Against Companies Involved in Falklands Oil Drilling
Author: Romig, Shane
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]16 Mar 2012: B.7.
ProQuest document link
Abstract:
Corrections & Amplifications Argentina's foreign minister, Hector Timerman, said Argentina planned to pursue proceedings against Rockhopper Exploration PLC, the first company to make a commercial oil discovery in the Falklands; Falkland Oil & Gas Ltd., which plans to drill the Loligo prospect later this year; Borders & Southern Petroleum PLC, an explorer currently drilling the Darwin prospect; Desire Petroleum PLC; and Argos Resources Ltd. A Corporate News article Friday incorrectly said Rockhopper planned to drill the Loligo well later this year, and Borders & Southern had begun work on the Stebbing prospect.
Full text: Corrections & Amplifications
Argentina's foreign minister, Hector Timerman, said Argentina planned to pursue proceedings against Rockhopper Exploration PLC, the first company to make a commercial oil discovery in the Falklands; Falkland Oil & Gas Ltd., which plans to drill the Loligo prospect later this year; Borders & Southern Petroleum PLC, an explorer currently drilling the Darwin prospect; Desire Petroleum PLC; and Argos Resources Ltd. A Corporate News article Friday incorrectly said Rockhopper planned to drill the Loligo well later this year, and Borders & Southern had begun work on the Stebbing prospect.
(WSJ March 17, 2012)
BUENOS AIRES -- Argentina intends to go after companies involved in oil exploration off the disputed Falkland Islands, with criminal and civil charges planned against drillers, service companies and even banks providing financing and analysis.
"This government won't let a single day go by without pursuing administrative, legal and international actions . . . to assert control over our resources," Argentina's foreign minister, Hector Timerman, said during a news conference Thursday.
The Falkland, South Georgia and South Sandwich islands in the South Atlantic have been under British control since the 1830s, when the U.K. displaced a precarious Argentine settlement. Argentina has long claimed that the islands still belong to it.
In April 1982, Argentina's military government invaded the islands. The U.K. took back the archipelago after a 74-day war in which 649 Argentine and 258 U.K. soldiers died.
Tension has risen since 2010, when a number of U.K.-listed oil companies started targeting the estimated 8.3 billion barrels of crude some believe lie in the waters surrounding the Falklands.
Mr. Timerman said Argentina planned to pursue proceedings against Rockhopper Exploration PLC, which plans to drill the Loligo well later this year; Falkland Oil & Gas Ltd.; Borders & Southern Petroleum PLC, an explorer that has already begun work on the Stebbing prospect; Desire Petroleum PLC, and Argos Resources Ltd. Representatives from the companies weren't available to comment.
Actions also would be taken against shareholders of those companies and those providing financial services, he said.
The foreign minister singled out Royal Bank of Scotland Group PLC, Macquarie Group Ltd., Credit Suisse Group AG, Morgan Stanley, Barclays PLC and Standard Chartered Bank. Representatives for the banks either declined to comment or weren't immediately available.
Argentina's first move will involve sending warnings to the companies stating they are involved in activities Argentina has dubbed illicit, Mr. Timerman said.
Notice also will be sent to shareholders of the companies involved and to the stock exchanges where they are listed to force them to declare the disputed drilling as a material risk in financial reports, he said.
British authorities were standing firm. "Hydrocarbon exploration in the Falklands is a legitimate commercial venture. The British Government supports the right of the Falkland Islanders to develop their own natural resources for their own economic benefit," the U.K. foreign office said in a statement.
"Argentina's efforts to intimidate the Falklands are illegal, unbecoming and wholly counterproductive," the foreign office said. "We are studying Argentina's remarks carefully and will work closely with any company potentially affected to ensure that the practical implications for them are as few as possible."
---
Ken Parks, Alexis Flynn, Iain Packham, Marietta Cauchi, Mark Najarian and Carolina Pica contributed to this article.
Credit: By Shane Romig
Subject: Territorial issues; Law enforcement; Petroleum industry; Oil exploration
Location: United Kingdom--UK Falkland Islands Argentina
Classification: 9180: International; 4300: Law; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.7
Publication year: 2012
Publication date: Mar 16, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And E conomics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928347603
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928347603?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. News: U.S., U.K. Discuss Tapping Oil Stocks
Author: Johnson, Keith; Bryan-Low, Cassell
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]16 Mar 2012: A.5.
ProQuest document link
Abstract:
High oil prices are driving gasoline prices to record levels for this time of year, raising the pressure on President Barack Obama to take steps -- such as tapping the Strategic Petroleum Reserve -- to temper gasoline's rise before it stunts the tentative economic recovery.
Full text: The U.S. and Britain discussed tapping strategic stocks of crude oil to calm oil markets, British Prime Minister David Cameron said Thursday, but he added that no decision was reached.
High oil prices are driving gasoline prices to record levels for this time of year, raising the pressure on President Barack Obama to take steps -- such as tapping the Strategic Petroleum Reserve -- to temper gasoline's rise before it stunts the tentative economic recovery. Last summer, Mr. Obama tapped the emergency stockpile to help replace oil output lost during the Libyan civil war.
Speaking at New York University Thursday, Mr. Cameron said he and Mr. Obama on Wednesday discussed tapping oil reserves. "We'd both like to see global oil prices at a lower level than they are today," Mr. Cameron said. Speaking of releasing reserves, he added, "I think it is something worth looking at, because it's having an effect on all our economies."
U.S. officials denied a report by Reuters Thursday that the leaders reached an agreement at their meeting Wednesday to release crude oil from reserves. White House press secretary Jay Carney called the report "false."
The report roiled oil markets, with prices falling in the morning before recovering somewhat later in the day on the White House denial. Front-month light, sweet crude oil for April delivery fell 0.3% Thursday to settle at $105.11 a barrel on the New York Mercantile Exchange.
Republican presidential candidates Mitt Romney and Newt Gingrich have blamed Mr. Obama for higher gasoline prices and accuse him of obstructing domestic oil production, though production is at an eight-year high. Mr. Obama said Thursday in his latest energy speech that "there is no quick fix" for high gasoline prices.
A number of influential lawmakers, including Rep. Ed Markey (D., Mass.), have called on the president to tap the strategic reserve to deflate rising prices. "Releasing even a small fraction of that oil could once again have a significant impact on speculation in the marketplace and on prices," Mr. Markey wrote last month in a letter to the president.
Other lawmakers, such as Alaska Republican Sen. Lisa Murkowski, say the reserve should be used only for serious supply disruptions, not to target rising gasoline prices. Energy experts generally agree that releasing oil from the emergency stockpile would have a short-term effect, at most, on prices.
The U.S. generally aims to coordinate with allies and the International Energy Agency in Paris when it releases oil from reserves. The IEA has suggested that it would be reluctant to use reserves for anything other than a serious supply disruption.
More broadly, the U.S. and the U.K. have been coordinating closely on Iran policy, including sanctions, joint naval action in the Strait of Hormuz and now efforts to stabilize the oil market. Britain doesn't have a big U.S.-style stockpile, but it can relax stockpiling requirements for the private sector, which has the same effect of releasing oil onto the market.
Oil markets have zeroed in on the possibility of a U.S. release of some crude oil this summer, in part because looming sanctions on Iran threaten to take a large amount of oil off the global market by then. Obama administration officials have said in recent weeks that tapping the Strategic Petroleum Reserve was a tool available to the administration.
The strategic petroleum reserve was created in 1975. Today, it can hold more than 720 million barrels of crude that are stored in underground caverns in the event of a serious supply disruption. The reserve today has 696 million barrels of crude, more than three months' of U.S. oil imports.
U.S. presidents have tapped the strategic reserve because of big supply disruptions three times: at the start of the 1991 Iraq war, in the aftermath of the 2005 hurricanes that ravaged Gulf Coast oil rigs and refineries, and amid last summer's violence in Libya.
---
Carol E. Lee contributed to this article.
Credit: By Keith Johnson and Cassell Bryan-Low
Subject: Energy policy; Oil reserves; International relations-US -- United Kingdom--UK
Location: United States--US United Kingdom--UK
People: Cameron, David Obama, Barack
Classification: 9175: Western Europe; 9190: United States; 1520: Energy policy
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.5
Publication year: 2012
Publication date: Mar 16, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928348402
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928348402?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Bullish Oil View Dented
Author: Bird, David
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]16 Mar 2012: C.4.
ProQuest document link
Abstract:
The bullish outlook on crude took a hit after a report, later denied, that the U.S. would act soon to release oil reserves from its emergency stockpile, reminding traders that governments stand ready to fill shortfalls from any supply disruptions.
Full text: The bullish outlook on crude took a hit after a report, later denied, that the U.S. would act soon to release oil reserves from its emergency stockpile, reminding traders that governments stand ready to fill shortfalls from any supply disruptions.
Crude prices dropped more than $2, to a one-month low of $103.78, after a report Thursday morning that the U.K. expected the U.S. to release oil from the Strategic Petroleum Reserve, the nation's emergency oil stockpile. The White House later denied the report and said no deal was in place for a release from the reserve. Oil pared losses and ended slightly down for the day.
But some market observers said the damage already had been done to the bullish outlook on oil. Crude has risen 6.4% this year as tensions between Iran and the West have intensified over the country's nuclear ambitions. Iran, the No. 2 oil producer in the Organization of Petroleum Exporting Countries, has threatened to close the Strait of Hormuz, the route for a fifth of the world's oil, in response to a European Union embargo on Tehran's oil as way to pressure it to give up its nuclear program.
"With this idea in the back of its mind, I think the market's going to be a little sketchy going forward," said Carl Larry of the Oil Outlooks and Opinions newsletter of the possibility of a release of oil reserves. "Nobody wants to take a risk" of betting on prices going higher, he said.
Front-month light, sweet crude oil for April delivery fell 32 cents, or 0.3%, to settle at $105.11 a barrel.
Credit: By David Bird
Subject: Petroleum industry; Strategic petroleum reserve; Oil reserves; Commodity prices; Crude oil prices
Location: United States--US United Kingdom--UK
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Mar 16, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928348411
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928348411?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Spain Approves Canary Islands Oil Exploration
Author: Brat, Ilan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: MADRID--The Spanish government approved Friday a controversial permit to explore for oil offshore the Canary Islands, in an area that could become by far the largest source of oil production in a country heavily dependent on crude imports.
Approval of an exploration license marks the latest move in Spain's shift away from a policy of subsidy-dependent renewable energy projects as it seeks ways to improve its trade balance and steady its budget, but will likely face opposition from environmentalists and local government officials concerned about the threat of damage to the island's tourist-friendly, white-sand beaches.
Conservative estimates by Madrid-based Repsol YPF SA, which would carry out the exploration, show that the concessions could eventually yield daily production of 100,000 barrels of oil equivalent, people familiar with the situation say. While relatively small in global terms that would be significant for Spain, amounting to about 10% of its daily crude oil imports in 2011, according to government data. Spain currently produces only about 2,000 barrels of oil-equivalent a day.
Repsol spokesman Kristian Rix wouldn't confirm the figure but said it is a reasonable estimate based on the company's own calculations.
The new exploration "is a big deal," said Kash Burchett, a European oil analyst with energy consultant IHS Cera. Even though Spain's crude imports have declined in recent years as its economy has weakened, demands have increased for it to improve its trade gap and balance its budget.
To be sure, Repsol's exploratory drilling may reveal amounts of oil below its estimates and even if the projections prove to be accurate, Repsol says the license area, near the border where Morocco already allows oil exploration, wouldn't reach plateau production for a decade. The project would require investment of [euro]9 billion ($11.8 billion) over 20 years, Repsol's Chairman Antonio Brufau has said.
And the oil from the project may not all end up being used in Spain, as Repsol could decide to ship it elsewhere in pursuit of higher margins.
But "it isn't entirely surprising that the government is seeking to exploit whatever reserves they can" and generate potentially substantial tax revenue from them, Ms. Burchett said.
Approval for the project comes as other governments in the region--among the worst hit by the euro-zone crisis--step up efforts to identify natural resources for exploitation. Portugal's new government, scrambling for money, has started to grant agreements to mine for iron ore and other materials, and last October granted rights to explore for oil off its tourist-heavy southern coast.
But the Canary Islands project will likely face opposition. Tourists flock to beaches on the islands, which are about 100 kilometers off Morocco's west coast, providing the most important industry for a region that has some of Spain's highest unemployment rates.
"The Canary Islands' selling points are sun, landscapes, white-sand beaches and crystalline water," said Fernando Ríos Rull, a representative for the Canary Islands government on legal and industrial matters. "That is totally incompatible with exploration for oil."
He said the Canary Islands government would appeal the exploration permit in the courts on technical and environmental grounds.
Repsol says it has ample experience safely drilling offshore.
"This is our home turf, so we are especially interested in making this project a success," said Repsol spokesman Mr. Rix.
The new production could be a significant boost for Repsol, which holds 50% in the consortium that would operate in the area. In 2011, its daily oil production was 110,000 barrels, a decline of 24% from 2010 partly due to the production stoppage in Libya.
Spain first granted Repsol the right to explore for oil about 60 kilometers from the coast of the Canary Islands in early 2002, and seismic studies determined that oil likely lies in rock formations about 3,000-3,500 meters below the surface. But local governments objected and the exploration program got tangled up in the courts, resulting in the permit's suspension in 2004.
Repsol resubmitted a corrected application, but Spain's Socialist Party, which had recently come to power on a platform that included moving toward renewable energy sources, never issued final approval. Instead, the government passed strong incentives to encourage higher wind and solar power production; Spain is now among the countries that derive the greatest percentage of electricity consumption from renewable sources, reaching more than 30% in 2011.
But a new government was elected in December. Within weeks new Energy Minister José Manuel Soria, a former top official in the Canary Islands regional government, suspended a subsidy program for new installations of renewable-energy projects, in part on concerns that it wasn't economically sustainable.
While it is unclear how much money oil production in the Canary Islands could generate, Repsol says it could create hundreds or thousands of jobs. However, Mr. Ríos Rull cautioned that the Canary Islands' largely less-qualified work force is unlikely to secure many new jobs from oil production in the region.
Credit: By Ilan Brat
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 16, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928418662
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928418662?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iraq Says Exxon Freezes Kurdistan Oil Deal
Author: Hassan Hafidh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 Mar 2012: n/a.
ProQuest document link
Abstract:
The KRG has signed nearly 50 oil and gas deals with international oil companies, mostly second-tier or wildcat explorers.
Full text: Senior Iraqi government officials said Friday that Exxon Mobil Corp. has told Iraq's central government that it has frozen an exploration contract with the nation's Kurdistan region, a deal Baghdad strongly opposes.
"We have received a letter from Exxon in which it stated it freezes its oil contract with Kurdistan," the government official said.
"Although we would prefer Exxon to cancel its deal with Kurdistan, freezing the contract is a step forward," another official from the Iraqi oil ministry said.
Exxon, based in Irving, Texas, wouldn't comment Friday. Last week, Exxon CEO Rex Tillerson said his company remains committed to working in both Kurdistan and southern Iraq.
The semiautonimous Kurdistan Regional Government in northern Iraq is embroiled in a long and often contentious dispute with Iraq's central government over the right to issue oil-exploration licenses in the region.
Baghdad has essentially asked the U.S. oil giant to choose between its deal with the KRG and its contract with the central government to develop the 370,000 barrels-a-day West Qurna Phase 1 field in southern Iraq. The impasse has also led Exxon to be barred from Iraq's fourth oil-and-gas licensing auction, scheduled for May.
The first Iraqi official said Exxon stated it has frozen its contract with the KRG until a new national oil-and-gas law is enacted. A new version of the law was introduced last year but it has been stalled in Parliament.
Exxon is already producing around 370,000 barrels a day of oil from the West Qurna field under a service contract with the Baghdad government. Many other large oil companies, including BP PLC, Royal Dutch Shell PLC, Eni SpA and Lukoil Holdings have similar contracts.
The KRG has signed nearly 50 oil and gas deals with international oil companies, mostly second-tier or wildcat explorers. The KRG hoped Exxon's presence would lead to other oil majors beginning operations in the region.
Credit: By Hassan Hafidh
Subject: Petroleum industry; Petroleum production; Iraq War-2003
Location: Iraq
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 16, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928460609
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928460609?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Spain Approves Oil Exploration in Canary Islands
Author: Brat, Ilan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]17 Mar 2012: A.11.
ProQuest document link
Abstract:
Even though Spain's crude imports have declined in recent years as its economy has weakened, the pressure has increased on the government of Conservative Primer Minister Mariano Rajoy to improve its finances, said Kash Burchett, an European oil analyst with energy consultant IHS Cera.
Full text: MADRID -- The Spanish government approved a permit to explore for oil offshore the Canary Islands, a project that could turn the celebrated tourist destination into the largest oil producer in a country heavily dependent on crude imports.
Friday's approval of the exploration license marks the latest move in Spain's shift away from a policy of subsidy-dependent renewable energy projects as it seeks ways to improve its trade balance and steady its budget.
The Canary Islands local government, however, opposes the project amid concerns that it could discourage tourists drawn to its white-sand beaches which are about 60 miles off Morocco's west coast.
Conservative estimates by Madrid-based Repsol YPF SA, which would carry out the exploration, show that the concessions could eventually yield daily production of 100,000 barrels of oil equivalent, people familiar with the situation say.
While relatively small in global terms, that would be significant for Spain, amounting to about 10% of its daily crude oil imports in 2011, according to government data.
Kristian Rix, a spokesman for Repsol, wouldn't confirm the figure but said it is a reasonable estimate based on the company's own calculations.
Even though Spain's crude imports have declined in recent years as its economy has weakened, the pressure has increased on the government of Conservative Primer Minister Mariano Rajoy to improve its finances, said Kash Burchett, an European oil analyst with energy consultant IHS Cera.
"It isn't entirely surprising that the government is seeking to exploit whatever reserves they can," and generate potentially substantial tax revenue from them, Mr. Burchett said.
Approval for the project would come as other countries in the region hit by the euro-zone crisis step up efforts to identify natural resources for exploitation.
Portugal's new government, scrambling for funds, has started granting agreements to mine for iron ore and other materials, and in October granted rights to explore for oil off its tourist-heavy southern coast.
Repsol says the license area -- near the border where Morocco already allows oil exploration -- wouldn't reach plateau production for a decade. The project would require investment of 9 billion euros ($11.9 billion) over 20 years, Repsol Chairman Antonio Brufau has said.
The new production could be a significant boost for Repsol. In 2011, its daily oil production was 110,000 barrels, a decline of 24% from 2010 partly due to the production stoppage in Libya.
Credit: By Ilan Brat
Subject: Petroleum industry; Offshore oil exploration & development
Location: Canary Islands Spain
Company / organization: Name: RepsolYPF SA; NAICS: 213111, 213112, 324110
Classification: 9175: Western Europe; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.11
Publication year: 2012
Publication date: Mar 17, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928588591
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928588591?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Chevron Sees New Oil Sheen at Brazil Frade Field
Author: Fick, Jeff
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Mar 2012: n/a.
ProQuest document link
Abstract:
RIO DE JANEIRO--Brazilian regulators and officials from the local unit of U.S. oil major Chevron Corp. confirmed Saturday that a new oil sheen was discovered during an overflight of the Frade offshore oil field.
Full text: RIO DE JANEIRO--Brazilian regulators and officials from the local unit of U.S. oil major Chevron Corp. confirmed Saturday that a new oil sheen was discovered during an overflight of the Frade offshore oil field.
The sheen extended over one kilometer and "had a volume of half a liter," Chevron said in the emailed statement. The sheen was in the area where the company had identified a new seep on the seabed.
The leak is the second to strike the Frade field since November, when a drilling accident caused an estimated 2,400 to 3,000 barrels of crude to leak into the Atlantic Ocean off Brazil's coast from similar seeps in the seafloor.
Chevron and the company's local executives are facing an $11 billion criminal lawsuit filed by a Rio de Janeiro federal prosecutor, as well as hefty fines from regulators related to the spill. Brazil's National Petroleum Agency, or ANP, also suspended Chevron's drilling rights in the country.
Late Friday a federal judge granted an injunction barring 17 of the company's employees, including Chevron Brasil President George Buck, from leaving Brazil without permission while the court case proceeds. Chevron Brasil, however, said that neither the company nor its executives have been formally notified of any judicial action in Brazil.
"Any legal decision will be abided by the company and its employees. We will defend the company and its employees," Chevron said in the statement.
The latest trouble for Chevron's Brazil operations comes after the company requested this week permission to halt output at Frade, which had been producing about 61,000 barrels a day. Chevron made the request to study the "geological complexity" of Frade, which holds recoverable reserves of between 200 million and 300 million barrels of oil.
The seep was first discovered March 4, with Chevron notifying Brazilian authorities March 13, the company said. Oil from the seep is being captured by specially built containment devices, Chevron said Saturday. Additional containment devices will be installed as needed, the company added.
The ANP, Brazil's navy and environmental regulators said in a statement Saturday they are monitoring the latest incident and accompanying Chevron's efforts to mitigate the oil sheen using mechanical dispersion. Mechanical dispersion typically includes shooting jets of water over the sheen, as well as piloting boats through the stain to break up the oil droplets.
Local regulators and Chevron officials are expected to meet early next week to discuss the incident, with the sheen to be monitored via additional overflights, the note said.
Write to Jeff Fick at jeff.fick@dowjones.com
Credit: By Jeff Fick
Subject: Petroleum industry; Litigation
Location: Rio de Janeiro Brazil United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 18, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928771718
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928771718?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Economy Hasn't Slipped on Oil Prices--Yet
Author: Casselman, Ben; Izzo, Phil
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Mar 2012: n/a.
ProQuest document link
Abstract:
When prices skyrocketed in 2008, consumers had to slash spending, light rail systems were overwhelmed and auto makers were stuck with thousands of inefficient and suddenly unpopular SUVs. Conventional wisdom has held that this year's price increase is at least partly supply-driven, this time related to tensions with Iran, although some economists have argued rising demand is also playing a role.
Full text: Rising oil prices haven't stalled the U.S. economic recovery. But that doesn't mean they won't in the months ahead.
High oil prices can ripple through an economy, sapping consumer confidence, eating into spending, driving up prices and ultimately slowing hiring and investment. The good news is that hasn't happened yet. "Consumers have yet to get really rattled," said Ellen Zentner, an economist at Nomura Securities International.
On Friday, a Thomson-Reuters University of Michigan report noted a slight decline in consumer sentiment from its previous reading, but the index remains above levels recorded at the end of last year when prices began to rise.
Of the 50 economists who responded to the Wall Street Journal's monthly forecasting survey, 37--just shy of three quarters--said oil prices haven't yet had a significant impact on growth. But when it comes to the future, there's much less consensus. Asked what price would have a meaningful impact, economists gave answers ranging from $115 per barrel, only modestly above their current level, to $250 per barrel, a price that implies a near-catastrophic supply disruption.
Economists say oil's impact on the economy will hinge on four questions:
1. How high do prices go? Pundits often talk as if gas prices can only go up. In the immediate term, they may be right. Crude-oil prices take weeks to filter through to consumers, so recent oil-price gains aren't yet being fully felt at the pump. Gasoline prices also tend to rise through the spring, peaking around May.
But beyond that, the path is less clear. Crude-oil prices have steadied in recent days, although no one knows how long the pause will last. Futures markets expect prices at the pump to peak at a bit over $4 per gallon this spring, around the level they hit in 2008.
All of this matters because research has shown that consumers respond much more when prices hit new records than when they merely return to recent highs. A recent Gallup poll found that most Americans wouldn't cut back their spending or make other major changes until prices hit $5 a gallon, although other polls have found lower thresholds.
"Everybody understood that $4 gasoline is something that you might have to live with," said James Hamilton, a University of California, San Diego, economist who has studied the economic impact of oil prices. "When it's a higher price than anybody remembers paying, that gets their attention."
2. How fast do prices rise? Prices get the headlines, but many experts argue that what matters more is how quickly they're rising. A long, gradual run-up gives both consumers and businesses more time to adjust.
Rapid price spikes are much harder to handle. When prices skyrocketed in 2008, consumers had to slash spending, light rail systems were overwhelmed and auto makers were stuck with thousands of inefficient and suddenly unpopular SUVs.
"If we hit $5 two years from now and there's a gradual rise up to then, that's not going to be a big problem," said Dean Maki, chief U.S. economist for Barclays Capital. "If we hit $5 tomorrow, that's going to be a problem."
One reason consumers seem to be taking the most recent rise in prices in stride, Mr. Maki argues, is that the jump hasn't actually been all that dramatic. In 2008, gasoline prices leapt 50% in nine months. Last year's spike was nearly as big. This time, prices are up just 19% since their most recent low, in December--to $3.83 a gallon, on average, according to the U.S. Energy Information Administration. Prices at the pump would have to hit around $4.80 in the next few months to mirror the earlier increases.
3. Why are prices going up? Oil prices can go up because of either rising demand or falling supply. The two have different economic implications.
In general, a demand-driven run-up in prices doesn't worry economists nearly as much as a supply-driven one. That's because rising demand generally indicates a growing economy. If prices get high enough to slow growth, then demand will slow too, bringing prices back down again.
A supply disruption has more significant consequences because it can drive up oil prices even in a weak economy. That's what happened last year: War in Libya and turmoil elsewhere in the Middle East sent prices soaring at a time when the U.S. economy was too weak to withstand the shock.
Conventional wisdom has held that this year's price increase is at least partly supply-driven, this time related to tensions with Iran, although some economists have argued rising demand is also playing a role. Any escalation in tensions could drive prices higher in coming months. "There's certainly a fear that it could worsen," said David Greenlaw, chief U.S. economist for Morgan Stanley.
4. How strong is the rest of the economy? Last year, oil prices tested the strength of the U.S. economy, and the economy failed the test. Are we better prepared this year?
Some economists argue the answer is yes. The job market is healthier than at any point since the recession began. Households have had another year to pay down debts and get their balance sheets in order. The real-estate market is showing cautious signs of improvement.
If the economy is on firmer footing, it would take a bigger shock to knock it off balance.
"Only a major oil supply disruption could cause a U.S. and global recession," said Stuart Hoffman of PNC Financial Services Group.
The fact that oil prices haven't yet derailed the recovery suggests a level of stability that has been absent for much of the past two years. But don't count on it holding up so well if prices take another sharp upward turn.
Write to Ben Casselman at ben.casselman@wsj.com and Phil Izzo at philip.izzo@wsj.com
Credit: By Ben Casselman and Phil Izzo
Subject: Gasoline prices; Economists; Colleges & universities; Energy economics
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 18, 2012
Section: US
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928837887
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928837887?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Fears of a 2008 Repeat for Oil; As Iran Tensions Rise, Excess Global Output Capacity Has Slipped; Tough Summer Ahead
Author: Faucon, Benoit
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Mar 2012: n/a.
ProQuest document link
Abstract:
Last year, crude prices rose when Libya's civil war interrupted 1.3 million barrels a day of the country's oil exports, a situation that prompted the U.S. to tap its Strategic Petroleum Reserve to keep prices down. After they kick in this summer, the EU embargo and U.S. sanctions may take one million barrels a day of Iran crude off the markets, according to the International Energy Agency, which represents some of the world's largest oil consumers.
Full text: A shrinking cushion of available oil, which is already thinner than during last year's Libya crisis, is driving fear that the West's tensions with Iran could send prices as high as in 2008, when crude neared $150 a barrel.
Last year, crude prices rose when Libya's civil war interrupted 1.3 million barrels a day of the country's oil exports, a situation that prompted the U.S. to tap its Strategic Petroleum Reserve to keep prices down.
This year, a standoff between the West and Iran over Tehran's nuclear program is raising even more concern in markets. Iranian officials have threatened to shut down the Strait of Hormuz, the route used to ship most Gulf oil and a fifth of global supplies. Markets are buzzing with talk that the U.S. and U.K. might dip into their reserves, something President Barack Obama and British Prime Minister David Cameron discussed last week without making any decisions.
One major reason that anxiety about Iran is more intense than the concerns about Libya a year ago is that so-called spare production capacity--the amount of idle output that can be swiftly brought online if needed--is already more stretched than it was in 2011.
Spare capacity stood at 2.5 million barrels a day on average in January and February this year, compared with 3.7 million barrels a day in the same period last year. The numbers come from the Energy Information Administration, an agency that predicts oil-market trends for the U.S. government.
This year, global oil demand is up by about one million barrels a day to around 89 million barrels. But technical and political problems have already shut down 750,000 barrels a day from Canada to South Sudan, before factoring in any disruption from the Iranian situation. A rumor of a Saudi oil-pipeline explosion, which proved not true, recently helped push crude prices in London above $128 a barrel--a level not seen in nearly four years.
On Friday, light, sweet crude for April delivery rose $1.95, or 1.9%, to settle at $107.06 a barrel on the New York Mercantile Exchange. May Brent crude on the ICE Futures Europe exchange settled up $3.21, or 2.6%, at $125.81 a barrel.
The potential for a further surge in prices amid tight markets is a rare point of agreement between the U.S. and Iran.
"This is something everybody is watching for," said U.S. deputy energy secretary Daniel Poneman on the sidelines of an energy conference in Kuwait. "Nobody wants to see a reprise of what happened in 2008," he said, referring to an all-time high of $147 a barrel for Nymex crude that contributed to a global recession. That upswing, too, came amid an intensification of tensions with Iran at a time when the cushion of spare capacity was shrinking.
Speaking at the same Kuwait conference, Muhammad Ali Khatibi, a top Iranian oil official, echoed his American counterpart, warning in an interview that prices may not have seen the worst of it. "For now, nothing has happened. But what if something happens?" Mr. Khatibi asked. "It will be like 2008."
The situation is fueling concerns that rising oil prices will undercut the long-gestating global economic recovery. "Oil prices at current levels are so high it is not consistent with sustained economic recovery," Mr. Poneman said.
Numbers point to an even more testing time in the second half of the year. Demand for crude will increase as U.S. and European refineries return to operation after seasonal maintenance, right when sanctions against Iran bite the hardest as the full European Union embargo goes into effect. Also, a U.S. ban on oil trades with Iran's central bank will begin at the end of June.
After they kick in this summer, the EU embargo and U.S. sanctions may take one million barrels a day of Iran crude off the markets, according to the International Energy Agency, which represents some of the world's largest oil consumers.
Partly as a result, demand will exceed production by roughly that same amount--1.1 million barrels a day--in the third quarter, according to the Energy Information Administration. Use of existing inventories would likely make up the difference. Iran exports about 2.2 million barrels of crude a day.
Sanctions against Iran are "happening at a time when the market is tight," said Christophe de Margerie, chief executive of French oil giant Total SA in an interview. "Demand is strong" while supply problems are "piling up," he said.
"The uncertainty is how the Iranian supplies may develop," said IEA Executive Director Maria van der Hoeven.
Ms. van der Hoeven said that, for now, there is enough oil to meet demand.
But asked if she was worried about the oil market this year, she said Middle East tensions could still go out control. The powder keg is "in this part of world," she said.
Write to Benoit Faucon at benoit.faucon@dowjones.com
Credit: By Benoit Faucon
Subject: Petroleum industry; Crude oil prices; Strategic petroleum reserve; Production capacity
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 18, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928837918
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928837918?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
U.S. News --- THE OUTLOOK: So Far, Economy Hasn't Slipped on Oil Prices
Author: Casselman, Ben; Izzo, Phil
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]19 Mar 2012: A.2.
ProQuest document link
Abstract:
On Friday, a Thomson-Reuters University of Michigan report noted a slight decline in consumer sentiment from its previous reading, but the index remained above levels recorded at the end of last year when oil prices began to rise. Conventional wisdom has held that this year's price increase is at least partly supply-driven, this time related to tensions with Iran, although some economists have argued that rising demand also is playing a role.
Full text: Rising oil prices haven't stalled the U.S. economic recovery. But that doesn't mean they won't in the months ahead.
High oil prices can ripple through an economy, sapping consumer confidence, eating into spending, driving up prices and ultimately slowing hiring and investment. The good news is that hasn't happened yet. "Consumers have yet to get really rattled," said Ellen Zentner, an economist at Nomura Securities International.
On Friday, a Thomson-Reuters University of Michigan report noted a slight decline in consumer sentiment from its previous reading, but the index remained above levels recorded at the end of last year when oil prices began to rise.
Of the 50 economists who responded to The Wall Street Journal's monthly forecasting survey, 37 -- just shy of three quarters -- said oil prices haven't yet had a significant impact on growth. But when it comes to the future, there's much less consensus. Asked what price would have a meaningful impact, economists gave answers ranging from $115 per barrel, only modestly above their current level, to $250 per barrel, a price that implies a near-catastrophic supply disruption.
Economists say oil's impact on the economy will hinge on four questions:
1. How high do prices go? Pundits often talk as if gas prices can only go up. In the immediate term, they may be right. Crude-oil prices take weeks to filter through to consumers, so recent oil-price gains aren't yet being fully felt at the pump. Gasoline prices also tend to rise through the spring, peaking around May.
But beyond that, the path is less clear. Crude-oil prices have steadied in recent days, although no one knows how long the pause will last. Futures markets expect prices at the pump to peak at a bit over $4 per gallon this spring, around the level they hit in 2008.
All of this matters because research has shown that consumers respond much more when prices hit new records than when they merely return to recent highs. A recent Gallup poll found that most Americans wouldn't cut back their spending or make other major changes until gas prices hit $5 a gallon, although other polls have found lower thresholds.
2. How fast do prices rise? Prices get the headlines, but many experts argue that what matters more is how quickly they are rising. A long, gradual run-up gives both consumers and businesses more time to adjust.
Rapid gas price jumps are much harder to handle. When prices skyrocketed in 2008, consumers had to slash spending, transit systems were overwhelmed and auto makers were stuck with thousands of inefficient and suddenly unpopular SUVs.
"If we hit $5 two years from now and there's a gradual rise up to then, that's not going to be a big problem," said Dean Maki, chief U.S. economist for Barclays Capital. "If we hit $5 tomorrow, that's going to be a problem."
One reason consumers seem to be taking the most recent rise in prices in stride, Mr. Maki argues, is that the jump hasn't actually been all that dramatic. In 2008, gas prices leapt 50% in nine months. Last year's spike was nearly as big. This time, prices are up just 19% since their most recent low, in December -- to $3.83 a gallon, on average, according to the U.S. Energy Information Administration. Pump prices would have to hit around $4.80 in the next few months to mirror the earlier increases.
3. Why are prices going up? Oil prices can go up because of either rising demand or falling supply. The two have different economic implications.
In general, a demand-driven run-up in prices doesn't worry economists nearly as much as a supply-driven one. That's because rising demand generally indicates a growing economy. If prices get high enough to slow growth, then demand will slow too, bringing prices back down again.
A supply disruption has more significant consequences because it can drive up oil prices even in a weak economy. That's what happened last year: War in Libya and turmoil elsewhere in the Middle East sent prices soaring at a time when the U.S. economy was too weak to withstand the shock.
Conventional wisdom has held that this year's price increase is at least partly supply-driven, this time related to tensions with Iran, although some economists have argued that rising demand also is playing a role. Any escalation in tensions could drive prices higher in coming months.
4. How strong is the rest of the economy? Last year, oil prices tested the strength of the U.S. economy, and the economy failed the test. Are we better prepared this year?
Some economists argue the answer is yes. The job market is healthier than at any point since the recession began. Households have had another year to pay down debts and get their balance sheets in order. The real-estate market is showing cautious signs of improvement.
The fact that oil prices haven't yet derailed the recovery suggests a level of stability that has been absent for much of the past two years. But don't count on it holding up so well if prices take another sharp upward turn.
Credit: By Ben Casselman and Phil Izzo
Subject: Economists; Energy economics; Petroleum industry; Price increases; Economic recovery; Crude oil prices
Location: United States--US
Classification: 9190: United States; 1110: Economic conditions & forecasts
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.2
Publication year: 2012
Publication date: Mar 19, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928883129
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928883129?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Fears of 2008 Repeat for Oil Prices
Author: Faucon, Benoit
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]19 Mar 2012: C.6.
ProQuest document link
Abstract:
Last year, crude prices rose when Libya's civil war interrupted 1.3 million barrels a day of the country's oil exports, a situation that prompted the U.S. to tap its Strategic Petroleum Reserve to keep prices down.
Full text: A shrinking cushion of available oil, already thinner than during last year's Libya crisis, is driving fear that the West's tensions with Iran could send prices as high as in 2008, when crude neared $150 a barrel.
Last year, crude prices rose when Libya's civil war interrupted 1.3 million barrels a day of the country's oil exports, a situation that prompted the U.S. to tap its Strategic Petroleum Reserve to keep prices down.
This year, a standoff between the West and Iran over Tehran's nuclear program is raising even more concern in markets. Iranian officials have threatened to shut down the Strait of Hormuz, the route used to ship most Gulf oil and a fifth of global supplies. Markets are buzzing with talk that the U.S. and U.K. might dip into their reserves, something President Barack Obama and British Prime Minister David Cameron discussed last week without making any decisions.
One major reason that anxiety about Iran is more intense than the concerns about Libya a year ago is that so-called spare production capacity -- the amount of idle output that can be swiftly brought online if needed -- is already more stretched than it was in 2011.
Spare capacity stood at 2.5 million barrels a day on average in January and February this year, compared with 3.7 million barrels a day in the same period last year. The numbers come from the Energy Information Administration, an agency that predicts oil-market trends for the U.S. government.
This year, global oil demand is up by about one million barrels a day to around 89 million barrels. But technical and political problems have already shut down 750,000 barrels a day from Canada to South Sudan, before factoring in any disruption from the Iranian situation. A rumor of a Saudi oil-pipeline explosion, which proved not true, recently helped push crude prices in London above $128 a barrel -- a level not seen in nearly four years.
On Friday, light, sweet crude for April delivery rose $1.95, or 1.9%, to settle at $107.06 a barrel on the New York Mercantile Exchange. May Brent crude on the ICE Futures Europe exchange settled up $3.21, or 2.6%, at $125.81 a barrel.
The potential for a surge in prices amid tight markets is a rare point of agreement between the U.S. and Iran.
"This is something everybody is watching for," said U.S. Deputy Energy Secretary Daniel Poneman on the sidelines of an energy conference in Kuwait. "Nobody wants to see a reprise of what happened in 2008," he said, referring to an all-time high of $147 a barrel for Nymex crude that contributed to a global recession. That upswing, too, came amid an intensification of tensions with Iran at a time when the cushion of spare capacity was shrinking.
Speaking at the same Kuwait conference, Muhammad Ali Khatibi, a top Iranian oil official, echoed his American counterpart, warning in an interview that prices may not have seen the worst of it. "For now, nothing has happened. But what if something happens?" Mr. Khatibi asked. "It will be like 2008."
Meanwhile, Iraq on Sunday revealed details of a contingency plan for oil exports in case of a closure of the Strait of Hormuz. Some 80% of Iraq's 2.2 million barrels a day of crude-oil exports pass through the strait. The plan includes reopening a 1.5-million-barrel-a-day pipeline that connects Iraq to the Red Sea through Saudi Arabia, an Iraqi government spokesman said. The pipeline was shut down in 1990 when Iraq invaded Kuwait, and Saudi Arabia has been using part of the pipeline to ship oil domestically. The plan also proposes that Iraq should add capacity from its northern export pipeline to the port of Ceyhan in Turkey.
The global oil situation is fueling concerns that rising prices will undercut the long-gestating global economic recovery. "Oil prices at current levels are so high it is not consistent with sustained economic recovery," Mr. Poneman said.
Numbers point to an even more testing time in the second half. Demand for crude will increase as U.S. and European refineries return to operation after seasonal maintenance, right when sanctions against Iran bite the hardest as the full European Union embargo goes into effect. Also, a U.S. ban on oil trades with Iran's central bank will begin at the end of June.
After they kick in this summer, the EU embargo and U.S. sanctions may take one million barrels a day of Iran crude off the markets, according to the International Energy Agency, which represents some of the world's largest oil consumers.
Credit: By Benoit Faucon
Subject: Crude oil; Commodity prices
Classification: 3400: Investment analysis & personal finance; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.6
Publication year: 2012
Publication date: Mar 19, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928883358
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928883358?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Oil Climbs After IMF's Cautious Outlook
Author: Bird, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 Mar 2012: n/a.
ProQuest document link
Abstract:
According to preliminary estimates from four analysts surveyed by Dow Jones Newswires, U.S. crude-oil inventories rose by 2.4 million barrels in the week ended March 16.
Full text: NEW YORK--U.S. crude-oil futures prices settled higher Monday, with trading dominated by position adjustments that suggest still-higher prices on the horizon.
Traders said there was little news to drive trading, noting the International Monetary Fund sent mixed signals about the global economic outlook.
"The bulls are in control and the thinking seems to be to err to the upside," said Tom Bentz, director, at BNP Paribas Prime Brokerage.
Business on the New York Mercantile Exchange was led by position squaring ahead of the expiration at the Tuesday's settlement of the April contract, which settled at its highest level since March 1. Trading in the May contract was about three times as heavy as in the April contract and suggests still higher prices.
Light, sweet crude for April settled 1%, or $1.03 a barrel higher, at $108.09 a barrel. May settled up 0.9%, or 98 cents higher, at $108.56 a barrel.
ICE North Sea Brent crude was little changed in late trading, off 9 cents, at $125.72 a barrel.
The price of April-delivery reformulated gasoline blendstock futures settled at the highest level since April 29 and the average price so far this month indicates pump prices may soon hit $4 a gallon on the national average for the first time since summer 2008. AAA Daily Fuel Gauge said the national average retail price Monday was $3.842 a gallon, up 4.1 cents from a week ago. The average of RBOB prices so far in March is $3.314 a gallon. Based on the long-term differential of 70 cents a gallon between futures and retail prices, regular gasoline at the pump is on target for $4 a gallon soon.
IMF Managing Director Christine Lagarde said Sunday in Beijing she sees hopeful signs that the world economy is stabilizing. But she also sees risks, including a slowdown in emerging-market economies.
"The world economy has stepped back from the brink and we have cause to be more optimistic," she said. Decisions by the European Central Bank and some European countries have been helpful, along with measures to extend renewed support for Greece, while recent economic indicators in the U.S. and elsewhere that "are beginning to look a little more upbeat," she said.
But she also warned that the rising price of oil is becoming a threat to global economic growth, especially to emerging economies, which have been leading growth in oil demand.
Traders said the market remained cautious about the potential for consumer countries to release emergency stocks amid high prices and the potential for disruption to normal supply lines, when the July 1 embargo on European Union imports of Iranian crude takes effect. Prices moved broadly last week after reports, denied by the U.S., that the U.K. and U.S. had agreed on a plan to tap reserves soon.
Near-term price direction will come from U.S. oil inventory data due Wednesday.
U.S. weekly oil data are expected to show crude-oil stocks increased last week while refiners modestly trimmed operations.
According to preliminary estimates from four analysts surveyed by Dow Jones Newswires, U.S. crude-oil inventories rose by 2.4 million barrels in the week ended March 16. The closely watched government survey from the Energy Information Administration is due at 10:30 a.m. EDT Wednesday.
Gasoline stocks are expected to fall by 2.4 million barrels, while distillate stocks, comprising heating oil and diesel fuel, are expected to fall by 1 million barrels. Refiners are expected to trim operation by 0.2 percentage point from the 82.7% of capacity level reported a week earlier by the EIA.
The American Petroleum Institute, an industry group, is set to release its survey for the same period at 4:30 p.m. EDT Tuesday.
April reformulated gasoline blendstock futures settled 1.09 cents higher, at $3.3678 a gallon. Heating oil for April delivery settled 2.06 cents lower, at $3.2613 a gallon.
Write to David Bird at david.bird@dowjones.com
Credit: By David Bird
Subject: Petroleum industry; Futures; Prices
Location: United States--US New York
Company / organization: Name: International Monetary Fund--IMF; NAICS: 522298
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 19, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928945037
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928945037?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
So Far, Economy Hasn't Slipped on Oil Prices
Author: Casselman, Ben; Izzo, Phil
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 Mar 2012: n/a. [Duplicate]
ProQuest document link
Abstract:
When prices skyrocketed in 2008, consumers had to slash spending, light rail systems were overwhelmed and auto makers were stuck with thousands of inefficient and suddenly unpopular SUVs. Conventional wisdom has held that this year's price increase is at least partly supply-driven, this time related to tensions with Iran, although some economists have argued rising demand is also playing a role.
Full text: Rising oil prices haven't stalled the U.S. economic recovery. But that doesn't mean they won't in the months ahead.
High oil prices can ripple through an economy, sapping consumer confidence, eating into spending, driving up prices and ultimately slowing hiring and investment. The good news is that hasn't happened yet. "Consumers have yet to get really rattled," said Ellen Zentner, an economist at Nomura Securities International.
On Friday, a Thomson-Reuters University of Michigan report noted a slight decline in consumer sentiment from its previous reading, but the index remains above levels recorded at the end of last year when prices began to rise.
Of the 50 economists who responded to the Wall Street Journal's monthly forecasting survey, 37--just shy of three quarters--said oil prices haven't yet had a significant impact on growth. But when it comes to the future, there's much less consensus. Asked what price would have a meaningful impact, economists gave answers ranging from $115 per barrel, only modestly above their current level, to $250 per barrel, a price that implies a near-catastrophic supply disruption.
Economists say oil's impact on the economy will hinge on four questions:
1. How high do prices go? Pundits often talk as if gas prices can only go up. In the immediate term, they may be right. Crude-oil prices take weeks to filter through to consumers, so recent oil-price gains aren't yet being fully felt at the pump. Gasoline prices also tend to rise through the spring, peaking around May.
But beyond that, the path is less clear. Crude-oil prices have steadied in recent days, although no one knows how long the pause will last. Futures markets expect prices at the pump to peak at a bit over $4 per gallon this spring, around the level they hit in 2008.
All of this matters because research has shown that consumers respond much more when prices hit new records than when they merely return to recent highs. A recent Gallup poll found that most Americans wouldn't cut back their spending or make other major changes until prices hit $5 a gallon, although other polls have found lower thresholds.
"Everybody understood that $4 gasoline is something that you might have to live with," said James Hamilton, a University of California, San Diego, economist who has studied the economic impact of oil prices. "When it's a higher price than anybody remembers paying, that gets their attention."
2. How fast do prices rise? Prices get the headlines, but many experts argue that what matters more is how quickly they're rising. A long, gradual run-up gives both consumers and businesses more time to adjust.
Rapid price spikes are much harder to handle. When prices skyrocketed in 2008, consumers had to slash spending, light rail systems were overwhelmed and auto makers were stuck with thousands of inefficient and suddenly unpopular SUVs.
"If we hit $5 two years from now and there's a gradual rise up to then, that's not going to be a big problem," said Dean Maki, chief U.S. economist for Barclays Capital. "If we hit $5 tomorrow, that's going to be a problem."
One reason consumers seem to be taking the most recent rise in prices in stride, Mr. Maki argues, is that the jump hasn't actually been all that dramatic. In 2008, gasoline prices leapt 50% in nine months. Last year's spike was nearly as big. This time, prices are up just 19% since their most recent low, in December--to $3.83 a gallon, on average, according to the U.S. Energy Information Administration. Prices at the pump would have to hit around $4.80 in the next few months to mirror the earlier increases.
3. Why are prices going up? Oil prices can go up because of either rising demand or falling supply. The two have different economic implications.
In general, a demand-driven run-up in prices doesn't worry economists nearly as much as a supply-driven one. That's because rising demand generally indicates a growing economy. If prices get high enough to slow growth, then demand will slow too, bringing prices back down again.
A supply disruption has more significant consequences because it can drive up oil prices even in a weak economy. That's what happened last year: War in Libya and turmoil elsewhere in the Middle East sent prices soaring at a time when the U.S. economy was too weak to withstand the shock.
Conventional wisdom has held that this year's price increase is at least partly supply-driven, this time related to tensions with Iran, although some economists have argued rising demand is also playing a role. Any escalation in tensions could drive prices higher in coming months. "There's certainly a fear that it could worsen," said David Greenlaw, chief U.S. economist for Morgan Stanley.
4. How strong is the rest of the economy? Last year, oil prices tested the strength of the U.S. economy, and the economy failed the test. Are we better prepared this year?
Some economists argue the answer is yes. The job market is healthier than at any point since the recession began. Households have had another year to pay down debts and get their balance sheets in order. The real-estate market is showing cautious signs of improvement.
If the economy is on firmer footing, it would take a bigger shock to knock it off balance.
"Only a major oil supply disruption could cause a U.S. and global recession," said Stuart Hoffman of PNC Financial Services Group.
The fact that oil prices haven't yet derailed the recovery suggests a level of stability that has been absent for much of the past two years. But don't count on it holding up so well if prices take another sharp upward turn.
Write to Ben Casselman at ben.casselman@wsj.com and Phil Izzo at philip.izzo@wsj.com
Credit: By Ben Casselman and Phil Izzo
Subject: Gasoline prices; Economists; Colleges & universities; Energy economics
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 19, 2012
Section: US
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928945051
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928945051?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Talks Set in Sudan Oil Standoff
Author: Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 Mar 2012: n/a.
ProQuest document link
Abstract:
According to Mr. Kirr, South Sudan can't exercise the ICC's warrant to arrest the Sudanese leader because it has "its own problems to solve first."
Full text: KAMPALA, Uganda--The presidents of Sudan and South Sudan will meet in the South's capital, Juba, in the first week of April, officials said Monday, representing a breakthrough in the standoff over oil-transit fees that has been threatening to cripple both countries' economies.
After weeks of negotiations the two nations appear to be headed for an understanding that could allow the resumption of South Sudan oil exports through Sudan in the next few months, according to people familiar with the situation.
Sudan's foreign-affairs minister, Ali Karti, said the south's President Salva Kiir and the north's President Omar al-Bashir are expected to sign recently agreed deals to safeguard the status of each other's citizens and demarcate their oil-rich common border.
"The summit will open a new path for the resolution of all of our differences," he said, after recent negotiations in Addis Ababa, Ethiopia, created an atmosphere "conducive" for the resolution of the oil-transit spat.
Atif Kirr, the spokesman for South Sudan's ruling party, the Sudan People's Liberation Movement, said separately that Juba is preparing a warm welcome for Mr. Bashir, his first visit since the country gained independence.
"We are determined to end this oil row," he said.
Mr. Bashir has been increasingly isolated in recent years and fears visiting most African states following his indictment by the International Criminal Court in The Hague over war crimes in the restive Darfur region. According to Mr. Kirr, South Sudan can't exercise the ICC's warrant to arrest the Sudanese leader because it has "its own problems to solve first."
The spat over oil-transit fees has heightened tensions between the two countries in recent weeks, with each accusing the other of raids and bombing along their common border. Analysts fear that failure to resolve the spat could lead to the resumption of armed conflict.
South Sudan in January shut down its production of 350,000 barrels of oil a day after accusing Sudan of stealing its oil. Sudan said it confiscated the crude to recover unpaid transit fees owed by South Sudan since its secession in July.
Sudan has been asking for $32 a barrel in transit fees, while South Sudan says it will pay less than $1 a barrel in accordance with international standards.
Last week, South Sudan said it would also call for the lifting of sanctions against Sudan provided Sudan ends wars with rebels in the restive regions of Darfur and South Kordofan. The halting of oil shipments has squeezed both nations, and South Sudan has already implemented austerity measures to cope with the loss of oil revenue financially.
Write to Nicholas Bariyo at nicholas.bariyo@dowjones.com
Credit: By Nicholas Bariyo
Subject: Fees & charges
Location: South Sudan
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 19, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928945191
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928945191?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Europe's Economy Tolerant of Oil's Gradual Rise; In 2008, Consumers Faced Three Straight Quarters When Brent Soared 50% to 70% From Year-Earlier Levels
Author: Herron, James
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 Mar 2012: n/a.
ProQuest document link
Abstract:
After examining a number of different scenarios, Daniel Ahn, adjunct fellow for energy at the Council on Foreign Relations, a New York-based think tank, concluded that sudden increases in oil prices are far more damaging to an economy than more gentle rises with the same cumulative effect.
Full text: Oil prices hit fresh highs in euros and sterling last week, but so far there is little sign that the jump in prices is causing the same economic havoc as in the summer of 2008, when oil prices last set records.
So far, Europe has proved resilient to high oil prices, even as they compound its problems with debt and a weak economy. Barring a war with Iran, analysts say a repeat of 2008's whipsaw, when oil prices surged and plunged, taking down stock markets and economic growth, doesn't appear to be looming.
The long-term decline in European and U.S. oil consumption isn't quickening despite a 17% increase in the price of Brent crude since December, according to data released last week from the International Energy Agency.
"I've been surprised at how the trend in falling demand hasn't been accelerating yet," said Matthew Parry, a senior economist at the IEA. "The trend in the numbers doesn't look all that different than if prices had been level."
This resilience may be because the surge in prices this time has been less sudden, other analysts say.
In 2008, oil consumers faced three consecutive quarters in which the average price of Brent crude was between 50% and 70% higher than a year earlier. In contrast, Brent was up 27% in the fourth quarter of 2011 compared with the final months of 2010, and is 10% higher this quarter from a year earlier. The front-month contract traded Monday at $125.71 a barrel, compared with $107.38 at the end of 2011.
In other words, European consumers may be paying the highest prices ever for their gasoline, but the path this time has been relatively gradual.
After examining a number of different scenarios, Daniel Ahn, adjunct fellow for energy at the Council on Foreign Relations, a New York-based think tank, concluded that sudden increases in oil prices are far more damaging to an economy than more gentle rises with the same cumulative effect.
A 50% surge in oil prices over just six months could reduce gross domestic product growth by as much as four percentage points, he found. The same scale of price shock spread over 18 months would reduce GDP growth by at most two percentage points.
The impact is smaller during a gradual price increase because, "time is a precious commodity that allows consumers to adjust to shocks," he said. "What consumers can do is ration themselves. Maybe [they] swap a clunker for a hybrid [car]."
If there is less time to adapt, an oil-price spike can suck cash out of the rest of the economy.
"Transport and energy form the biggest nondiscretionary component of household spending. A sharp rise in spending on these, without compensating income gains, reduces the pot available to spend on discretionary items, resulting in lower overall demand," said Madhur Jha, global economist at HSBC.
This can happen regardless of the absolute level of the oil price. From 1999 to 2000, "the oil price surged by 150% [from $10 a barrel to $25 a barrel] and global growth halved the following year," said Ms. Jha.
Drastic changes like this cause the economy and financial markets to lurch. "Oil prices will slingshot back as demand gets crushed," Mr. Ahn said.
While the oil market doesn't appear to be headed for such a scenario now, the standoff between Iran and the West over the country's nuclear program is a potential flash point. A military conflict in the Strait of Hormuz, the route used to ship most Gulf oil and a fifth of global supplies, could lead to a sudden 50% increase in oil prices and all the damage to economic growth that may entail, he said.
Write to James Herron at james.herron@dowjones.com
Credit: By James Herron
Subject: Petroleum industry; International relations; Gross Domestic Product--GDP
Company / organization: Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 19, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928971458
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928971458?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
We Should Exploit Our Oil Resources
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 Mar 2012: n/a.
ProQuest document link
Abstract:
Five hundred billion barrels of recoverable oil within America's borders is enough to reverse the major geopolitical shift that occurred after World War II, when the Persian Gulf replaced the Gulf of Mexico-Caribbean Basin region as the world's premier oil producer.
Full text: Stephen Moore's (Cross Country, March 10), contrasting California's energy policy with North Dakota's, doesn't adequately recognize the geopolitical significance of the 500 billion barrels of oil which are probably recoverable from Dakota shale formations. This is nearly twice the estimated 264 billion barrels of recoverable reserves in Saudi Arabia.
Five hundred billion barrels of recoverable oil within America's borders is enough to reverse the major geopolitical shift that occurred after World War II, when the Persian Gulf replaced the Gulf of Mexico-Caribbean Basin region as the world's premier oil producer. Five hundred billion barrels of recoverable oil will restore the energy independence that was a major factor in winning that war and will end the absurdity of the West's dependence on reactionary Islamist societies that seek our destruction.
It can similarly end the need to send American military personnel into harm's way to secure an oil lifeline from the Persian Gulf. The question remains whether we will have the will to implement the necessary changes or whether we will remain hostage to environmental lobbies and global-warming alarmists who blind themselves to the political and ecological problems of Third World oil production.
Robert M. Petrusak
Fairfax, Va.
Subject: Petroleum industry; Geopolitics; Petroleum production; Oil reserves
Location: Persian Gulf North Dakota Saudi Arabia Gulf of Mexico
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 19, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928971467
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928971467?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Fears of a 2008 Repeat for Oil; As Iran Tensions Rise, Excess Global Output Capacity Has Slipped; Tough Summer Ahead
Author: Faucon, Benoit
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 Mar 2012: n/a.
ProQuest document link
Abstract:
Last year, crude prices rose when Libya's civil war interrupted 1.3 million barrels a day of the country's oil exports, a situation that prompted the U.S. to tap its Strategic Petroleum Reserve to keep prices down. After they kick in this summer, the EU embargo and U.S. sanctions may take one million barrels a day of Iran crude off the markets, according to the International Energy Agency, which represents some of the world's largest oil consumers.
Full text: A shrinking cushion of available oil, which is already thinner than during last year's Libya crisis, is driving fear that the West's tensions with Iran could send prices as high as in 2008, when crude neared $150 a barrel.
Last year, crude prices rose when Libya's civil war interrupted 1.3 million barrels a day of the country's oil exports, a situation that prompted the U.S. to tap its Strategic Petroleum Reserve to keep prices down.
This year, a standoff between the West and Iran over Tehran's nuclear program is raising even more concern in markets. Iranian officials have threatened to shut down the Strait of Hormuz, the route used to ship most Gulf oil and a fifth of global supplies. Markets are buzzing with talk that the U.S. and U.K. might dip into their reserves, something President Barack Obama and British Prime Minister David Cameron discussed last week without making any decisions.
One major reason that anxiety about Iran is more intense than the concerns about Libya a year ago is that so-called spare production capacity--the amount of idle output that can be swiftly brought online if needed--is already more stretched than it was in 2011.
Spare capacity stood at 2.5 million barrels a day on average in January and February this year, compared with 3.7 million barrels a day in the same period last year. The numbers come from the Energy Information Administration, an agency that predicts oil-market trends for the U.S. government.
This year, global oil demand is up by about one million barrels a day to around 89 million barrels. But technical and political problems have already shut down 750,000 barrels a day from Canada to South Sudan, before factoring in any disruption from the Iranian situation. A rumor of a Saudi oil-pipeline explosion, which proved not true, recently helped push crude prices in London above $128 a barrel--a level not seen in nearly four years.
On Friday, light, sweet crude for April delivery rose $1.95, or 1.9%, to settle at $107.06 a barrel on the New York Mercantile Exchange. May Brent crude on the ICE Futures Europe exchange settled up $3.21, or 2.6%, at $125.81 a barrel.
The potential for a further surge in prices amid tight markets is a rare point of agreement between the U.S. and Iran.
"This is something everybody is watching for," said U.S. deputy energy secretary Daniel Poneman on the sidelines of an energy conference in Kuwait. "Nobody wants to see a reprise of what happened in 2008," he said, referring to an all-time high of $147 a barrel for Nymex crude that contributed to a global recession. That upswing, too, came amid an intensification of tensions with Iran at a time when the cushion of spare capacity was shrinking.
Speaking at the same Kuwait conference, Muhammad Ali Khatibi, a top Iranian oil official, echoed his American counterpart, warning in an interview that prices may not have seen the worst of it. "For now, nothing has happened. But what if something happens?" Mr. Khatibi asked. "It will be like 2008."
The situation is fueling concerns that rising oil prices will undercut the long-gestating global economic recovery. "Oil prices at current levels are so high it is not consistent with sustained economic recovery," Mr. Poneman said.
Numbers point to an even more testing time in the second half of the year. Demand for crude will increase as U.S. and European refineries return to operation after seasonal maintenance, right when sanctions against Iran bite the hardest as the full European Union embargo goes into effect. Also, a U.S. ban on oil trades with Iran's central bank will begin at the end of June.
After they kick in this summer, the EU embargo and U.S. sanctions may take one million barrels a day of Iran crude off the markets, according to the International Energy Agency, which represents some of the world's largest oil consumers.
Partly as a result, demand will exceed production by roughly that same amount--1.1 million barrels a day--in the third quarter, according to the Energy Information Administration. Use of existing inventories would likely make up the difference. Iran exports about 2.2 million barrels of crude a day.
Sanctions against Iran are "happening at a time when the market is tight," said Christophe de Margerie, chief executive of French oil giant Total SA in an interview. "Demand is strong" while supply problems are "piling up," he said.
"The uncertainty is how the Iranian supplies may develop," said IEA Executive Director Maria van der Hoeven.
Ms. van der Hoeven said that, for now, there is enough oil to meet demand.
But asked if she was worried about the oil market this year, she said Middle East tensions could still go out control. The powder keg is "in this part of world," she said.
Write to Benoit Faucon at benoit.faucon@dowjones.com
Credit: By Benoit Faucon
Subject: Petroleum industry; Crude oil prices; Strategic petroleum reserve; Production capacity
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 19, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928971630
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928971630?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Chevron's Troubled Waters; Planned Criminal Charges After Offshore Oil Leak Casts Pall Over Development
Author: Gilbert, Daniel; Lyons, John
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 Mar 2012: n/a.
ProQuest document link
Abstract:
The developments are a blow for Chevron, which has about 700 million barrels of oil reserves in the country and is spending about $2 billion on one of its largest oil projects there, the offshore Papa-Terra field, with Brazil's state-owned energy company, Petroleo Brasileiro SA, or Petrobras.
Full text: Brazilian prosecutors' planned criminal charges against Chevron Corp. executives for an offshore oil leak threaten to stifle foreign companies' drilling plans in the petroleum-rich nation.
Brazil will file criminal charges Wednesday against executives from Chevron and drilling-rig operator Transocean Ltd., accusing them of environmental crimes related to an offshore oil spill in November, prosecutor Eduardo Santos de Oliveira said in an interview Monday.
Chevron has struggled to defuse the backlash stemming from the accident, which occurred on the sea floor in the Frade field some 230 miles northeast of Rio de Janeiro. Last week, the U.S. oil giant reported that a second subsea leak was releasing a small amount of oil into the ocean. The company has sealed off its production from the field.
On Friday, a Brazilian judge barred a group of executives and employees of Chevron and Transocean from leaving the country.
Mr. Oliveira said "there exists information and evidence that criminal conduct occurred" by employees at the companies related to the November drilling accident, which caused an estimated 2,400 to 3,000 barrels of oil to seep from the seabed.
"We will defend the company and its employees. Chevron is confident that once all the facts are fully examined, they will demonstrate that Chevron responded appropriately and responsibly to the incident," Kurt Glaubitz, a spokesman for the San Ramon, Calif., company said in a statement.
Transocean spokesman Guy Cantwell said the company "has always cooperated with the authorities but will also continue to vigorously defend its staff."
The developments are a blow for Chevron, which has about 700 million barrels of oil reserves in the country and is spending about $2 billion on one of its largest oil projects there, the offshore Papa-Terra field, with Brazil's state-owned energy company, Petroleo Brasileiro SA, or Petrobras.
"If you're heading to Brazil to manage your company's operations, I think some executives would be very alarmed about this," said Subash Chandra, an analyst for Jefferies & Co. in New York.
Pavel Molchanov, a Raymond James analyst in Houston, said Brazil has more at stake than Chevron, which he said had 1% of its reserves there.
"The Brazilian government is shooting itself in the foot," Mr. Molchanov said. "Brazil still needs capital and technological expertise. It is not to Brazil's strategic benefit to frighten people into leaving, or to not investing."
A Chevron spokesman said the company hasn't changed its investment plans in Brazil, but the company's chief executive, John Watson, told analysts last week that the company's future in Brazil "remains to be seen."
The controversy is rippling through Brazil's offshore-drilling industry, dominated by Petrobras, but could impact international oil companies that partner with the state-owned firm, such as the U.K.'s BG Group.
Denver-based Anadarko Petroleum Corp. is looking to sell its holdings in 700,000 acres off Brazil's coast. Spokesmen for both companies declined to comment Monday.
The massive deposits of oil off Brazil's shores are highly attractive for companies looking for a foothold in one of the few countries in the world that has the potential to increase production and isn't a member of the Organization of Petroleum Exporting Countries.
Developing Brazil's offshore oil reserves holds enormous political stakes for administration of President Dilma Rousseff. Her Workers Party has promised to use oil proceeds to provide more welfare programs and sustain a years-long economic expansion.
In November, Chevron provoked strong criticism from Brazilian officials after admitting that it miscalculated the pressure of oil and gas in its Frade reservoir and caused oil to seep through cracks in the sea floor. At the time, the company publicly absolved contractor Transocean of responsibility.
The amount of oil spilled was relatively small, less than 1% of the 2010 BP PLC spill in the Gulf of Mexico.
But Brazilian regulators have fined Chevron millions of dollars for environmental violations and barred it from exploratory drilling, a ban which remains in effect. Federal prosecutors filed a civil lawsuit seeking about $11 billion from Chevron and Transocean.
Among the executives subject to the judge's order restricting movements is George Buck, the American who heads Chevron's Brazilian subsidiary.
Chevron's Mr. Glaubitz declined to comment on whether the new leak was related to the company's nearby operations, pending a technical review which will take months to complete. The seep, which Chevron estimates at less than a barrel a day, is being contained by a subsea device shaped like an upside-down cone.
Brazil's national oil regulatory agency said Monday n a statement after an evaluation that there was nothing to indicate that the leak at the Frade field has increased.
Seeps, which can occur naturally, are common in waters above oil reservoirs. In the 1940s, dark petroleum stains on the surface of the Gulf of Mexico clued drillers to the potential buried beneath the ocean floor, which became one of the U.S.'s biggest sources of oil.
But in Brazil, the seeps have added to the debate about how to regulate offshore drilling, with the BP spill still looming large in the public conversation.
Some 12 Chevron and five Transocean employees will be charged with environmental crimes that carry potential prison terms of between two and five years, Mr. Oliveira said. A federal judge will then decide whether to bring the charges to trial.
State-run Petrobras is also drawing scrutiny from federal prosecutors for a recent spate of accidents, Mr. Oliveira said. Petrobras suffered three accidents that caused oil spills over a month-long period between January and February, including a 30-barrel spill in the Campos Basin.
Jeff Fick contributed to this article.
Credit: By Daniel Gilbert And John Lyons
Subject: Oil reserves; Petroleum industry; Public prosecutors
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 19, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928991312
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928991312?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Chevron's Troubled Waters; Brazil Plans Criminal Charges After Oil Leak, Casting Pall Over Development
Author: Gilbert, Daniel; Lyons, John
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Mar 2012: n/a.
ProQuest document link
Abstract:
Brazil will file criminal charges Wednesday against executives from Chevron and drilling-rig operator Transocean Ltd., accusing them of environmental crimes related to an offshore oil spill in November, prosecutor Eduardo Santos de Oliveira said in an interview Monday. The developments are a blow for Chevron, which has about 700 million barrels of oil reserves in the country and is spending about $2 billion on one of its largest oil projects there, the offshore Papa-Terra field, with Brazil's state-owned energy company, Petroleo Brasileiro SA, or Petrobras.
Full text: Brazilian prosecutors' planned criminal charges against Chevron Corp. executives for an offshore oil leak threatens to stifle foreign companies' drilling plans in this petroleum-rich nation.
Brazil will file criminal charges Wednesday against executives from Chevron and drilling-rig operator Transocean Ltd., accusing them of environmental crimes related to an offshore oil spill in November, prosecutor Eduardo Santos de Oliveira said in an interview Monday.
Chevron has struggled to defuse the backlash stemming from the accident, which occurred on the sea floor in the Frade field some 230 miles northeast of Rio de Janeiro. Last week, the U.S. oil giant reported that a second subsea leak was releasing a small amount of oil into the ocean. The company has sealed off its production from the field.
On Friday, a Brazilian judge barred a group of executives and employees of Chevron and Transocean from leaving the country.
Mr. Oliveira said "there exists information and evidence that criminal conduct occurred" by employees at the companies related to the November drilling accident, which caused an estimated 2,400 to 3,000 barrels of oil to seep from the seabed.
"We will defend the company and its employees. Chevron is confident that once all the facts are fully examined, they will demonstrate that Chevron responded appropriately and responsibly to the incident," Kurt Glaubitz, a spokesman for the San Ramon, Calif., company said in a statement.
Transocean spokesman Guy Cantwell said the company "has always cooperated with the authorities but will also continue to vigorously defend its staff."
The developments are a blow for Chevron, which has about 700 million barrels of oil reserves in the country and is spending about $2 billion on one of its largest oil projects there, the offshore Papa-Terra field, with Brazil's state-owned energy company, Petroleo Brasileiro SA, or Petrobras.
"If you're heading to Brazil to manage your company's operations, I think some executives would be very alarmed about this," said Subash Chandra, an analyst for Jefferies & Co. in New York.
Pavel Molchanov, a Raymond James analyst in Houston, said Brazil has more at stake than Chevron, which he said had 1% of its reserves there.
"The Brazilian government is shooting itself in the foot," Mr. Molchanov said. "Brazil still needs capital and technological expertise. It is not to Brazil's strategic benefit to frighten people into leaving, or to not investing."
Chevron's Mr. Glaubitz said the company hasn't changed its investment plans in Brazil, but the company's chief executive, John Watson, told analysts last week that the company's future in Brazil "remains to be seen."
The controversy is rippling through Brazil's offshore-drilling industry, dominated by Petrobras. Brazil's approach could impact Petrobras and international oil companies that partner with the state-owned firm, such as the U.K.'s BG Group.
Houston-based Anadarko Petroleum Corp. is looking to sell its holdings in 700,000 acres off Brazil's coast. Spokesmen for both companies declined to comment Monday.
The massive deposits of oil off Brazil's shores are highly attractive for companies looking for a foothold in one of the few countries in the world that has the potential to increase production and isn't a member of the Organization of Petroleum Exporting Countries.
Developing Brazil's offshore oil reserves holds enormous political stakes for administration of President Dilma Rousseff. Her Workers Party has promised to use oil proceeds to provide more welfare programs and sustain a years-long economic expansion.
In November, Chevron provoked strong criticism from Brazilian officials after admitting that it miscalculated the pressure of oil and gas in its Frade reservoir and caused oil to seep through cracks in the sea floor. At the time, the company publicly absolved contractor Transocean of responsibility.
The amount of oil spilled was relatively small, less than 1% of the 2010 BP PLC spill in the Gulf of Mexico.
But Brazilian regulators have fined Chevron millions of dollars for environmental violations and barred it from exploratory drilling, a ban which remains in effect. Federal prosecutors filed a civil lawsuit seeking about $11 billion from Chevron and Transocean.
Among the executives subject to the judge's order restricting movements is George Buck, the American who heads Chevron's Brazilian subsidiary.
Chevron's Mr. Glaubitz declined to comment on whether the new leak was related to the company's nearby operations, pending a technical review which will take months to complete. The seep, which Chevron estimates at less than a barrel a day, is being contained by a subsea device shaped like an upside-down cone.
Brazil's national oil regulatory agency said Monday in a statement after an evaluation that there was nothing to indicate that the leak at the Frade field has increased.
Seeps, which can occur naturally, are common in waters above oil reservoirs. In the 1940s, dark petroleum stains on the surface of the Gulf of Mexico clued drillers to the potential buried beneath the ocean floor, which became one of the U.S.'s biggest sources of oil.
But in Brazil, the seeps have added to the debate about how to regulate offshore drilling, with the BP spill still looming large in the public conversation.
Some 12 Chevron and five Transocean employees will be charged with environmental crimes that carry potential prison terms of between two and five years, Mr. Oliveira said. A federal judge will then decide whether to bring the charges to trial.
State-run Petrobras is also drawing scrutiny from federal prosecutors for a recent spate of accidents, Mr. Oliveira said. Petrobras suffered three accidents that caused oil spills over a month-long period between January and February, including a 30-barrel spill in the Campos Basin.
Jeff Fick contributed to this article.
Corrections & Amplifications
An earlier version of this story incorrectly said that Houston-based Anadarko Petroleum Corp. was based in Denver.
Write to Daniel Gilbert at daniel.gilbert@wsj.com and John Lyons at john.lyons@wsj.com
Credit: By Daniel Gilbert And John Lyons
Subject: Oil reserves; Petroleum industry; Public prosecutors
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 20, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 928989373
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/928989373?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Prices Drop On Saudi Comments
Author: DiColo, Jerry A; Strumpf, Dan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Mar 2012: n/a.
ProQuest document link
Abstract:
According to a Dow Jones survey published earlier this month, the Saudi kingdom produced 9.8 million barrels a day in February, up from 9.625 million barrels a day in January.
Full text: NEW YORK--Oil futures tumbled 2.3% Tuesday as Saudi Arabian officials suggested the world's largest crude exporter will try to rein in prices.
The Mideast nation said late Monday it would work with other producers to "restore oil prices to levels that are fair for producers, consumers and the oil industry," according to a statement from the Saudi cabinet posted by the country's official news agency.
Additionally, Saudi Oil Minister Ali al-Naimi said, "There is no shortage of supply in the market," according to Reuters, and added that his country could raise output to 12.5 million barrels a day if needed. According to a Dow Jones survey published earlier this month, the Saudi kingdom produced 9.8 million barrels a day in February, up from 9.625 million barrels a day in January.
Traders closely follow comments from Saudi Arabia on oil prices, as the member of the Organization of Petroleum Exporting Countries has additional production it can turn on in the event of a shortfall.
Light, sweet crude for April delivery fell $2.48, or 2.3%, to settle at $105.61 a barrel on the New York Mercantile Exchange. The April contract expired at the close of trading Tuesday, and the more heavily traded May contract settled $2.49, or 2.3%, lower, at $106.07 a barrel. Front-month ICE Brent crude for May delivery lost $1.59 a barrel, or 1.3%, to $124.12.
Reports of additional oil tankers steaming from the Middle East, along with rising stockpiles overseas and in the U.S., are helping to calm markets worried about the impact of sanctions against Iranian oil.
"The market is taking notice that oil supplies are increasing in the near term," said Andy Lipow, president of Lipow Oil Associates, an energy-market consultant.
The issue of supply availability has come into sharper focus in the oil market over the past year, as a civil war in Libya and increasing tensions between Iran and the West have roiled many of the world's biggest producers.
A European oil embargo on Iran is set to take full effect July 1, but worries about a military conflict or a closure of the Strait of Hormuz, a key throughway for crude, has put oil markets on high alert.
Morgan Stanley analysts said Tuesday the oil market may need to replace anywhere between 800,000 and two million barrels a day of Iranian exports this summer.
But in a move to further calm fears of a price increase, the U.S. has decided to grant exemptions to Japan and 10 European Union countries to allow them to import some Iranian oil, said Sen. Robert Menendez (D., N.J.), who played a key role in developing the sanctions.
Front-month April reformulated gasoline blendstock, or RBOB, settled 0.47 cent, or 0.1%, lower at $3.3631 a gallon. April heating oil settled 2.46 cents, or 0.8%, lower at $3.2367 a gallon.
In other markets, front-month Nymex natural gas for April delivery lost 1.60 cent per million British thermal units, or 0.7%, to $2.3350.
Write to Jerry A. DiColo at jerry.dicolo@dowjones.com and Dan Strumpf at daniel.strumpf@dowjones.com
Credit: By Jerry A. DiColo And Dan Strumpf
Subject: Petroleum industry; Crude oil prices; Oil prices
Location: New York
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 20, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 929036745
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/929036745?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
IMF's Lagarde Flags Oil Price Threat
Author: Jagota, Mukesh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Mar 2012: n/a.
ProQuest document link
Abstract:
NEW DELHI - A sudden oil price shock could threaten the fragile global economy's recovery, International Monetary Fund Managing Director Christine Lagarde said Tuesday, underscoring the vulnerability of a world trying to shrug off the effects of the euro zone's sovereign debt crisis.
Full text: NEW DELHI - A sudden oil price shock could threaten the fragile global economy's recovery, International Monetary Fund Managing Director Christine Lagarde said Tuesday, underscoring the vulnerability of a world trying to shrug off the effects of the euro zone's sovereign debt crisis.
Brent crude prices for May delivery are at $124.35 a barrel, retreating slightly from $128 earlier this month.
Last year's Libya crisis has already squeezed global oil supply, and growing tensions between the West and Iran could add to supply shocks and drive prices higher. Oil prices have risen about 17% already this year.
At a press conference, Ms. Lagarde warned that prices could jump 20% to 30% if Iran's crude exports fall sharply, as it would take some time for other oil exporters to adjust global supplies and stabilize prices.
Any such disruption in oil output would have "serious consequences" for the world economy, she said.
The global economy is however showing signs of recovery thanks to liquidity injections by the European Central Bank, some fiscal tightening and the IMF's own efforts.
The global economic situation isn't "as dire as it was three months ago... we are really away from the abyss," Ms. Lagarde said.
She dismissed concerns over inflationary risks arising from the nearly [euro]1 trillion that the ECB has provided as part of its long-term refinancing operations of euro zone banks.
Ms. Lagarde, who is in India to attend a conference, also said that the South Asian nation should give priority to encouraging foreign direct investment.
Last year, the Indian government rolled back its decision to open multi-brand retail to foreign investors, costing India prospective investments from retailers such as Wal-Mart Stores Inc.
Write to Mukesh Jagota at mukesh.jagota@dowjones.com
Credit: By Mukesh Jagota
Subject: Petroleum industry; Economic forecasts; Prices; Sovereign debt
Company / organization: Name: International Monetary Fund--IMF; NAICS: 522298; Name: European Central Bank; NAICS: 521110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 20, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 929070183
Document URL: https://login.e zproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/929070183?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Chevron Hits Troubled Waters --- Brazil Plans Criminal Charges After Oil Leak, Casting Pall Over Development
Author: Gilbert, Daniel; Lyons, John
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]20 Mar 2012: B.1.
ProQuest document link
Abstract:
Brazil will file criminal charges Wednesday against executives from Chevron and drilling-rig operator Transocean Ltd., accusing them of environmental crimes related to an offshore oil spill in November, prosecutor Eduardo Santos de Oliveira said in an interview Monday. The developments are a blow for Chevron, which has about 700 million barrels of oil reserves in the country and is spending about $2 billion on one of its largest oil projects there, the offshore Papa-Terra field, with Brazil's state-owned energy company, Petroleo Brasileiro SA, or Petrobras.
Full text: Brazilian prosecutors' planned criminal charges against Chevron Corp. executives for an offshore oil leak threaten to stifle foreign companies' drilling plans in the petroleum-rich nation.
Brazil will file criminal charges Wednesday against executives from Chevron and drilling-rig operator Transocean Ltd., accusing them of environmental crimes related to an offshore oil spill in November, prosecutor Eduardo Santos de Oliveira said in an interview Monday.
Chevron has struggled to defuse the backlash stemming from the accident, which occurred on the sea floor in the Frade field some 230 miles northeast of Rio de Janeiro. Last week, the U.S. oil giant reported that a second subsea leak was releasing a small amount of oil into the ocean. The company has sealed off its production from the field.
On Friday, a Brazilian judge barred a group of executives and employees of Chevron and Transocean from leaving the country.
Mr. Oliveira said "there exists information and evidence that criminal conduct occurred" by employees at the companies related to the November drilling accident, which caused an estimated 2,400 to 3,000 barrels of oil to seep from the seabed.
"We will defend the company and its employees. Chevron is confident that once all the facts are fully examined, they will demonstrate that Chevron responded appropriately and responsibly to the incident," Kurt Glaubitz, a spokesman for the San Ramon, Calif., company said.
Transocean spokesman Guy Cantwell said the company "has always cooperated with the authorities but will also continue to vigorously defend its staff."
The developments are a blow for Chevron, which has about 700 million barrels of oil reserves in the country and is spending about $2 billion on one of its largest oil projects there, the offshore Papa-Terra field, with Brazil's state-owned energy company, Petroleo Brasileiro SA, or Petrobras.
"If you're heading to Brazil to manage your company's operations, I think some executives would be very alarmed about this," said Subash Chandra, an analyst for Jefferies & Co. in New York.
Pavel Molchanov, a Raymond James analyst in Houston, said Brazil has more at stake than Chevron, which he said had 1% of its reserves there.
"The Brazilian government is shooting itself in the foot," Mr. Molchanov said. "Brazil still needs capital and technological expertise. It is not to Brazil's strategic benefit to frighten people into leaving, or to not investing."
Chevron's Mr. Glaubitz said the company hasn't changed its investment plans in Brazil, but the company's chief executive, John Watson, told analysts last week that the company's future in Brazil "remains to be seen."
The controversy is rippling through Brazil's offshore-drilling industry, dominated by Petrobras. The approach could impact international firms that partner with the state-owned firm, such asthe U.K.'s BG Group.
Houston-based Anadarko Petroleum Corp. is looking to sell its holdings in 700,000 acres off Brazil's coast. Spokesmen for both companies declined to comment.
The massive deposits of oil off Brazil's shores are highly attractive for companies looking for a foothold in one of the few countries in the world that has the potential to increase production and isn't a member of the Organization of Petroleum Exporting Countries.
Developing Brazil's offshore oil reserves holds enormous political stakes for administration of President Dilma Rousseff. Her Workers Party has promised to use oil proceeds to provide more welfare programs and sustain a years-long economic expansion.
In November, Chevron provoked strong criticism from Brazilian officials after admitting that it miscalculated the pressure of oil and gas in its Frade reservoir.
The amount of oil spilled was relatively small, less than 1% of the 2010 BP PLC spill in the Gulf of Mexico.
But Brazilian regulators have fined Chevron millions of dollars for environmental violations and barred it from exploratory drilling. Federal prosecutors filed a civil lawsuit seeking about $11 billion from Chevron and Transocean.
Among the executives subject to the judge's order restricting movements is George Buck, the American who heads Chevron's Brazilian subsidiary.
Chevron's Mr. Glaubitz declined to comment on whether the new leak was related to the company's nearby operations. The seep, which Chevron estimates at less than a barrel a day, is being contained by a subsea device shaped like an upside-down cone.
Brazil's national oil regulatory agency said Monday after an evaluation that there was nothing to indicate that the leak at the Frade field has increased.
Seeps, which can occur naturally, are common in waters above oil reservoirs. In the 1940s, dark petroleum stains on the surface of the Gulf of Mexico clued drillers to the potential buried beneath the ocean floor.
But in Brazil, the seeps have added to the debate about how to regulate offshore drilling, with the BP spill still looming large in the public conversation.
Some 12 Chevron and five Transocean employees will be charged with environmental crimes that carry potential prison terms of between two and five years, Mr. Oliveira said. A federal judge will then decide whether to bring the charges to trial.
---
Jeff Fick contributed to this article.
Credit: By Daniel Gilbert and John Lyons
Subject: Oil reserves; Petroleum industry; Litigation; Offshore drilling; Oil spills
Location: Brazil
Company / organization: Name: Chevron Corp; NAICS: 211111, 324110
Classification: 8510: Petroleum industry; 9173: Latin America
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.1
Publication year: 2012
Publication date: Mar 20, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 929078101
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/929078101?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduc tion or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Talks Set in Sudan Oil Standoff
Author: Bariyo, Nicholas
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]20 Mar 2012: A.11.
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Abstract:
Mr. Bashir has been increasingly isolated in recent years and fears visiting most African states following his indictment by the International Criminal Court in The Hague over war crimes in the Darfur region.
Full text: KAMPALA, Uganda -- The presidents of Sudan and South Sudan will meet in the South's capital, Juba, in the first week of April, officials said Monday, representing a breakthrough in the standoff over oil-transit fees that has been threatening to cripple both countries' economies.
After weeks of negotiations the two nations appear to be headed for an understanding that could allow the resumption of South Sudan oil exports through Sudan in the next few months, according to people familiar with the situation.
Sudan's foreign-affairs minister, Ali Karti, said the south's President Salva Kiir and the north's President Omar al-Bashir are expected to sign deals to safeguard the status of each other's citizens and demarcate their oil-rich common border.
Atif Kirr, spokesman for South Sudan's ruling party, the Sudan People's Liberation Movement, said Juba is preparing a warm welcome for Mr. Bashir, his first visit since the country gained independence.
Mr. Bashir has been increasingly isolated in recent years and fears visiting most African states following his indictment by the International Criminal Court in The Hague over war crimes in the Darfur region.
The spat over oil-transit fees has heightened tensions between the two countries in recent weeks, with each accusing the other of raids and bombing along their common border. Analysts fear that failure to resolve the spat could lead to the resumption of armed conflict.
South Sudan in January shut down its production of 350,000 barrels of oil a day after accusing Sudan of stealing its oil. Sudan said it confiscated the crude to recover unpaid transit fees owed by South Sudan since its secession in July.
Sudan has been asking for $32 a barrel in transit fees, while South Sudan says it will pay less than $1 a barrel in accordance with international standards.
Credit: By Nicholas Bariyo
Subject: Fees & charges; Exports; Petroleum production
Location: South Sudan Sudan
Classification: 9177: Africa; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.11
Publication year: 2012
Publication date: Mar 20, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 929083825
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/929083825?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
We Should Exploit Our Oil Resources
Author: Anonymous
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]20 Mar 2012: A.14.
ProQuest document link
Abstract:
Five hundred billion barrels of recoverable oil within America's borders is enough to reverse the major geopolitical shift that occurred after World War II, when the Persian Gulf replaced the Gulf of Mexico-Caribbean Basin region as the world's premier oil producer.
Full text: Stephen Moore's "What North Dakota Could Teach California" (Cross Country, March 10), contrasting California's energy policy with North Dakota's, doesn't adequately recognize the geopolitical significance of the 500 billion barrels of oil which are probably recoverable from Dakota shale formations. This is nearly twice the estimated 264 billion barrels of recoverable reserves in Saudi Arabia.
Five hundred billion barrels of recoverable oil within America's borders is enough to reverse the major geopolitical shift that occurred after World War II, when the Persian Gulf replaced the Gulf of Mexico-Caribbean Basin region as the world's premier oil producer. Five hundred billion barrels of recoverable oil will restore the energy independence that was a major factor in winning that war and will end the absurdity of the West's dependence on reactionary Islamist societies that seek our destruction.
It can similarly end the need to send American military personnel into harm's way to secure an oil lifeline from the Persian Gulf. The question remains whether we will have the will to implement the necessary changes or whether we will remain hostage to environmental lobbies and global-warming alarmists who blind themselves to the political and ecological problems of Third World oil production.
Robert M. Petrusak
Fairfax, Va.
(See related letter: "Letters to the Editor: Let the States Lead U.S. Oil Exploitation" -- WSJ March 24, 2012)
Subject: Petroleum industry; Petroleum production; Geopolitics
Location: North Dakota Persian Gulf Saudi Arabia Gulf of Mexico
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.14
Publication year: 2012
Publication date: Mar 20, 2012
Section: Letters to the Editor
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 929085576
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/929085576?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Mobil, Apple: Money Flow Leaders (XOM, AAPL)
Author: MARKET DATA STAFF
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Exxon Mobil Corp. topped the list in late trading for, which tracks stocks that fell in price but had the largest inflow of money. See the.
Apple Inc. topped the list for, which tracks stocks that rose in price but had the largest outflow of money. See the.
Go to () for complete coverage.
Credit: By MARKET DATA STAFF
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 20, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 929137559
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/929137559?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Saudi Supply Talk Pushes Down Oil
Author: DiColo, Jerry A; Strumpf, Dan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]21 Mar 2012: C.4.
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Abstract:
According to a Dow Jones survey published earlier this month, the Saudi kingdom produced 9.8 million barrels a day in February, up from 9.625 million barrels a day in January.
Full text: NEW YORK -- Oil futures tumbled 2.3% Tuesday as Saudi Arabian officials suggested the world's largest crude exporter will try to rein in prices.
The Mideast nation said late Monday it would work with other producers to "restore oil prices to levels that are fair for producers, consumers and the oil industry," according to a statement from the Saudi cabinet posted by the country's official news agency.
Additionally, Saudi Oil Minister Ali al-Naimi said, "There is no shortage of supply in the market," according to Reuters, and added that his country could raise output to 12.5 million barrels a day if needed. According to a Dow Jones survey published earlier this month, the Saudi kingdom produced 9.8 million barrels a day in February, up from 9.625 million barrels a day in January.
Traders closely follow comments from Saudi Arabia on oil prices, as the member of the Organization of Petroleum Exporting Countries has additional production it can turn on in the event of a shortfall.
Light, sweet crude for April delivery fell $2.48, or 2.3%, to settle at $105.61 a barrel on the New York Mercantile Exchange. The April contract expired at the close of trading Tuesday, and the more heavily traded May contract settled $2.49, or 2.3%, lower, at $106.07 a barrel. Front-month ICE Brent crude for May delivery lost $1.59 a barrel, or 1.3%, to $124.12.
Reports of additional oil tankers steaming from the Middle East, along with rising stockpiles overseas and in the U.S., are helping to calm markets worried about the impact of sanctions against Iranian oil.
"The market is taking notice that oil supplies are increasing in the near term," said Andy Lipow, president of Lipow Oil Associates, an energy-market consultant.
The issue of supply availability has come into sharper focus in the oil market over the past year, as a civil war in Libya and increasing tensions between Iran and the West have roiled many of the world's biggest producers.
A European oil embargo on Iran is set to take full effect July 1, but worries about a military conflict or a closure of the Strait of Hormuz, a key throughway for crude, has put oil markets on high alert.
Morgan Stanley analysts said Tuesday the oil market may need to replace anywhere between 800,000 and two million barrels a day of Iranian exports this summer.
But in a move to further calm fears of a price increase, the U.S. has decided to grant exemptions to Japan and 10 European Union countries to allow them to import some Iranian oil, said Sen. Robert Menendez (D., N.J.), who played a key role in developing the sanctions.
Front-month April reformulated gasoline blendstock, or RBOB, settled 0.47 cent, or 0.1%, lower at $3.3631 a gallon. April heating oil settled 2.46 cents, or 0.8%, lower at $3.2367 a gallon.
In other markets, front-month Nymex natural gas for April delivery lost 1.60 cent per million British thermal units, or 0.7%, to $2.3350.
Credit: By Jerry A. DiColo and Dan Strumpf
Subject: Petroleum industry; Futures trading; Crude oil; Commodity prices
Location: Saudi Arabia United States--US
Classification: 3400: Investment analysis & personal finance; 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Mar 21, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 929134728
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/929134728?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Sudan, South Sudan Trade Accusations Ahead of Oil Talks
Author: Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Mar 2012: n/a.
ProQuest document link
Abstract:
Sudan said it confiscated the crude to recover unpaid transit fees owed by South Sudan since its secession last July. Since the secession, the two countries have been accusing each other of supporting rebels in the other's territory.
Full text: KAMPALA, Uganda--South Sudan and Sudan Wednesday accused each other of cross-border attacks in the latest escalation of rhetoric ahead of a summit called to resolve the oil transit spat between the formerly united countries.
Col. Philip Aguer, the South Sudan army spokesman, accused Sudanese troops of bombing Sudan People's Liberation Army positions in the border Jau region Monday, in violation of a recent non-aggression pact.
"SPLA reminds Khartoum that such behavior will never pass unpunished," he said. "We are ready to invite a third party to investigate all the border violations."
Col. Aguer didn't reveal details of casualties from the alleged bombings. Earlier this month, South Sudan accused Sudan of bombing two oil wells in its Unity state.
Meanwhile Sudan's defense minister, Abdul Rahim Mohamed Hussein, accused the SPLA of giving support to rebels in Sudan's oil-rich region of South Kordofan, in preparation for an imminent attack on Sudanese army positions. South Sudan denies any links with the anti-Khartoum rebels.
Mr. Hussein told state-run Sudan Media Center that any attack in South Kordofan would lead to the revocation of agreements the two countries recently agreed to safeguard the status of each other's citizens and demarcate their oil-rich common border.
South Sudan's President Salva Kiir and his Sudanese counterpart, Omar al Bashir, are slated to sign the two deals during a summit in early April, when they are also expected to discuss the transit fee dispute that has been threatening to cripple both countries' economies.
South Sudan in January shut down its entire 350,000-barrels-of-oil-a-day production after accusing Sudan of stealing its oil. Sudan said it confiscated the crude to recover unpaid transit fees owed by South Sudan since its secession last July.
Since the secession, the two countries have been accusing each other of supporting rebels in the other's territory.
Col. Aguer also accused Sudanese troops of arming nomads and Ugandan rebels of the Lord's Resistance Army in the regions of Raja and South Darfur with the intention of pushing them to destabilize South Sudan, a charge denied by a Sudanese government spokesman.
The spat over oil transit fees has heightened tensions between the two countries in recent weeks. Analysts fear that failure to resolve the dispute could lead to the resumption of armed conflict.
Credit: By Nicholas Bariyo
Location: South Sudan
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 21, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 929148220
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/929148220?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iran Oil Sanctions Exemption Cheers Japan
Author: Iwata, Mari
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Mar 2012: n/a.
ProQuest document link
Abstract:
In a bid to pressure Iran over its suspected nuclear-arms development, the U.S. has said it would take steps against foreign financial institutions in the U.S. that have dealings with Iran's central bank--the clearing house for the country's oil transactions.
Full text: TOKYO--Japanese officials said the U.S.'s decision to exempt Tokyo from new sanctions on Iran reflects Washington's recognition of the nation's efforts to reduce its dependency on Tehran's oil.
Japan will continue to cut its Iranian oil imports "considerably," Chief Cabinet Secretary Osamu Fujimura said Wednesday at a news conference. "We have explained to the U.S. that this trend will accelerate in the future and that we will carry out our reductions considerably."
The exemption comes as a relief for Tokyo, which is seeking to avoid any confrontations with its major ally amid growing concerns about China's military clout.
Officials also pledged to keep reducing oil purchases from Iran, but didn't specify how or by what extent. Industry Minister Yukio Edano said Japan's crude imports from the Islamic Republic have fallen by 40% in the past five years. He added that the imports wouldn't be reduced to zero anytime soon.
The U.S. said it is exempting 11 nations, including European Union members and Japan, from tough new sanctions against Iran, saying they are reducing their dependency on Iranian oil.
Akihiko Tembo, chairman of the Petroleum Association of Japan and oil refiner Idemitsu Kosan Co., said he welcomed the U.S. decision, but that the issue of sanctions proposed by the EU on insurance for Iranian crude shipments still needed to be solved.
"We have to keep watching developments," he said, noting that Japanese companies generally buy insurance from domestic insurers for crude-oil shipments, but that 80% to 90% of such insurance is sold in reinsurance markets.
"Europe is the world largest reinsurance market. If they stop buying, it would be a big problem," Mr. Tembo said.
Foreign Minister Koichiro Gemba said later in the day that the government is in talks with the EU about its proposed sanctions against insuring Iranian crude-oil shipments, and said "We aim to prevent any impact on stable oil supply to Japan."
In a bid to pressure Iran over its suspected nuclear-arms development, the U.S. has said it would take steps against foreign financial institutions in the U.S. that have dealings with Iran's central bank--the clearing house for the country's oil transactions.
Iran has said its nuclear program is for peaceful means.
Japan's oil imports from Iran fell 12% in January compared with a year earlier, much steeper than the 2.1% decline in the total import volume in the month, data from the Ministry of Finance showed.
Japan imported 3.6 million barrels of crude oil per day in 2011, with Iranian crude accounting for 8.7%, down from 9.8% in 2010, according to the MOF. Any cut in imports of crude oil is a vital issue for Japan, which depends entirely on imports for the oil it consumes. Crude imports have taken on greater significance as Japan drastically curbs its reliance on nuclear energy following the Fukushima Daiichi nuclear crisis last year.
Meanwhile, China's Foreign Ministry on Wednesday defended the nation's crude-oil purchases and said it opposes unilateral sanctions. At a daily news briefing, spokesman Hong Lei said China buys its crude oil "through normal channels, which is understandable, reasonable and justified. It isn't in violation of any Security Council resolutions or impaired interests of any third party or international community."
He added, "China always opposes the practice of one country imposing unilateral sanctions against another based on its domestic laws and will not accept such unilateral sanctions to be imposed onto a third country."
China said Wednesday its imports from Iran fell by more than 40% to 1.15 million tons due to a business dispute between Iran's state oil company and one of the two Chinese companies that imports Iranian oil. The two sides have since reached a new agreement. Last year Iran was China's No. 3 source of exported crude, after Saudi Arabia and Angola.
The Obama administration on Tuesday said it won't impose sanctions against Japan or 10 European Union nations that have moved to pare Iranian oil purchases, a move that reflects U.S. efforts to squeeze Tehran's finances without upsetting global energy markets.
Carlos Tejada in Beijing contributed to this article.
Write to Mari Iwata at mari.iwata@dowjones.com
Credit: By Mari Iwata
Subject: Petroleum industry
Location: United States--US
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 21, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 929148263
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/929148263?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.K. Plans Oil Sector Tax Relief
Author: Flynn, Alexis
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: LONDON--Oil and gas firms operating in the U.K. North Sea will be guaranteed tax relief for the costs of retiring old rigs and platform and be given fresh tax allowances totaling £3.5 billion ($5.55 billion) for harder-to-access deep water fields.
The move comes as the U.K. seeks to spur renewed investment in its energy sector, Chancellor of the Exchequer George Osborne said Wednesday in his annual budget speech to lawmakers.
The measure ends months of uncertainty among the region's oil producers and comes after intense talks between government and industry over possible measures to aid investment in the North Sea.
The move extends an olive branch to the industry, which was incensed by a surprise hike in the windfall tax on oil and gas profits last year. A record 18% decline in oil and gas production in 2011 was blamed in part on the tax increase.
Mr. Osborne said Wednesday the government will sign contracts with companies such as Premier Oil and Apache Corp. guaranteeing tax relief for the lifetime of a project. The ironclad government assurance on decommissioning could pave the way for at least £17 billion of new investment over the life of the North Sea basin, said Mr. Osborne.
In addition, it will provide tax allowances for companies investing in fields located in the deeper waters west of the Shetland Islands that are much harder to reach and require greater amounts of capital investment.
Mr. Osborne said the fresh allowances for this harder-to-reach exploration and production would total some £3.5 billion.
Under current rules, the government covers between half and three-quarters of the costs of dismantling old fields by making them tax deductible, but there are fears among many companies--and the banks that lend to them--that these rules could change.
An entire production facility needs to be removed once a reservoir has been exhausted, with its wells plugged and the site returned to as natural a state as possible. The process is expensive and complicated, and poses a number of environmental and safety challenges.
Decom North Sea, a nonprofit organization jointly funded by the industry and the government, expects the cost of decommissioning efforts to reach about £30 billion by 2040.
The issue is particularly acute for the smaller independent firms that are leading much of the next wave of investment in the North Sea, wringing out the last drops of oil from many of the older fields that were sold off by majors like Exxon Mobil Corp. and BP PLC.
These companies have been hamstrung by the legal requirement to provide security, usually letters of credit or large cash deposits, against future decommissioning costs. A tougher economic environment means these companies are finding their access to capital restricted and lenders less willing to issue letters of credit against a backdrop of fiscal uncertainty and declining North Sea production.
Credit: By Alexis Flynn
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 21, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 929159335
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/929159335?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Oil Rises as U.S. Supplies Drop
Author: DiColo, Jerry A
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Mar 2012: n/a.
ProQuest document link
Abstract:
Retail gasoline prices are reaching towards $4 a gallon in the U.S., and many analysts expect prices will continue to rise through the spring.
Full text: NEW YORK--Crude-oil futures moved higher Wednesday after weekly government data showed a surprise drop in U.S. oil inventories.
Light, sweet crude for May delivery gained $1.20, or 1.1%, to settle at $107.27 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 10 cents higher at $124.17 a barrel.
The U.S. Energy Information Administration said crude stockpiles fell by 1.2 million barrels in the week ended March 16, surprising analysts that had expected, on average, an increase of 1.9 million barrels. The closely followed EIA report was mostly in line with data late Tuesday from the American Petroleum Institute that showed a 1.4 million barrel decline. Gasoline stockpiles fell by 1.2 million barrels, the EIA said.
Crude prices gained on the data as declining oil and gasoline stockpiles signaled to investors that supplies are falling despite high prices and still-weak demand. Retail gasoline prices are reaching towards $4 a gallon in the U.S., and many analysts expect prices will continue to rise through the spring.
Still, an increase in stockpiles of distillate, which includes heating oil and diesel, put a lid on gains, said Tom Bentz, director at BNP Paribas Prime Brokerage. "It's was a quick pop, but when you look at it more closely ... it's a bit of a mixed bag," Mr. Bentz said.
Stockpiles of distillate rose by 1.8 million barrels after analysts had expected a 1.6-million-barrel decline.
Futures on Wednesday bounced back after suffering a sharp decline Tuesday. Crude fell by 2.3% after Saudi officials indicated the kingdom would work to keep prices from rising. The report helped calm markets worried about how the global economy will fare with prices well above $100 a barrel for the past month.
Saudi Arabia is the world's largest crude-oil exporter, and investors closely follow comments from the kingdom as it has additional production that it can turn on to increase global supplies.
Separately, France's Energy Minister said Wednesday that the country was mulling a release of strategic oil stockpiles in coordination with its partners in an effort to lower prices.
Front-month April reformulated gasoline blendstock, or RBOB, settled 0.60 cent lower at $3.3571 a gallon. April heating oil settled 2.05 cents lower at $3.2162 a gallon.
Write to Jerry A. DiColo at jerry.dicolo@dowjones.com
Credit: By Jerry A. DiColo
Subject: Petroleum industry; Gasoline prices; Futures
Location: United States--US New York
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 21, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 929159565
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/929159565?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
France Studies Release of Oil Stockpile
Author: Amiel, Géraldine
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: PARIS--France and other industrialized countries are considering releasing some strategic oil stocks to help lower oil prices, French Energy Minister Éric Besson said Wednesday.
"France is studying with its partners all possible options to fight the increase in oil prices," Mr. Besson said in a statement. "Releasing part of the industrialized countries' strategic stocks is one of these options."
The minister's admission came nearly a week after White House spokesman Jay Carney denied reports that the Obama administration had reached an agreement with the U.K. to release crude oil from its emergency reserves.
Last week, U.S. President Barack Obama and British Prime Minister David Cameron agreed to keep open discussions about a possible release of oil held in emergency stockpiles, which have been used in the past to reduce prices or compensate for a supply disruption.
No specific plan has been made in that respect as of now, Mr. Besson said, adding that during a conference in Kuwait earlier this month, International Energy Agency executive director Maria Van Der Hoeven acknowledged a tightening market and left the door open for a future stocks release.
Last June, the IEA released some of its members' strategic oil stocks, for only the third time in its history, to help tame an oil price surge. The effect of the release of some 60 million barrels of oil over 30 days then was nevertheless short-lived due to the impact of the Libyan revolution on oil supplies and as demand, notably from China and the rest of Asia remained substantial and in the early part of the U.S. summer driving season.
Since then, oil prices have stayed well above the $100 a barrel level due to the current geopolitical tensions surrounding Iran and buoyant demand from emerging countries.
Mr. Besson said he was satisfied that Saudi Arabia, the world's largest oil producer in terms of volume and a leading member of the Organization of Petroleum Exporting Countries, had offered to help supply match demand.
He said that Kuwait and the United Arab Emirates, also members of OPEC, shared the same commitment.
The minister noted that he met in Kuwait with energy ministers from Canada, the U.S. and the U.K.
Write to Geraldine Amiel at geraldine.amiel@dowjones.com
Credit: By Géraldine Amiel
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 21, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 929295017
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/929295017?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Brazil Charges Chevron, Transocean Over Oil Leak
Author: Cowley, Matthew
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Mar 2012: n/a.
ProQuest document link
Abstract:
SAO PAULO--A Brazilian federal prosecutor Wednesday indicted Chevron Corp., Transocean Ltd. and 17 executives for alleged environmental crimes and damaging public property related to an offshore oil leak in November, according to a statement on the prosecutor's website.
Full text: SAO PAULO--A Brazilian federal prosecutor Wednesday indicted Chevron Corp., Transocean Ltd. and 17 executives for alleged environmental crimes and damaging public property related to an offshore oil leak in November, according to a statement on the prosecutor's website.
The prosecutor, Eduardo Santos de Oliveira, has asked for the assets of the two companies and the 17 employees to be seized and for each company to post a bond of 10 million Brazilian reais ($5.5 million), and each employee a bond of one million reais, the statement said.
The president of Chevron's Brazil operations, George Buck, and three other Chevron employees also have been charged with other crimes, including obstructing the investigation, the statement said. If found guilty, Mr. Buck faces up to 31 years in jail, according to the statement.
The charges were filed with a federal court in the city of Campos, in Rio de Janeiro state, the statement said.
The statement said Brazil's oil regulator, the ANP, found "serious failures" in the SEDCO 706 oil platform, which belongs to Transocean. In the November spill, an estimated 2,400 to 3,000 barrels of oil seeped from the seabed at a well in Chevron's Frade field in the Atlantic Ocean.
Transocean spokesman Guy Cantwell said: "We strongly disagree with the indictments, they are without merit and we will vigorously defend our company, our people, our reputation and our quality of services."
"Transocean acted responsibly, appropriately and quickly putting safety first. Transocean's crew did exactly what they were trained to do," Mr. Cantwell said in a telephone interview.
"They always maintained control of the well and the rig's equipment worked perfectly. Once all of the facts are fully examined they will demonstrate that we performed to the highest standards," he said.
Chevron said the company is a "scapegoat" in a broader dispute over the country's oil wealth.
A lawyer for Chevron, Oscar Graca Couto, said that there had been no measurable environmental impact from the oil spill. "Not even one sardine perished," Mr. Graca Couto told reporters at a news conference in Rio de Janeiro.
Another Chevron lawyer, Nilo Batista, questioned the jurisdiction of the Brazilian courts, saying that the accident happened outside Brazilian territorial waters.
Chevron has become a scapegoat in a dispute among Brazilian states about how to distribute the wealth from massive oil fields discovered off the country's southeast coast, Mr. Batista said. The company will analyze the prosecutor's charges, he said.
Chevron has never considered leaving Brazil, Mr. Batista said.
On Friday, a Brazilian judge barred a group of 17 executives and employees of Chevron and Transocean, including Mr. Buck, from leaving the country.
Diana Kinch contributed to this article.
Credit: By Matthew Cowley
Subject: Petroleum industry; Public prosecutors; Employees
Location: Rio de Janeiro Brazil
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 21, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 929377696
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/929377696?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Brazil Charges Chevron; Oil Giant, Transocean and Executives Accused of Environmental Crimes in Leak
Author: Cowley, Matthew; Gilbert, Daniel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 Mar 2012: n/a.
ProQuest document link
Abstract:
SAO PAULO--A Brazilian prosecutor filed criminal charges Wednesday against Chevron Corp., Transocean Ltd. and their top executives in the country for an offshore oil spill in November, raising fresh questions about the legal perils of drilling for Brazil's deep-sea riches.
Full text: SAO PAULO--A Brazilian prosecutor filed criminal charges Wednesday against Chevron Corp., Transocean Ltd. and their top executives in the country for an offshore oil spill in November, raising fresh questions about the legal perils of drilling for Brazil's deep-sea riches.
Energy analysts said the environmental-crimes charges--against the firms, 16 of their employees and a subcontractor--are likely to send a chill through an offshore-drilling industry unaccustomed to prosecution for what companies view as inevitable accidents.
The federal prosecutor, Eduardo Santos de Oliveira, is seeking to seize assets from both companies and their employees in Brazil and is calling for the companies to each pay a $5.5 million bond. Mr. Oliveira has charged George Buck, president of Chevron's Brazil operations, and Guilherme Dantas Rocha Coelho, Transocean's director general in Brazil, as well as employees ranging from a geologist to a reservoir engineer.
Mr. Buck was also charged with obstructing the government's investigation, along with three other Chevron employees. He faces up to 31 years in jail if convicted of all charges. A judge will now decide if those charged will face trial, in a case legal experts said could take years to wind through the courts.
Both companies said the charges were without merit and vowed a vigorous defense.
"Not even one sardine perished" in the spill, Oscar Graca Couto, a lawyer for Chevron, said at news conference in Rio de Janeiro.
Chevron called the charges "outrageous" in a statement. "There is no technical or factual evidence demonstrating any willful or negligent conduct by Chevron or its employees associated with the incident," the company said.
Guy Cantwell, a spokesman for Transocean, said the company "acted responsibly, appropriately and quickly, putting safety first."
The charges are the most serious fallout yet from the Nov. 7 leak. The drilling incident caused up to 3,000 barrels of oil to seep through cracks in the Atlantic Ocean floor some 230 miles off the coast of Rio de Janeiro. Chevron, owner of the well in the Frade field, hired a Transocean rig and crew to drill the well.
Chevron stanched the leak within days but has struggled to manage the backlash from Brazilian authorities, who have fined the company millions of dollars and barred it from drilling. The storm was inflamed last week when the San Ramon, Calif., oil giant identified a new fissure on the sea floor leaking oil near where the first leak occurred. Chevron says "intermittent droplets" are leaking and that it is capturing them with an underwater device.
Days after that disclosure, a Brazilian judge barred a dozen Chevron employees, including a subcontractor, and five Transocean workers from leaving the country ahead of Wednesday's indictments. The charged workers include six Americans, five Brazilians, two French and Australian nationals, one British citizen and one Canadian.
Brazil's tough posture suggests it is determined to prevent big oil spills like the 2010 BP PLC spill in the Gulf of Mexico. But it could frighten off big firms that have the technology and manpower needed to develop the massive, difficult to tap oil fields located off its Atlantic coast. The Brazilian fields are some of largest discoveries anywhere in the world in the last 20 years but will require billions of dollars of investments.
"Companies that come here to set up, as well as those that are already here, must know that safety protocols exist to be complied with--all companies, without exception," said Brazilian President Dilma Rousseff, at an event in Rio de Janeiro Wednesday to mark the appointment of a new head of the country's oil regulatory agency.
Legal experts said it is rare for governments to criminally charge individuals for an oil spill.
"It's really a case of the Brazilians playing hardball with the companies," said Robert Percival, an environmental-law professor at the University of Maryland. "I don't know of any other instance where a foreign country has done this."
Diana Kinch and Jeff Fick contributed to this article.
Write to Matthew Cowley at matthew.cowley@dowjones.com and Daniel Gilbert at daniel.gilbert@wsj.com
Credit: By Matthew Cowley And Daniel Gilbert
Subject: Petroleum industry; Public prosecutors; Drilling
Location: Rio de Janeiro Brazil
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 22, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 929289318
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/929289318?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Corporate News: Brazil Charges Chevron --- Oil Giant, Transocean and Executives Accused of Environmental Crimes in Leak
Author: Cowley, Matthew; Gilbert, Daniel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]22 Mar 2012: B.3.
ProQuest document link
Abstract:
A Brazilian prosecutor filed criminal charges Wednesday against Chevron Corp., Transocean Ltd. and their top executives in the country for an offshore oil spill in November, raising fresh questions about the legal perils of drilling for Brazil's deep-sea riches.
Full text: SAO PAULO -- A Brazilian prosecutor filed criminal charges Wednesday against Chevron Corp., Transocean Ltd. and their top executives in the country for an offshore oil spill in November, raising fresh questions about the legal perils of drilling for Brazil's deep-sea riches.
Energy analysts said the environmental-crimes charges -- against the firms, 16 of their employees and a subcontractor -- are likely to send a chill through an offshore-drilling industry unaccustomed to prosecution for what companies view as inevitable accidents.
The federal prosecutor, Eduardo Santos de Oliveira, is seeking to seize assets from both companies and their employees in Brazil and is calling for the companies to each pay a $5.5 million bond. Mr. Oliveira has charged George Buck, president of Chevron's Brazil operations, and Guilherme Dantas Rocha Coelho, Transocean's director general in Brazil, as well as employees ranging from a geologist to a reservoir engineer.
Mr. Buck was also charged with obstructing the government's investigation, along with three other Chevron employees. He faces up to 31 years in jail if convicted of all charges. A judge will now decide if those charged will face trial, in a case legal experts said could take years to wind through the courts.
Both companies said the charges were without merit and vowed a vigorous defense.
"Not even one sardine perished" in the spill, Oscar Graca Couto, a lawyer for Chevron, said in Rio de Janeiro.
Chevron called the charges "outrageous" in a statement. "There is no technical or factual evidence demonstrating any willful or negligent conduct by Chevron or its employees associated with the incident," the company said.
Guy Cantwell, a spokesman for Transocean, said the company "acted responsibly, appropriately and quickly, putting safety first."
The charges are the most serious fallout yet from the Nov. 7 leak. The drilling incident caused up to 3,000 barrels of oil to seep through cracks in the Atlantic Ocean floor some 230 miles off the coast of Rio de Janeiro. Chevron, owner of the well in the Frade field, hired a Transocean rig to drill the well.
Chevron stanched the leak within days but has struggled to manage the backlash from Brazilian authorities, who have fined the company millions of dollars and barred it from drilling. The storm was inflamed last week when the San Ramon, Calif., oil giant identified a new fissure on the sea floor leaking oil near where the first leak occurred.
Days after that disclosure, a Brazilian judge barred a dozen Chevron employees, including a subcontractor, and five Transocean workers from leaving the country ahead of Wednesday's indictments. The charged workers include six Americans, five Brazilians, two French and Australian nationals, one British citizen and one Canadian.
Brazil's tough posture suggests it is determined to prevent big oil spills like the 2010 BP PLC spill in the Gulf of Mexico. But it could frighten off big firms that have the technology and manpower needed to develop the massive, difficult to tap oil fields located off its Atlantic coast.
Legal experts said it is rare for governments to criminally charge individuals for a spill.
"It's really a case of the Brazilians playing hardball with the companies," said Robert Percival, an environmental-law professor at the University of Maryland. "I don't know of any other instance where a foreign country has done this."
---
Diana Kinch and Jeff Fick contributed to this article.
Credit: By Matthew Cowley and Daniel Gilbert
Subject: Public prosecutors; Drilling; Indictments; Prosecutions; Oil spills; Environmental law
Location: Brazil
Company / organization: Name: Transocean Ltd; NAICS: 213111, 213112; Name: Chevron Corp; NAICS: 211111, 324110
Classification: 9180: International; 9190: United States; 1540: Pollution control; 4330: Litigation
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.3
Publication year: 2012
Publication date: Mar 22, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 929469066
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/929469066?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Falls on China Worry
Author: Bird, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 Mar 2012: n/a.
ProQuest document link
Abstract:
NEW YORK--Crude-oil futures fell 1.8% to settle at a one-week low of $105.35 a barrel Thursday on fears of a potential slowdown in oil demand in China, the world's second-biggest oil consumer.
Full text: NEW YORK--Crude-oil futures fell 1.8% to settle at a one-week low of $105.35 a barrel Thursday on fears of a potential slowdown in oil demand in China, the world's second-biggest oil consumer.
Preliminary data show China's manufacturing sector is showing the longest contraction since an eight-month string of declines ended in March 2009. A purchasing managers' index shows a drop in March to a reading of 48.1, the lowest since November. The index was down from 49.6 in February, and was below the 50 level, which signals a contraction, for a fifth-straight month.
The slowdown raises concerns that China's oil demand growth may be weaker than expected. The International Energy Agency forecasts that China will account for half of global oil demand growth of 800,000 barrels a day in 2012.
"U.S. demand is abysmal, and everybody's looking overseas, mostly at China" for oil-demand growth, said Kyle Cooper, analyst at IAF Advisors.
Demand in the U.S., the world's biggest oil consumer, averaged 17.7 million barrels a day last week, as the use of distillate fuel (diesel/heating oil) was the lowest for the week since 1992 and gasoline demand was at a 12-year low.
Light, sweet crude oil for May delivery on the New York Mercantile Exchange settled $1.92 lower, at $105.35 a barrel. ICE May Brent crude was $1.06 a barrel lower at $123.14 a barrel in late trading.
Reformulated gasoline blendstock for April delivery settled at a one-week low of $3.3396 a gallon, down 1.75 cents.
April heating oil futures settled at the lowest level since Feb. 14, at $3.1787 a gallon, down 3.75 cents.
Credit: By David Bird
Subject: Petroleum industry
Location: New York United States--US
People: Obama, Barack
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 22, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 929682358
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/929682358?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Norway's Oil Industry Snaps Up Swedish Workers
Author: Gustafsson, Katarina
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 Mar 2012: n/a.
ProQuest document link
Abstract:
There is competence from SKF when it comes to bearings, competence from the paper pulp industry when it comes to large process pumps and from the truck makers on large turbo engines, he says.Tormod Sveen, an engineer who worked for Volvo Cars for 11 years before joining Aker Solutions in January, says the biggest difference between the two industries is that technology plays a larger role in his new job.
Full text: The collapse of Swedish car maker Saab Automobile AB last year put the Scandinavian country's once-proud automotive industry in the spotlight, and as the sector struggles, firms in neighboring Norway are seeing a chance to snap up staff.
Saab's bankruptcy and repeated cutbacks by its Chinese-controlled peer Volvo Car Corp. have released thousands of workers into the labor market in Western Sweden-- workers Norway now hopes to lure to its booming petroleum industry.
With total investments in Norway's petroleum industry forecast at a record-high 186 billion Norwegian kroner (roughly $32 billion) this year, according to the national statistics bureau, engineers are in heavy demand. Norwegian oil-services company Aker Solutions ASA went looking for them in Gothenburg, once the hub of Sweden's automotive industry and the country's second-largest city. Gothenburg and its surroundings are not only home to Saab Automobile and Volvo Cars, but also to truck maker Volvo AB, and ball-bearings maker SKF ABand a big university of technology.
Aker Solutions set up an office in the city last August and aims to nearly double its staffing this year to 60 for its subsea business after Norway last year made one of its biggest-ever oil finds.After starting out with 10 employees in Gothenburg in August,Aker Solutions now employs 33 people in the city, which is just 300 kilometers from the Norwegian capital, Oslo.
While Aker hopes to pick up people from a range of industries, including oil and gas, around a third of those it has employed so far were previously employed by Swedish car makers. The company hopes to take advantage of their expertise in areas like efficient mass production as the oil industry makes efforts to reduce field-development costs by moving away from tailor-made solutions.
"There is definitely information in the automotive industry that we take part of and learn a lot from that makes us more competitive as a company," says Jesper Ericsson, chief executive of Aker Solutions' Swedish unit. "It's the skills that drive us to Gothenburg."
Aker's Sweden-based engineers will focus on research and development, and and help out with a number of oil and gas projects around the world. in particular on developing subsea production technologies and deal with projects to extract oil and gas from the seabed, Mr. Ericsson said. Aker is currently installing a compression system on the seabed at the Asgard natural gas field for Norwegian oil major Statoil ASA.
"An important part for Asgard is the development of compressors and pumps, and there Gothenburg can make a very positive contribution. There is competence from SKF when it comes to bearings, competence from the paper pulp industry when it comes to large process pumps and from the truck makers on large turbo engines," he says.Tormod Sveen, an engineer who worked for Volvo Cars for 11 years before joining Aker Solutions in January, says the biggest difference between the two industries is that technology plays a larger role in his new job.
"A car has a lot to do with the customer's experience when driving, like comfort for example...Now, focus is rather on the technical; there is no need to change a solution just because it isn't that good-looking. Design is based on what is technically best," he says.
"One is also more free to find solutions," he says. "At Volvo there are more limits both in terms of economy and in terms of technology."
Gothenburg-based YellowOffshore, a training company focusing on the Norwegian petroleum industry, is also seeking to capitalize on Sweden's new labor pool by educating Saab's former employees for a career in the offshore oil industry. The company has a client that needs 200 people in a first recruitment round and then another 150 people. YellowOffshore's head of training, Peter Eriksson, said Saab workers have skills in technology, electronics, hydraulics, assembly etc. that are useful for the offshore industry. "We're not the only ones to want their skills."
In the small town of Trollhattan--just 25 kilometers from the Norwegian border--a string of firms are turning their attention to the more than 3,000 people lost their jobs when Saab Automobile collapsed in last December after a three-year struggle to avoid bankruptcy.
Swedish engineering consultancy MVV International has just opened an office in the midst of Saab's deserted industrial park and has so far hired 15 of the car maker's former engineers, who will develop equipment for Norway's offshore industry. "It's with wonder we watch the growth we now experience in Norway," said Chief Executive Soren Gustafsson."The number of enquiries increases almost every day."
Managers from Trollhattan-based staffing company Jobbprofilen Sverige AB January travelled to Norway hoping to find 50 jobs for Saab's workers but in just one day,found about 1,500 jobs, many in the petroleum industry. "For every place we went to, we found more jobs. In the first place we came to they needed 80 employees and the last place we went to they needed 1,000 people," says Jobbprofilen Chief Executive Christian Akeson. "Adding everything up in the car on our way home, we arrived at some 1,500 jobs."
Credit: By Katarina Gustafsson
Subject: Automobile industry; Petroleum industry; Natural gas; Technological change; Engineers; Bankruptcy
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 22, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 932215403
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/932215403?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Let the States Lead U.S. Oil Exploitation
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Regarding responding to Stephen Moore's March 10 I would add a proposal to enhance U.S. country's energy-resource development through open competition among the states. We should end the federal ownership of unused land, including the continental shelves off the shores of the states.
Texas joined the union only with the agreement that all land within Texas belong to Texans. Federal land within other states should likewise be turned over to these respective states to allow development of their oil and gas resources without federal interference.
James W. Benefiel
Dunedin, Fla.
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 23, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 937166814
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/937166814?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Nailing Big Oil's Moving Target
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 Mar 2012: n/a.
ProQuest document link
Abstract:
The target set in 2002 was north of 3%. Besides this, though, two factors that have dogged oil companies' production performance over the past decade look set to dissipate.
Full text: As with the tankers they use, oil companies don't change direction easily. Even charting their course can be a challenge.
The past decade is littered with the wreckage of Big Oil's production forecasts. Back in 2002, Exxon Mobil was projecting production of almost 5.5 million barrels of oil equivalent a day by 2009, according to Deutsche Bank. Exxon's output that year came in at 3.9 million a day, actually lower than in 2002. Chevron, Royal Dutch Shell and BP also have been serial optimists.
One way of avoiding underdelivering isn't to overpromise. On that score, Exxon at least should do better with its latest target, delivered at its strategy presentation this month, of 1% to 2% annual production growth. The target set in 2002 was north of 3%. Besides this, though, two factors that have dogged oil companies' production performance over the past decade look set to dissipate.
One is the impact of the oil price itself. In many countries outside North America and Europe, the companies produce oil under production-sharing contracts. A typical feature of these is that when energy prices rise, the amount of oil and gas the company is entitled to take, as opposed to the government's share, falls.
So while rising energy prices are beneficial to the oil companies in general, they cut into production growth at the margin. Alongside its annual output growth figure, Exxon also reports one stripping out the impact of these contracts, quotas imposed by countries belonging to the Organization of Petroleum Exporting Countries, and divestments.
Take 2011. Given minimal disposals and the fact that most OPEC members are producing flat out, production-sharing contracts would appear to have been the primary factor affecting Exxon's output growth. On that basis, its output would have been 119,000 barrels of oil equivalent a day higher, meaning 4% growth last year rather than the headline 1.3% rate.
Across the past five years, Exxon's output would have been roughly 91,000 barrels of oil equivalent a day higher on this basis. During that time, the annual average Brent oil price jumped 68%. It is unlikely to repeat this over the next five years, since that would imply Brent averaging $186 a barrel in 2016, likely a death sentence for global economic growth and, thereby, oil demand.
So the contract effect should moderate. On average, about one-fifth of the proven reserves of Exxon, Chevron, Shell, BP, Total and ConocoPhillips were subject to these contracts at the end of 2010, according to consultant IHS Herold. Shell and Total were closer to 30%.
The other factor set to support production targets is the investment made in response to rising oil prices. Initially, oil companies were reluctant to accept the oil-price surge after 2001 as sustainable. Investment in oil and gas fields didn't increase markedly until 2005, well into the energy rally. That year, it jumped 61%, to $81 billion, according to IHS Herold. Last year, it hit $154 billion.
Given the multiyear gap between initial investment and actual production, this increased spending should underpin output over the next decade.
The added twist is what the companies have invested in. Increasingly, they are targeting unconventional resources like oil sands and shale reserves. These tend to be bigger than standard fields, with more sustainable production. Goldman estimates that their share of Exxon's production will hit 50% by 2015, from less than a fifth in 2008. For Chevron, they should top 40%, up from 27%.
Producing more isn't the only consideration for oil companies. For example, while Exxon's acquisition of XTO Energy in 2010 boosted output, it was of low-price U.S. natural gas. But at least those guidance targets should hold up a bit better for posterity.
Write to Liam Denning at liam.denning@wsj.com
Credit: By Liam Denning
Subject: Petroleum industry; Natural gas; Petroleum production
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 24, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 936454432
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/936454432?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Let the States Lead U.S. Oil Exploitation
Author: Anonymous
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]24 Mar 2012: A.14.
ProQuest document link
Abstract: None available.
Full text: Regarding Robert M. Petrusak's March 20 letter responding to Stephen Moore's March 10 "What North Dakota Could Teach California," I would add a proposal to enhance U.S. country's energy-resource development through open competition among the states. We should end the federal ownership of unused land, including the continental shelves off the shores of the states.
Texas joined the union only with the agreement that all land within Texas belong to Texans. Federal land within other states should likewise be turned over to these respective states to allow development of their oil and gas resources without federal interference.
James W. Benefiel
Dunedin, Fla.
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.14
Publication year: 2012
Publication date: Mar 24, 2012
Section: Letters to the Editor
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 938385918
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/938385918?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Giant Offers Global Energy Play
Author: Williams, Christopher C
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 Mar 2012: n/a.
ProQuest document link
Abstract:
Rising oil prices could raise the fortunes and share price of Total, France's largest energy company and one of the six so-called oil super-majors.
Full text: Rising oil prices could raise the fortunes and share price of Total, France's largest energy company and one of the six so-called oil super-majors.
Paris-based Total (TOT) isn't well known on these shores, but the story of an energized European oil and gas giant with a juicy dividend yield and reasonably priced stock is slowly getting out. Recently selling in the mid-$50s, the company's American depositary receipts are up 8% this year, outperforming other super-majors such as Exxon Mobil and Chevron. Some analysts and investors expect Total to rally to the mid-$60s within a year.
Total's beauty isn't unblemished. Critics contend the company has lower-quality assets and higher finding costs than peers. Also, Total operates in some of the world's dicier regions. But such drawbacks arguably are reflected in its shares, which trade for an inexpensive 7.8 times this year's expected earnings of $7.08 a share.
The shares had a rough spring and summer last year, but began rebounding in late September, when management impressed investors at Total's investor day with plans to grow production by 3% this year and 2.5% annually through 2014, assuming oil prices stay around $100 a barrel. Total's production growth has been spotty in recent years, and was flat last year at about 2.4 million barrels of oil-equivalent per day. ("Oil equivalent" is a measure of energy from various sources.) Oil accounts for 52% of production.
Total intends to spend $20 billion on capital projects this year, up from an average of $19 billion in 2010 and 2011. The company had impressive finds in 2011 in countries such as Azerbaijan, French Guyana and Bolivia. And one potential catalyst for the stock would be favorable news from Pazflor, a deep-offshore oil project off the coast of Angola, whose start-up management called "the crowning achievement" of 2011. Pazflor has an estimated 590 million barrels of reserves.
Total Chief Financial Officer Patrick de la Chevardiere says the company's most promising longer-term opportunity is Ichthys, a liquefied-natural-gas project in Australia in which Total has a 24% stake. Production will begin in several years, and reserves total about three billion barrels of oil-equivalent.
One of Total's most attractive assets is its dividend. The company paid out 2.28 euros a share last year (equivalent to $3.07 today) for a yield of almost 5.4%, Exxon, in contrast, has a yield of 2.2%.
Some investors are leery of European stocks, but Total, the largest company on the Paris stock exchange, is a global player. Last year 75% of production came from outside Europe and North America. The company's long-term outlook is bright.
Christopher C. Williams is a staff writer for Barron's. For more stories, see .
Credit: By Christopher C. Williams
Subject: Petroleum industry; Investments
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 25, 2012
Section: Personal Finance
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 940257852
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/940257852?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Giant Offers Global Energy Play
Author: Williams, Christopher C
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]25 Mar 2012: WSJ.2. [Duplicate]
ProQuest document link
Abstract:
Rising oil prices could raise the fortunes and share price of Total, France's largest energy company and one of the six so-called oil super-majors.
Full text: Rising oil prices could raise the fortunes and share price of Total, France's largest energy company and one of the six so-called oil super-majors.
Paris-based Total (TOT) isn't well known on these shores, but the story of an energized European oil and gas giant with a juicy dividend yield and reasonably priced stock is slowly getting out. Recently selling in the mid-$50s, the company's American depositary receipts are up 8% this year, outperforming other super-majors such as Exxon Mobil and Chevron. Some analysts and investors expect Total to rally to the mid-$60s within a year.
Total's beauty isn't unblemished. Critics contend the company has lower-quality assets and higher finding costs than peers. Also, Total operates in some of the world's dicier regions. But such drawbacks arguably are reflected in its shares, which trade for an inexpensive 7.8 times this year's expected earnings of $7.08 a share.
The shares had a rough spring and summer last year, but began rebounding in late September, when management impressed investors at Total's investor day with plans to grow production by 3% this year and 2.5% annually through 2014, assuming oil prices stay around $100 a barrel. Total's production growth has been spotty in recent years, and was flat last year at about 2.4 million barrels of oil-equivalent per day. ("Oil equivalent" is a measure of energy from various sources.) Oil accounts for 52% of production.
Total intends to spend $20 billion on capital projects this year, up from an average of $19 billion in 2010 and 2011. The company had impressive finds in 2011 in countries such as Azerbaijan, French Guyana and Bolivia. And one potential catalyst for the stock would be favorable news from Pazflor, a deep-offshore oil project off the coast of Angola, whose start-up management called "the crowning achievement" of 2011. Pazflor has an estimated 590 million barrels of reserves.
Total Chief Financial Officer Patrick de la Chevardiere says the company's most promising longer-term opportunity is Ichthys, a liquefied-natural-gas project in Australia in which Total has a 24% stake. Production will begin in several years, and reserves total about three billion barrels of oil-equivalent.
One of Total's most attractive assets is its dividend. The company paid out 2.28 euros a share last year (equivalent to $3.07 today) for a yield of almost 5.4%, Exxon, in contrast, has a yield of 2.2%.
Some investors are leery of European stocks, but Total, the largest company on the Paris stock exchange, is a global player. Last year 75% of production came from outside Europe and North America. The company's long-term outlook is bright.
Credit: By Christopher C. Williams
Subject: Petroleum industry; Investments
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Source details: Sunday Edition
Pages: WSJ.2
Publication year: 2012
Publication date: Mar 25, 2012
Section: Personal Finance
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 940266964
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/940266964?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Electric Cars Do Reduce Oil Demand
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 Mar 2012: n/a.
ProQuest document link
Abstract:
Since the U.S.'s world-leading oil consumption overwhelming sets global oil prices via insatiable demand, my electric car helps lower your gas costs, while helping keep both your and my fuel dollars here at home.
Full text: As an electric-car owner, I was disappointed to see William T. McCormick Jr.'s (March 16) suggesting that electricity cannot reduce oil consumption. Almost all electrical utilities have long since gotten off oil, switching to cheaper, more rational fuels such as natural gas. Electric cars also allow our nation to switch off oil. My per-mile fuel costs are literally 10 times cheaper than for the driver of a gas car and 20 times cheaper than running a large SUV.
My vehicle is powered by 100% green electricity that I purchase at a slight premium from my local utility, a "no emissions anywhere" mix of solar, wind and recycled barnyard manure. Since the U.S.'s world-leading oil consumption overwhelming sets global oil prices via insatiable demand, my electric car helps lower your gas costs, while helping keep both your and my fuel dollars here at home. With the amount of manure floating around nowadays, my car won't be stuck in "gas" lines anytime soon.
James Adcock
Bellevue, Wash.
Subject: Oil prices
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 25, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 940770774
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/940770774?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Electric Cars Do Reduce Oil Demand
Author: Anonymous
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]26 Mar 2012: A.16.
ProQuest document link
Abstract:
Since the U.S.'s world-leading oil consumption overwhelming sets global oil prices via insatiable demand, my electric car helps lower your gas costs, while helping keep both your and my fuel dollars here at home.
Full text: As an electric-car owner, I was disappointed to see William T. McCormick Jr.'s letter (March 16) suggesting that electricity cannot reduce oil consumption. Almost all electrical utilities have long since gotten off oil, switching to cheaper, more rational fuels such as natural gas. Electric cars also allow our nation to switch off oil. My per-mile fuel costs are literally 10 times cheaper than for the driver of a gas car and 20 times cheaper than running a large SUV.
My vehicle is powered by 100% green electricity that I purchase at a slight premium from my local utility, a "no emissions anywhere" mix of solar, wind and recycled barnyard manure. Since the U.S.'s world-leading oil consumption overwhelming sets global oil prices via insatiable demand, my electric car helps lower your gas costs, while helping keep both your and my fuel dollars here at home. With the amount of manure floating around nowadays, my car won't be stuck in "gas" lines anytime soon.
James Adcock
Bellevue, Wash.
(See related letter: "Letters to the Editor: A Closer Look at Power for Electrics" -- WSJ April 3, 2012)
Subject: Oil sands
Location: United States--US
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.16
Publication year: 2012
Publication date: Mar 26, 2012
Section: Letters to the Editor
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 940825722
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/940825722?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Sinopec's Profit Rose 2% Last Year On Oil Prices
Author: Lee, Yvonne
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]26 Mar 2012: B.4.
ProQuest document link
Abstract:
While higher international oil prices boosted revenue, strong domestic demand for gasoline and diesel fuel forced Sinopec to increase imports that cut into the company's bottom line.
Full text: HONG KONG -- China Petroleum & Chemical Corp. said Sunday that its net profit for 2011 rose 2% as higher oil prices and fuel sales outweighed lower refining margins.
The Beijing-based company, also known as Sinopec, said it expects China's demand for petrochemical products to continue to grow, though at a slower pace, this year.
"We estimate that in 2012, the price of international crude oil will generally fluctuate in a high range due to the tight geopolitical situation," Chairman Fu Chengyu said.
Sinopec, the largest refiner in Asia by capacity, said its net profit for the 12 months ended Dec. 31 totaled 73.23 billion yuan (US$11.62 billion), up from 71.78 billion yuan in 2010, according to international accounting standards. It was lower than the average 76.63 billion yuan forecast of 32 analysts polled by Thomson Reuters.
Revenue rose 31% to 2.51 trillion yuan amid higher contributions from upstream exploration and production.
Its oil-and-gas producing operation posted an operating profit of 71.63 billion yuan, up 52% from 47.15 billion yuan a year earlier, amid higher oil prices.
Sinopec said the average selling price of its crude oil rose 38% to 4,621 yuan a ton from a year earlier.
But Sinopec's refining business posted an operating loss of 35.78 billion yuan, reversing an operating profit of 15.85 billion yuan as higher fuel imports undercut refining margins and the government's control on fuel-product prices.
While higher international oil prices boosted revenue, strong domestic demand for gasoline and diesel fuel forced Sinopec to increase imports that cut into the company's bottom line.
In response to strong energy demand, Sinopec plans to boost the production of its refining business.
Credit: By Yvonne Lee
Subject: Petroleum industry; Corporate profits
Location: Hong Kong
Company / organization: Name: China Petroleum & Chemical Corp; NAICS: 211111
Classification: 8510: Petroleum industry; 9179: Asia & the Pacific
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.4
Publication year: 2012
Publication date: Mar 26, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 940825794
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/940825794?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
In the Pipeline: M&A Spurt for Europe's Oil Firms
Author: Flynn, Alexis
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Merger and acquisition activity in Europe's midsize oil explorers is arousing interest, and bidding speculation is driving up shares in the sector.
While buyouts have fallen out of vogue in recent years as risk aversion and lack of cash deters management teams from the sort of bumper deals seen in the last decade, that hasn't held true in the oil and gas sector.
The number of M&A deals rose 5% in 2011 compared to 2010, according to consultancy Ernst & Young. The trend is likely to continue into this year given the fall in share prices late last year for smaller exploration companies, according to Andy Brogan, head of the consultancy group's oil and gas transaction advisory service.
The dealmaking is the result of specific dynamics within the sector. Chief among these are the need for giant oil companies--the so-called supermajors--to replenish their diminishing reserves. With most of the world's easily available oil in major producer nations like Saudi Arabia and Russia off-limits to foreign companies, firms are turning more to unconventional and costlier types of exploration such as that for shale gas.
One way to circumvent this challenge is to buy nimble, smaller firms whose exploration efforts have yielded promising finds in new frontiers in East and West Africa and South America.
That is why Cove Energy, which put itself up for sale in January, has been the subject of much interest. Cove, listed on the FTSE's Alternative Investment Market, holds a minority stake in a giant natural-gas discovery off the coast of Mozambique. The field, operated by U.S. firm Anadarko Petroleum Corp., borders another huge site run by Italy's Eni SpA
The finds, along with major gas discoveries off the shores of Tanzania by BG Group PLC and Ophir Energy PLC, should expedite the construction of East African export facilities to liquefy and ship gas to Asia.
Both Royal Dutch Shell and Thai state-owned firm PTT's listed arm, PTT Exploration & Production PCL have made offers.
Shares in AIM-listed small-cap Wessex Exploration rocketed 33% last week after French giant Total SA offered £71.9 million ($114 million) for the firm, a minority stakeholder in the bountiful Zaedyus discovery in French Guiana. Wessex said Monday that Total's offer "undervalues" the firm.
Long-pent up M&A activity in the U.K. North Sea is expected to resume after Chancellor of the Exchequer George Osborne proposed that the government would guarantee that it wouldn't change tax rebates tied to dismantling old oil rigs and platforms. Fresh worries that the rebates could disappear had arisen following last year's tax hikes. This would help would-be buyers of more mature oil fields to access financing.
"The current uncertainty [around these costs] is seen by many as a roadblock to North Sea drilling activity as it had severely cut the acquisitions of late-life fields from the majors by U.K. oil & gas minnows," said Andrew Moorfields, managing director for oil & gas at Lloyds Banking Group, "These minnows, with their management focus and technical expertise to maximize recovery of late-life fields, have been a U.K. North Sea success story."
BP PLC's long-planned divestment of its southern North Sea gas fields is likely to be one of the first North Sea-focused deals to be announced this year. BP announced the plan last year to help cover the costs of the 2010 Deepwater Horizon oil spill.
While rising energy prices are likely to encourage these deals, sharp and sustained swings in prices could curb companies' willingness to act. "The oil and gas market has proved that it can adapt to higher levels of uncertainty and keep transacting. The key questions now are how it will cope with the combination of commodity price volatility and structural contraction in global debt capacity," Ernst & Young's Mr. Brogan said.
Credit: By Alexis Flynn
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 26, 2012
column: Market Focus
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 940877610
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/940877610?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Tullow Discovers Oil in Kenya
Author: Flynn, Alexis
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: LONDON--Tullow Oil PLC discovered crude oil in Kenya in its first attempt at exploratory drilling in the East African country.
The London-based company said it found oil in the northwestern region of Turkana, where Tullow is assessing the commercial viability of crude prospects in the Ngamia geological structure. The discovery continued Tullow's recent record of exploration success following discoveries in Ghana, Uganda and French Guiana.
The find was "beyond our expectations," Tullow Exploration Director Angus McCoss said. "This is an excellent start to our major exploration campaign in the East African rift basins of Kenya and Ethiopia."
Tullow shares closed at £15.70 ($24.92), up 6.6% in London.
Kenyan President Mwai Kibaki told reporters the discovery was a "major breakthrough."
He cautioned, however, that more wells would have to be drilled to see whether there was enough oil to warrant investment. "It is...the beginning of a long journey to make our country an oil producer, which typically takes in excess of three years."
Tullow, which last month completed a $2.9 billion sale of part of its interests in three Ugandan oil blocks to France's Total SA and China's Cnooc Ltd., has targeted East Africa as a potentially important hydrocarbon province. The three companies expect to get approval by next year for development of Uganda's nascent oil industry, including the construction of a pipeline and a small refinery.
Credit: By Alexis Flynn
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 26, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 940877673
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/940877673?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Tullow Discovers Oil in Kenya
Author: Flynn, Alexis
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: LONDON--Tullow Oil PLC discovered crude oil in Kenya in its first attempt at exploratory drilling in the East African country.
The London-based company said it found oil in the northwestern region of Turkana, where Tullow is assessing the commercial viability of crude prospects in the Ngamia geological structure. The discovery continued Tullow's recent record of exploration success following discoveries in Ghana, Uganda and French Guiana.
The find was "beyond our expectations," Tullow Exploration Director Angus McCoss said. "This is an excellent start to our major exploration campaign in the East African rift basins of Kenya and Ethiopia."
Tullow shares closed at £15.70 ($24.92), up 6.6% in London.
Kenyan President Mwai Kibaki told reporters the discovery was a "major breakthrough."
He cautioned, however, that more wells would have to be drilled to see whether there was enough oil to warrant investment. "It is...the beginning of a long journey to make our country an oil producer, which typically takes in excess of three years."
Tullow, which last month completed a $2.9 billion sale of part of its interests in three Ugandan oil blocks to France's Total SA and China's Cnooc Ltd., has targeted East Africa as a potentially important hydrocarbon province. The three companies expect to get approval by next year for development of Uganda's nascent oil industry, including the construction of a pipeline and a small refinery.
Credit: By Alexis Flynn
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 27, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 941066988
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/941066988?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Cairn India Raps Tax; Plan to Boost Oil Producer's Levy Could Hurt Country's Reputation
Author: Sharma, Amol
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 Mar 2012: n/a.
ProQuest document link
Abstract:
NEW DELHI--The chief executive of India's largest private oil producer criticized the government for proposing an 80% increase in the company's taxes, a measure that could stoke foreign investors' concerns about India's business environment. The Finance Ministry proposed the tax increase this month, one of a series of moves in the annual budget meant to help trim a budget deficit that is expected to reach 5.9% of gross domestic product in the fiscal year ending March 31.
Full text: NEW DELHI--The chief executive of India's largest private oil producer criticized the government for proposing an 80% increase in the company's taxes, a measure that could stoke foreign investors' concerns about India's business environment.
Cairn India Ltd. CEO Rahul Dhir said a proposed increase in the levy the company pays on each ton of oil it produces would cost the company $2.5 billion by 2020 and could discourage it from pursuing a $6 billion expansion plan.
"This came out of nowhere," Mr. Dhir said in an interview Tuesday. "The government has been desperately trying to attract investment in the oil-and-gas sector and it hasn't worked. This will just create further disincentives to invest."
The Finance Ministry proposed the tax increase this month, one of a series of moves in the annual budget meant to help trim a budget deficit that is expected to reach 5.9% of gross domestic product in the fiscal year ending March 31. Parliament must pass the budget bill in coming weeks for the oil-tax increase to go into effect.
The complaint by Cairn, 59% of which is owned by U.K.-based Vedanta Resources PLC, adds to disenchantment about India's investment environment. Foreign and domestic companies alike increasingly are uncertain that once they make substantial investments, the government could enact changes that undermine their business plans.
In some ways, the critics have said, India is regressing to the planned economy it had before 1991.
"There is so much nervousness about dealing with India when the laws are ambiguous and the policies are uncertain," said Nishith Desai, who runs an Indian law firm that specializes in advising foreign investors. "Unlike local residents, foreign companies are a soft target--every possible way to squeeze foreign companies has become the order of the day."
India's finance and petroleum ministries didn't respond to requests for comment. New Delhi has said that it wants to create a hospitable environment for investors.
Another budget proposal would allow the government retroactively to tax any international transaction dating as far back as 1962 in which a significant Indian asset was transferred.
That took investors by surprise and could damp cross-border merger activity, some international merger-and-acquisition lawyers said. That proposal stems from the government's desire to collect more than $2 billion in taxes from the 2007 deal by U.K.-based Vodafone Group PLC to enter India. The Supreme Court ruled in January that Vodafone doesn't owe taxes on the deal, but the proposed law could reopen the issue and put more deals in tax agencies' cross hairs.
Meanwhile, the court's attempt to address alleged corruption in the government's 2008 sale of mobile-phone spectrum has sparked confusion in the telecommunications sector, which has seen investments from foreign companies. The court ordered that all the companies who purchased frequencies relinquish their licenses and essentially end service. Some critics have said that was too heavy-handed.
Norway's Telenor ASA, which purchased one of the companies that had bought spectrum in the 2008 sale, said it shouldn't be held responsible for any earlier wrongdoing. The company said Tuesday that it intends to seek compensation.
Cairn, which produces 150,000 barrels of oil a day--accounting for 15% of India's total domestic production--would have to pay about $90 a ton under the new tax proposal, up from $50 now. It would be the only private company affected by the change. While two state-run oil companies also would be subject to the increase, several private companies' taxes were contractually capped at about $18 a ton.
Mr. Dhir said that is discriminatory. "Any industry needs a sense of a stable playing field and predictable rules," he said.
The government has said it needs to increase revenue to offset its higher energy costs as crude-oil prices have climbed.
What is particularly frustrating, Mr. Dhir said, is that Cairn agreed just a few months ago to withdraw an arbitration case seeking to lower the company's taxes. It also agreed to pay increased royalties to the government. Those were conditions the government demanded before it cleared Vedanta's $8.67 billion takeover of a majority stake in Cairn India from the U.K.'s Cairn Energy PLC. The deal had been awaiting approval for more than a year.
Cairn also has been awaiting approval for over a year to expand production at its largest oil field, in the western state of Rajasthan.
India relies on imports for three-quarters of its oil and is struggling to ramp up domestic production. By 2030, when oil demand is expected to have more than doubled to 833 million tons, India could be importing 90%, according to the Confederation of Indian Industry.
"Why is it so complicated? It is the simplest decision," Mr. Dhir said, referring to Cairn's application to expand production.
Mr. Dhir said the government would stand to benefit if the company carries out its plan to double production to 300,000 barrels a day in four years. The increased output could reduce expensive imports and state and federal government entities would get 80% of the estimated $101 billion in production value through taxes or profit-sharing, he said. That plan would involve $6 billion of investment by Cairn, on top of the $4 billion it already has put into India.
He said Cairn might explore investment opportunities in Africa and Sri Lanka if India's environment doesn't improve. "If there's fiscal instability, it is going to discourage investment. That isn't a threat, it is reality," he said.
Dhanya Ann Thoppil
contributed to this article.
Credit: By Amol Sharma
Subject: Acquisitions & mergers; Tax increases; Foreign investment; Petroleum industry; Budgets; Taxes
Location: United Kingdom--UK
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 27, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 942710656
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/942710656?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Total's Recall of Oil Risk
Author: Peaple, Andrew; Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Cut through the jargon, and the oil business really boils down to one thing: risk management. Ultimately, the majors exist to bridge the many pitfalls involved in finding, developing, producing and distributing energy.
This tends to come into focus only when something goes wrong, like Total's natural-gas and condensate spill in the North Sea. Down 6% Tuesday, Total is leaking value almost as fast as the Elgin field. That is likely an overreaction, but this in itself should worry oil and gas producers everywhere.
Unlike BP's Deepwater Horizon disaster of 2010, there are no fatalities from Total's incident. Moreover, this leak mainly involves natural gas, which presents some danger in the immediate area but will disperse into the atmosphere rather than foul beaches. And while fixing Elgin might take as long as six months, its overall value to Total is only around [euro]2.6 billion ($3.47 billion), Sanford C. Bernstein estimates--far lower than the [euro]6 billion drop in market capitalization.
But the stakes are actually bigger than that. Deepwater Horizon significantly undermined confidence in the oil industry's ability to manage risk. This has had two effects.
First, it means investors are more likely to sell at the first hint of trouble, afraid to rely on initial company estimates of the damage involved, which proved far too optimistic in BP's case. Second, it has heightened political sensitivities, meaning even relatively small spills can become a cause célèbre. Witness the continuing uproar in Brazil over Chevron's offshore leak in the Frade field.
As their recent strategy presentations demonstrate, the majors are relying on pushing further into frontier prospects like deep-water drilling and hydraulic fracturing of shale resources to underpin growth. Their ability to do this at all, let alone cost-effectively, diminishes with every foul-up, big or small. The Elgin leak matters less for Total than it does for the oil industry in totality.
Write to Andrew Peaple at andrew.peaple@dowjones.com and Liam Denning at liam.denning@wsj.com
Credit: By Andrew Peaple And Liam Denning
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 27, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 944325316
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/944325316?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Cairn India Raps Tax; Plan to Boost Oil Producer's Levy Could Hurt Country's Reputation
Author: Sharma, Amol
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 Mar 2012: n/a.
ProQuest document link
Abstract:
NEW DELHI--The chief executive of India's largest private oil producer criticized the government for proposing an 80% increase in the company's taxes, a measure that could stoke foreign investors' concerns about India's business environment. The Finance Ministry proposed the tax increase this month, one of a series of moves in the annual budget meant to help trim a budget deficit that is expected to reach 5.9% of gross domestic product in the fiscal year ending March 31.
Full text: NEW DELHI--The chief executive of India's largest private oil producer criticized the government for proposing an 80% increase in the company's taxes, a measure that could stoke foreign investors' concerns about India's business environment.
Cairn India Ltd. CEO Rahul Dhir said a proposed increase in the levy the company pays on each ton of oil it produces would cost the company $2.5 billion by 2020 and could discourage it from pursuing a $6 billion expansion plan.
"This came out of nowhere," Mr. Dhir said in an interview Tuesday. "The government has been desperately trying to attract investment in the oil-and-gas sector and it hasn't worked. This will just create further disincentives to invest."
The Finance Ministry proposed the tax increase this month, one of a series of moves in the annual budget meant to help trim a budget deficit that is expected to reach 5.9% of gross domestic product in the fiscal year ending March 31. Parliament must pass the budget bill in coming weeks for the oil-tax increase to go into effect.
The complaint by Cairn, 59% of which is owned by U.K.-based Vedanta Resources PLC, adds to disenchantment about India's investment environment. Foreign and domestic companies alike increasingly are uncertain that once they make substantial investments, the government could enact changes that undermine their business plans.
In some ways, the critics have said, India is regressing to the planned economy it had before 1991.
"There is so much nervousness about dealing with India when the laws are ambiguous and the policies are uncertain," said Nishith Desai, who runs an Indian law firm that specializes in advising foreign investors. "Unlike local residents, foreign companies are a soft target--every possible way to squeeze foreign companies has become the order of the day."
India's finance and petroleum ministries didn't respond to requests for comment. New Delhi has said that it wants to create a hospitable environment for investors.
Another budget proposal would allow the government retroactively to tax any international transaction dating as far back as 1962 in which a significant Indian asset was transferred.
That took investors by surprise and could damp cross-border merger activity, some international merger-and-acquisition lawyers said. That proposal stems from the government's desire to collect more than $2 billion in taxes from the 2007 deal by U.K.-based Vodafone Group PLC to enter India. The Supreme Court ruled in January that Vodafone doesn't owe taxes on the deal, but the proposed law could reopen the issue and put more deals in tax agencies' cross hairs.
Meanwhile, the court's attempt to address alleged corruption in the government's 2008 sale of mobile-phone spectrum has sparked confusion in the telecommunications sector, which has seen investments from foreign companies. The court ordered that all the companies who purchased frequencies relinquish their licenses and essentially end service. Some critics have said that was too heavy-handed.
Norway's Telenor ASA, which purchased one of the companies that had bought spectrum in the 2008 sale, said it shouldn't be held responsible for any earlier wrongdoing. The company said Tuesday that it intends to seek compensation.
Cairn, which produces 150,000 barrels of oil a day--accounting for 15% of India's total domestic production--would have to pay about $90 a ton under the new tax proposal, up from $50 now. It would be the only private company affected by the change. While two state-run oil companies also would be subject to the increase, several private companies' taxes were contractually capped at about $18 a ton.
Mr. Dhir said that is discriminatory. "Any industry needs a sense of a stable playing field and predictable rules," he said.
The government has said it needs to increase revenue to offset its higher energy costs as crude-oil prices have climbed.
What is particularly frustrating, Mr. Dhir said, is that Cairn agreed just a few months ago to withdraw an arbitration case seeking to lower the company's taxes. It also agreed to pay increased royalties to the government. Those were conditions the government demanded before it cleared Vedanta's $8.67 billion takeover of a majority stake in Cairn India from the U.K.'s Cairn Energy PLC. The deal had been awaiting approval for more than a year.
Cairn also has been awaiting approval for over a year to expand production at its largest oil field, in the western state of Rajasthan.
India relies on imports for three-quarters of its oil and is struggling to ramp up domestic production. By 2030, when oil demand is expected to have more than doubled to 833 million tons, India could be importing 90%, according to the Confederation of Indian Industry.
"Why is it so complicated? It is the simplest decision," Mr. Dhir said, referring to Cairn's application to expand production.
Mr. Dhir said the government would stand to benefit if the company carries out its plan to double production to 300,000 barrels a day in four years. The increased output could reduce expensive imports and state and federal government entities would get 80% of the estimated $101 billion in production value through taxes or profit-sharing, he said. That plan would involve $6 billion of investment by Cairn, on top of the $4 billion it already has put into India.
He said Cairn might explore investment opportunities in Africa and Sri Lanka if India's environment doesn't improve. "If there's fiscal instability, it is going to discourage investment. That isn't a threat, it is reality," he said.
Dhanya Ann Thoppil
contributed to this article.
Credit: By Amol Sharma
Subject: Acquisitions & mergers; Tax increases; Foreign investment; Petroleum industry; Budgets; Taxes
Location: United Kingdom--UK
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 28, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 946833291
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/946833291?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Total's Recall of Oil Risk
Author: Peaple, Andrew; Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Cut through the jargon, and the oil business really boils down to one thing: risk management. Ultimately, the majors exist to bridge the many pitfalls involved in finding, developing, producing and distributing energy.
This tends to come into focus only when something goes wrong, like Total's natural-gas and condensate spill in the North Sea. Down 6% Tuesday, Total is leaking value almost as fast as the Elgin field. That is likely an overreaction, but this in itself should worry oil and gas producers everywhere.
Unlike BP's Deepwater Horizon disaster of 2010, there are no fatalities from Total's incident. Moreover, this leak mainly involves natural gas, which presents some danger in the immediate area but will disperse into the atmosphere rather than foul beaches. And while fixing Elgin might take as long as six months, its overall value to Total is only around [euro]2.6 billion ($3.47 billion), Sanford C. Bernstein estimates--far lower than the [euro]6 billion drop in market capitalization.
But the stakes are actually bigger than that. Deepwater Horizon significantly undermined confidence in the oil industry's ability to manage risk. This has had two effects.
First, it means investors are more likely to sell at the first hint of trouble, afraid to rely on initial company estimates of the damage involved, which proved far too optimistic in BP's case. Second, it has heightened political sensitivities, meaning even relatively small spills can become a cause célèbre. Witness the continuing uproar in Brazil over Chevron's offshore leak in the Frade field.
As their recent strategy presentations demonstrate, the majors are relying on pushing further into frontier prospects like deep-water drilling and hydraulic fracturing of shale resources to underpin growth. Their ability to do this at all, let alone cost-effectively, diminishes with every foul-up, big or small. The Elgin leak matters less for Total than it does for the oil industry in totality.
Write to Andrew Peaple at andrew.peaple@dowjones.com and Liam Denning at liam.denning@wsj.com
Credit: By Andrew Peaple And Liam Denning
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 28, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 950517532
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/950517532?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Sudan Oil Fields Recaptured as Ground Fighting Subsides
Author: Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 Mar 2012: n/a.
ProQuest document link
Abstract:
The latest clashes are the most serious since South Sudan seceded from Sudan last summer. Since the split, the two nations have been embroiled in disputes mainly over border demarcation and the amount of oil transit fees the South should pay for using Sudanese oil pipelines and ports.
Full text: KAMPALA, Uganda--Sudanese forces have recaptured oil fields from South Sudanese troops, the authorities in Khartoum said Wednesday as clashes between the armies of the two civil war foes appeared to subside.
By Tuesday evening, Sudan's armed forces had liberated all the sites earlier occupied by South Sudanese troops along the poorly defined border, including the Martyr Al Fadil area some 15 miles inside Sudan, according to the National Intelligence and Security Service chief, General Mohamed Atta Al Mawla Abas.
"Sudan has no expansion ambitions in southern Sudan territories, however it will deter with strong determination any aggression launched against Sudanese territories," he said. The latest clashes are the most serious since South Sudan seceded from Sudan last summer. Since the split, the two nations have been embroiled in disputes mainly over border demarcation and the amount of oil transit fees the South should pay for using Sudanese oil pipelines and ports.
After two days of air bombardments and ground fighting, clashes between the armies eased Wednesday, according to officials from both countries. However, South Sudan officials said Sudanese fighter jets continued to bomb its oil fields overnight in Unity state.
The authorities are still trying to verify the damage from the bombings in the oil-rich state, which started Monday, said Col. Philip Aguer, the South Sudan army spokesman.
Fighting erupted Monday after Sudanese planes bombed South Sudan's oil regions of Jau and Pan Akuach. Hours after the bombings, Sudanese ground forces attacked South Sudan on multiple fronts, triggering a counter-attack from South Sudan.
South Sudan later said it had captured a major oil field in Heglig.
The United Nations Security Council and the African Union have called for an end to the clashes.
The Security Council Tuesday urged the two countries to exercise maximum restraint and sustain dialogue to peacefully resolve the issues that have fuelled mistrust between them.
"The members of the Security Council call upon Sudan and South Sudan to respect the letter and spirit of their February 10 memorandum of understanding on non-aggression and cooperation," the council said in a statement.
However, a Sudanese military spokesman, Col. Al-Sawarmi Khalid was quoted by the state media as saying that by attacking Heglig oil field, South Sudan completely "ruined all agreements concluded recently in Addis Ababa."
John Ashworth, an independent analyst on Sudan said that the Sudanese army continues to take a hard-line dominant role, as the conflict with the South deepens.
"It is significant that statements about national policy are coming from the army, not the government, and that the army is declaring that an agreement negotiated by the government is revoked" he said.
Sudanese President Omar al-Bashir Tuesday appointed a body to mobilize jihadist groups and other paramilitary forces to augment his troops.
South Sudan's information Minister Barnaba Benjamin said separately that the newly independent nation wouldn't be dragged into a "senseless war" despite the provocations from Sudan.
Credit: By Nicholas Bariyo
Subject: Councils; Security services; Oil fields
Location: South Sudan
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 28, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 950519770
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/950519770?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
France Joins U.S. and Ponders Tapping Strategic Oil Reserve
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 Mar 2012: n/a.
ProQuest document link
Abstract:
PARIS--The French government is in consultation with the International Energy Agency on whether to release oil reserves in moves to stem high crude prices, government spokeswoman Valerie Pecresse said Wednesday.
Full text: PARIS--France said it is in talks with the International Energy Agency about tapping emergency oil stockpiles, joining the U.S. and U.K. in pondering such a move amid concerns that tensions with Iran could tighten oil supply.
The IEA, which represents the interests of industrialized oil consumers and coordinates strategic oil stocks held by its members, declined to comment.
President Barack Obama and U.K. Prime Minister David Cameron earlier this month discussed tapping their own countries' reserves as they seek relief for consumers saddled with rocketing gasoline prices.
Many observers are starting to buy into the idea that such moves will happen in the foreseeable future. "A [U.S.] strategic stock release, either unilaterally or via the International Energy Agency, appears inevitable during the next two quarters," London bank Barclays said in a note last week.
But some in the oil industry warn such measures may not significantly tame oil prices, and could push them higher.
The discussion of dipping into the reserves is an attempt to resolve a conundrum that has rattled governments in recent months: how to pressure Iran without endangering a fragile economic recovery.
Policy makers have identified rising oil prices as a central threat to the global economy, which is burdened by slowing growth in China and Europe's lingering debt crisis. Christine Lagarde, the managing director of the International Monetary Fund, has warned a sudden oil price shock could threaten the global economic recovery.
Mr. Obama and French President Nicolas Sarkozy--both up for re-election this year--have been spearheading sanctions against Iran that have already forced the world's fourth-largest crude exporter to cut its shipments. Both men are under pressure to respond to motorists fuming over rising prices.
U.S. gasoline prices have been ramping up toward their record high of $4.114 a gallon reached during the 2008 recession.
Last month, a record was broken in Europe when Iran tensions combined with the weaker euro to bring the price per barrel of Brent North Sea oil to [euro]93.60 (about $125).
Some in the industry warn a stock release might fail in significantly damping prices.
"You saw what happened in the last release? Nothing," Saudi Oil Minister Ali al-Naimi said last week, referring to last year's release of stockpiles to make up for a Libyan export shutdown. U.S. oil futures fell 5% at the time, but bounced higher within a week.
Barclays warned a release could push prices higher. "The U.S. drawdown of 30 million barrels [last year] has yet to be refilled," it said. If the U.S. taps the reserve again, "additional demand to refill the [Strategic Petroleum Reserve] is not necessarily going to be price neutral."
Others say the U.S. could be caught short by disruptions larger and more abrupt than the expected Iranian decline.
The U.S. Strategic Petroleum Reserve and similar stockpiles in other consumer countries were created after a 1973 Arab oil embargo shut U.S. access to the world's largest oil patch. The reserves have been used only three times since: during the first Gulf war; when Hurricane Katrina shut Gulf of Mexico production in 2005; and after the Libyan crisis last year.
Some say the 2011 release set a dangerous precedent because it was largely driven by prices.
"If Washington sells SPR every time gasoline prices rise, we will end up with no SPR, more volatile prices, and less protection against severe supply interruptions," Robert McNally, president of Rapidan Group and a former White House energy adviser, told the Council on Foreign Relations last week.
Rumors of a Saudi oil-pipeline blowup--later denied--and an Iranian threat to block the Strait of Hormuz--through which a fifth of the world's oil transits--have reminded markets there could be worse than Iranian exports dropping. Instead, critics of a stockpile release argue the U.S. should focus on underlying issues--from excessive speculation to oil-drilling restrictions.
Sen. Lisa Murkowski, a Republican from Alaska and the ranking member on the Senate Energy and Natural Resources Committee, has opposed an early release and said the U.S. should increase oil production--a move that would entail easing exploration rules.
Like Western consumers, Saudi Arabia is also concerned by high oil prices, said Mr. Naimi, the oil minister. "The bottom line is that Saudi Arabia would like to see a lower price," he wrote in an op-ed published on the Financial Times website Wednesday.
But he has blamed insufficient oil-market regulations for the problem. "Ultimately, volatility is caused by speculation in the marketplace," he told an energy conference this month.
William Horobin, James Herron and Jenny Gross contributed to this article.
Credit: By Benoît Faucon
Subject: Oil reserves; Petroleum industry
People: Pecresse, Valerie
Company / organization: Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 28, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 950522483
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/950522483?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Prices Tumble as U.S. Supply Surges, France Weighs Stockpile Release
Author: DiColo, Jerry A
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 Mar 2012: n/a.
ProQuest document link
Abstract:
The larger-than-expected increase, combined with reports of potential strategic oil releases on comments made by a French official, raised the specter of increasing global oil supplies, said Phil Flynn, an energy analyst with PFGBest.
Full text: NEW YORK--Crude-oil futures fell Wednesday, hit by a surprise increase in U.S. oil inventories and the renewed potential for a strategic oil reserve release.
Light, sweet crude oil for May delivery fell $1.92, or 1.8%, to settle at $105.41 a barrel on the New York Mercantile Exchange, after dipping below $105 a barrel earlier in the session. Brent crude oil on the ICE futures exchange was $1.10 lower at $124.16 a barrel.
Crude-oil prices, which fell throughout the session Wednesday, slumped after the Energy Information Administration reported that U.S. oil stockpiles rose by 7.1 million barrels last week to a seven-month high. Analysts had expected a more modest 2.2 million-barrel increase.
The larger-than-expected increase, combined with reports of potential strategic oil releases on comments made by a French official, raised the specter of increasing global oil supplies, said Phil Flynn, an energy analyst with PFGBest.
Earlier Wednesday, French government spokesman Valerie Pecresse said the country is working "alongside the U.S. and the U.K. in the consultation with the IEA [International Energy Agency], which could allow reserves to be used."
The statements follow pledges earlier this month from U.S. and U.K. leaders that they will keep open discussion about an oil release. But last week, the IEA's executive director said the agency hadn't discussed plans for a release with its members.
"It's looking more and more like they are going to go ahead and do it," said Carl Larry, head of trading adviser Oil Outlooks and Opinions.
A release of oil from strategic stockpiles would bring futures prices back to near $100, Mr. Larry said, though he said he doubted a release will have much of a long-term impact.
Oil prices in recent weeks have held in a narrow band between $105 and $110 a barrel, as investors are worried that any push higher would convince developed nations to provide additional supplies.
The weekly data added to worries among oil traders that prices are due for a correction. Smaller price swings suggest a larger break in prices one way or the other is ahead, said Rich Ilczyszyn, a broker at II Trader in Chicago.
"The daily ranges are getting tighter and tighter and tighter. Something is going to happen when the market is consolidating like this," Mr. Ilczyszyn said.
Front-month April reformulated gasoline blendstock, or RBOB, settled 1.01 cents lower at $3.3955 a gallon after falling as low as $3.3439 earlier in the session. April heating oil settled 1.07 cents, or 0.3%, lower at $3.2079 a gallon.
Write to Jerry A. DiColo at jerry.dicolo@dowjones.com
Credit: By Jerry A. DiColo
Subject: Petroleum industry; Oil reserves; Futures
Location: United States--US New York
Company / organization: Name: International Energy Agency; NAICS: 928120; Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 28, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 951502275
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/951502275?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Iran Oil Flow Slows, and Price Fears Rise
Author: Spindle, Bill; Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Iran's oil exports appear to have dropped this month as buyers prepare for tough new sanctions, market observers say, and shipments are likely to shrink further if President Barack Obama determines by Friday, as expected, that markets can adjust to fewer barrels of Iranian oil.
By the end of March, with three months until a European Union embargo on Iranian oil takes effect, Iran's exports are expected to fall by about 300,000 barrels a day from last month, to 1.9 million barrels daily, a nearly 14% drop, according to Swiss oil-shipping specialist Petro-Logistics SA.
More aggressive measures are in the pipeline, U.S. congressional leaders and the EU say. Sanctions intended to bring Iran's nuclear program to heel could eventually leave half of Iran's oil output cut off from international markets, according to analysts and officials.
But Iran could hold off on any nuclear compromise, betting that sanctions will push oil prices so high that the country's income will hold steady--while fragile Western economies wrestle with higher energy costs.
U.S. sanctions that aim to cut off Iran's central bank, the clearing house for all of Iran's oil sales, will take effect at the end of June if Mr. Obama doesn't make an unexpected move at his Friday deadline and choose to block the measures. The EU boycott will take effect at the same time, though European buyers have already started cutting back.
The oil market has absorbed rapid supply drops before--most recently when Libyan production suddenly halted when fighting broke out last year--but rarely without seeing prices rise.
Rhetorical sparring between Iran and the West has already helped to push oil prices higher this year. Mounting fears of Iranian disruptions have sent the price U.S. motorists pay at gasoline pumps closer to $4 a gallon. Oil prices were down 1.79% in New York on Wednesday, closing at $105.41 a barrel, after rising for three days of trading.
Analysts and the U.S. Energy Information Administration say the oil market has a small cushion of excess capacity, most of it in Saudi Arabia.
Some observers worry that oil prices could rise further if Iranian oil comes off the market faster than it can be replaced by other sources, and as the Saudi cushion of spare supply shrinks. "The pain is yet to come, in my view," said Trevor Houser, a partner in Rhodium Group, a private oil-market analyst.
The sanctions trade-off from the perspective of the West--how much less Iran earns compared how much more Western consumers pay--depends largely on what happens to oil prices.
Iran could receive between $1.4 billion and $3.9 billion a month less than if there were no sanctions, depending on how comprehensively Iranian oil exports are shunned, Rhodium Group calculates.
The amount would be equivalent to 1.4% to 3.8% of what Iran was expected to earn from oil and gas exports in the financial year that ended this year, based on estimates by the International Monetary Fund.
Global oil prices might climb between $5 and $14 per barrel, leaving oil consumers paying between $14.7 billion and $36 billion more, because of concerns that global spare capacity is shrinking, Mr. Houser says.
With oil prices rising steadily--they are up 6.66% this year in New York--Iran could still wind up with almost as much money as it did last year, despite the sanctions, according to the calculations.
Without sanctions, Iran's revenue would climb by $1 billion this year, Mr. Houser figures.
Mr. Obama, however, is looking at an Energy Information Administration report issued in February that attributes tightness in the oil market to multiple factors, not only Iranian supply cutbacks.
Some of Iran's once-reliable customers, such as Japan, have sharply reduced their purchases in recent months and plan to cut back further. Iranian crude exports to India, meanwhile, rose 37.5% in January from December.
And while China, traditionally Iran's biggest customer, has bought significantly less this year because of a commercial dispute unrelated to sanctions, Chinese oil traders say they expected it to purchase more in the coming months.
Write to Bill Spindle at bill.spindle@wsj.com and Benoît Faucon at benoit.faucon@dowjones.com
Adjustments
Iran oil exports have slowed to most countries--besides India
China's February imports fell 40% from last year (because of pricing dispute)
Japan saw a 12% drop in January from a year earlier
South Korea cut purchases 14% from a year earlier in January-February
Spain's imports of Iranian crude fell by 37% in December on a monthly basis
France stopped all Iranian oil imports late 2011
India lifted imports by 37.5% in January from December
Sources: country data and WSJ research
Credit: By Bill Spindle And Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 28, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 952798247
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/952798247?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iran Oil Slows as Price Concerns Rise; Tehran's Supply to Global Markets Drops in March as Obama Faces Decision on Tighter Sanctions
Author: Spindle, Bill; Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Iran's oil exports appear to have dropped this month as buyers prepare for tough new sanctions, market observers say, and shipments are likely to shrink further if President Barack Obama determines by Friday, as expected, that markets can adjust to fewer barrels of Iranian oil.
By the end of March, with three months until a European Union embargo on Iranian oil takes effect, Iran's exports are expected to fall by about 300,000 barrels a day from last month, to 1.9 million barrels daily, a nearly 14% drop, according to Swiss oil-shipping specialist Petro-Logistics SA.
More aggressive measures are in the pipeline, U.S. congressional leaders and the EU say. Sanctions intended to bring Iran's nuclear program to heel could eventually leave half of Iran's oil output cut off from international markets, according to analysts and officials.
But Iran could hold off on any nuclear compromise, betting that sanctions will push oil prices so high that the country's income will hold steady--while fragile Western economies wrestle with higher energy costs.
U.S. sanctions that aim to cut off Iran's central bank, the clearing house for all of Iran's oil sales, will take effect at the end of June if Mr. Obama doesn't make an unexpected move at his Friday deadline and choose to block the measures. The EU boycott will take effect at the same time, though European buyers have already started cutting back.
The oil market has absorbed rapid supply drops before--most recently when Libyan production suddenly halted when fighting broke out last year--but rarely without seeing prices rise.
Rhetorical sparring between Iran and the West has already helped to push oil prices higher this year. Mounting fears of Iranian disruptions have sent the price U.S. motorists pay at gasoline pumps closer to $4 a gallon. Oil prices were down 1.79% in New York on Wednesday, closing at $105.41 a barrel, after rising for three days of trading.
Analysts and the U.S. Energy Information Administration say the oil market has a small cushion of excess capacity, most of it in Saudi Arabia.
Some observers worry that oil prices could rise further if Iranian oil comes off the market faster than it can be replaced by other sources, and as the Saudi cushion of spare supply shrinks. "The pain is yet to come, in my view," said Trevor Houser, a partner in Rhodium Group, a private oil-market analyst.
The sanctions trade-off from the perspective of the West--how much less Iran earns compared how much more Western consumers pay--depends largely on what happens to oil prices.
Iran could receive between $1.4 billion and $3.9 billion a month less than if there were no sanctions, depending on how comprehensively Iranian oil exports are shunned, Rhodium Group calculates.
The amount would be equivalent to 1.4% to 3.8% of what Iran was expected to earn from oil and gas exports in the financial year that ended this year, based on estimates by the International Monetary Fund.
Global oil prices might climb between $5 and $14 per barrel, leaving oil consumers paying between $14.7 billion and $36 billion more, because of concerns that global spare capacity is shrinking, Mr. Houser says.
With oil prices rising steadily--they are up 6.66% this year in New York--Iran could still wind up with almost as much money as it did last year, despite the sanctions, according to the calculations.
Without sanctions, Iran's revenue would climb by $1 billion this year, Mr. Houser figures.
Mr. Obama, however, is looking at an Energy Information Administration report issued in February that attributes tightness in the oil market to multiple factors, not only Iranian supply cutbacks.
Some of Iran's once-reliable customers, such as Japan, have sharply reduced their purchases in recent months and plan to cut back further. Iranian crude exports to India, meanwhile, rose 37.5% in January from December.
And while China, traditionally Iran's biggest customer, has bought significantly less this year because of a commercial dispute unrelated to sanctions, Chinese oil traders say they expected it to purchase more in the coming months.
Write to Bill Spindle at bill.spindle@wsj.com and Benoît Faucon at benoit.faucon@dowjones.com
Adjustments
Iran oil exports have slowed to most countries--besides India
China's February imports fell 40% from last year (because of pricing dispute)
Japan saw a 12% drop in January from a year earlier
South Korea cut purchases 14% from a year earlier in January-February
Spain's imports of Iranian crude fell by 37% in December on a monthly basis
France stopped all Iranian oil imports late 2011
India lifted imports by 37.5% in January from December
Sources: country data and WSJ research
Credit: By Bill Spindle and Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 29, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 952892665
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/952892665?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
World News: Iran Oil Slows as Price Concerns RiseTides of Change --- Tehran's Supply to Global Markets Drops in March as Obama Faces Decision on Tighter Sanctions
Author: Spindle, Bill; Faucon, Benoit
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]29 Mar 2012: A.10.
ProQuest document link
Abstract:
Sanctions intended to bring Iran's nuclear program to heel could eventually leave half of Iran's oil output cut off from international markets, according to analysts and officials.
Full text: Iran's oil exports appear to have dropped this month as buyers prepare for tough new sanctions, market observers say, and shipments are likely to shrink further if President Barack Obama determines by Friday, as expected, that markets can adjust to fewer barrels of Iranian oil.
By the end of March, with three months until a European Union embargo on Iranian oil takes effect, Iran's exports are expected to fall by about 300,000 barrels a day from last month, to 1.9 million barrels daily, a nearly 14% drop, according to Swiss oil-shipping specialist Petro-Logistics SA.
More aggressive measures are in the pipeline, U.S. congressional leaders and the EU say. Sanctions intended to bring Iran's nuclear program to heel could eventually leave half of Iran's oil output cut off from international markets, according to analysts and officials.
But Iran could hold off on any nuclear compromise, betting that sanctions will push oil prices so high that the country's income will hold steady -- while fragile Western economies wrestle with higher energy costs.
U.S. sanctions that aim to cut off Iran's central bank, the clearing house for all of Iran's oil sales, will take effect at the end of June if Mr. Obama doesn't make an unexpected move at his Friday deadline and choose to block the measures. The EU boycott will take effect at the same time, though European buyers have already started cutting back.
The oil market has absorbed rapid supply drops before -- most recently when Libyan production suddenly halted when fighting broke out last year -- but rarely without seeing prices rise.
Rhetorical sparring between Iran and the West has already helped to push oil prices higher this year. Mounting fears of Iranian disruptions have sent the price U.S. motorists pay at gasoline pumps closer to $4 a gallon. Oil prices were down 1.79% in New York on Wednesday, closing at $105.41 a barrel, after rising for three days of trading.
Analysts and the U.S. Energy Information Administration say the oil market has a small cushion of excess capacity, most of it in Saudi Arabia.
Some observers worry that oil prices could rise further if Iranian oil comes off the market faster than it can be replaced by other sources, and as the Saudi cushion of spare supply shrinks. "The pain is yet to come, in my view," said Trevor Houser, a partner in Rhodium Group, a private oil-market analyst.
The sanctions trade-off from the perspective of the West -- how much less Iran earns compared how much more Western consumers pay -- depends largely on what happens to oil prices.
Iran could receive between $1.4 billion and $3.9 billion a month less than if there were no sanctions, depending on how comprehensively Iranian oil exports are shunned, Rhodium Group calculates.
The amount would be equivalent to 1.4% to 3.8% of what Iran was expected to earn from oil and gas exports in the financial year that ended this year, based on estimates by the International Monetary Fund.
Global oil prices might climb between $5 and $14 per barrel, leaving oil consumers paying between $14.7 billion and $36 billion more, because of concerns that global spare capacity is shrinking, Mr. Houser says.
With oil prices rising steadily -- they are up 6.66% this year in New York -- Iran could still wind up with almost as much money as it did last year, despite the sanctions, according to the calculations.
Without sanctions, Iran's revenue would climb by $1 billion this year, Mr. Houser figures.
Mr. Obama, however, is looking at an Energy Information Administration report issued in February that attributes tightness in the oil market to multiple factors, not only Iranian supply cutbacks.
Some of Iran's once-reliable customers, such as Japan, have sharply reduced their purchases in recent months and plan to cut back further. Iranian crude exports to India, meanwhile, rose 37.5% in January from December.
Credit: By Bill Spindle and Benoit Faucon
Subject: Petroleum industry; Sanctions; Energy economics; Crude oil prices; Petroleum production
Location: United States--US Iran
Company / organization: Name: European Union; NAICS: 926110, 928120
Classification: 9180: International; 8510: Petroleum industry; 1300: International trade & foreign investment
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.10
Publication year: 2012
Publication date: Mar 29, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 952932988
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/952932988?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: France Joins U.S. and Ponders Tapping Strategic Oil Reserve
Author: Faucon, Benoit
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]29 Mar 2012: A.10.
ProQuest document link
Abstract:
"If Washington sells SPR every time gasoline prices rise, we will end up with no SPR, more volatile prices, and less protection against severe supply interruptions," Robert McNally, president of Rapidan Group and a former White House energy adviser, told the Council on Foreign Relations last week.
Full text: PARIS -- France said it is in talks with the International Energy Agency about tapping emergency oil stockpiles, joining the U.S. and U.K. in pondering such a move amid concerns that tensions with Iran could tighten oil supply.
The IEA, which represents the interests of industrialized oil consumers and coordinates strategic oil stocks held by its members, declined to comment.
President Barack Obama and U.K. Prime Minister David Cameron earlier this month discussed tapping their own countries' reserves as they seek relief for consumers saddled with rocketing gasoline prices.
Many observers are starting to buy into the idea that such moves will happen in the foreseeable future. "A [U.S.] strategic stock release, either unilaterally or via the International Energy Agency, appears inevitable during the next two quarters," London bank Barclays said in a note last week.
But some in the oil industry warn such measures may not significantly tame oil prices, and could push them higher.
The discussion of dipping into the reserves is an attempt to resolve a conundrum that has rattled governments in recent months: how to pressure Iran without endangering a fragile economic recovery.
Policy makers have identified rising oil prices as a central threat to the global economy, which is burdened by slowing growth in China and Europe's lingering debt crisis. Christine Lagarde, the managing director of the International Monetary Fund, has warned a sudden oil price shock could threaten the global economic recovery.
Mr. Obama and French President Nicolas Sarkozy -- both up for re-election this year -- have been spearheading sanctions against Iran that have already forced the world's fourth-largest crude exporter to cut its shipments. Both men are under pressure to respond to motorists fuming over rising prices.
U.S. gasoline prices have been ramping up toward their record high of $4.114 a gallon reached during the 2008 recession.
Last month, a record was broken in Europe when Iran tensions combined with the weaker euro to bring the price per barrel of Brent North Sea oil to 93.60 euros (about $125).
Some in the industry warn a stock release might fail in significantly damping prices.
"You saw what happened in the last release? Nothing," Saudi Oil Minister Ali al-Naimi said last week, referring to last year's release of stockpiles to make up for a Libyan export shutdown. U.S. oil futures fell 5% at the time, but bounced higher within a week.
Barclays warned a release could push prices higher. "The U.S. drawdown of 30 million barrels [last year] has yet to be refilled," it said. If the U.S. taps the reserve again, "additional demand to refill the [Strategic Petroleum Reserve] is not necessarily going to be price neutral."
The U.S. Strategic Petroleum Reserve and similar stockpiles in other consumer countries were created after a 1973 Arab oil embargo shut U.S. access to the world's largest oil patch. The reserves have been used only three times since: during the first Gulf war; when Hurricane Katrina shut Gulf of Mexico production in 2005; and after the Libyan crisis last year.
Some say the 2011 release set a dangerous precedent because it was largely driven by prices.
"If Washington sells SPR every time gasoline prices rise, we will end up with no SPR, more volatile prices, and less protection against severe supply interruptions," Robert McNally, president of Rapidan Group and a former White House energy adviser, told the Council on Foreign Relations last week.
Sen. Lisa Murkowski, a Republican from Alaska and the ranking member on the Senate Energy and Natural Resources Committee, has opposed an early release and said the U.S. should increase oil production -- a move that would entail easing exploration rules.
---
William Horobin contributed to this article.
Credit: By Benoit Faucon
Subject: Petroleum industry; Recessions; Strategic petroleum reserve; Energy economics; International relations-US -- France
Location: United States--US United Kingdom--UK France
Company / organization: Name: International Energy Agency; NAICS: 928120
Classification: 9180: International; 8510: Petroleum industry; 1530: Natural resources; 1520: Energy policy
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.10
Publication year: 2012
Publication date: Mar 29, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 952932995
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/952932995?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
French PM Upbeat on Oil Plan
Author: Landauro, Inti
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: PARIS--French Prime Minister François Fillon Thursday said the outlook for an agreement between the U.S. and European countries to release oil stockpiles in an effort to lower oil prices is positive.
"If we agree with the other developed countries, we can, by withdrawing part of our stocks, push (oil) prices in a limited way," Mr. Fillon said in an interview with French radio station France Inter Thursday morning. However, we "shouldn't expect miracles on fuel prices" he added.
The effects of the release of the strategic oil stockpiles will be limited and may stem prices downward for "a few months," Mr. Fillon said.
He attributed the current high oil prices to geopolitical tensions with Iran over its nuclear program.
On Wednesday, French spokeswoman Valerie Pecresse said France supports a proposal to tap reserves and is also trying to convince producer nations to put more oil on the market.
Earlier this month, U.S. President Barack Obama and U.K. Prime Minister David Cameron agreed to keep open discussions about a possible release of oil held in emergency stocks ahead of sanctions on Iranian oil exports due to come into effect in July.
Write to Inti Landauro at inti.landauro@dowjones.com
Credit: By Inti Landauro
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 29, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 952933262
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/952933262?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. Stymies Iran's Iraq Oil Plan
Author: Faucon, Benoît; Hassan Hafidh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Mar 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: LONDON--U.S. pressure is threatening to quash Iranian hopes of using oil fields it jointly holds with Iraq as a way to evade sanctions, people familiar with the matter say.
The failure of the cross-border plan is the latest example of Tehran's struggle to find ways to keep its oil revenue out of the reach of measures designed to stop its nuclear program.
Washington is tightening the noose on Tehran with the toughest sanctions to date--a law that will bar countries from the U.S. banking system if they conduct oil trades with Iran's central bank. The European Union will also ban Iranian oil purchases from July 1.
Iran had hoped to use oil fields straddling its border with Iraq as a way to market oil that wouldn't be subject to sanctions, according to two people familiar with Tehran's thinking.
An Iranian oil official said Tehran had proposed setting up a joint operating company with Iraq, which could have been registered in the British Virgin Islands. But he said that following Washington's pressure, Baghdad offered to bring in a private Iraqi contractor rather than a state concern, fearing the latter could breach U.S. sanctions. Iran maintained that no existing private Iraqi contractor was large enough to handle such project, making the proposal unviable.
An oil industry professional said Iran also approached France's Total SA last year to operate some of the fields on behalf of both countries. He said the plan was to market the oil as effectively "stateless;" neither Iraqi nor Iranian, and with a foreign operator. But Total, wary of sanctions, refused.
In an interview, Total's Chief Executive Christophe de Margerie confirmed the approach had taken place. "It is a nontopic. It cannot happen because of the political situation," he said.
Washington has been using the legislation against Iran's central bank to stifle ties between Iran and its trade partners and is now bringing the heat to Iran's closest neighbor.
A State Department official said recently that "we consult closely with the government of Iraq on Iran sanctions-related issues, including recently-enacted U.S. sanctions legislation."
Iran and Iraq have both said they remained confident a deal could be reached on developing the cross-border fields. Iranian Deputy Oil Minister Alireza Zeiqami was quoted as saying mid-March that negotiations were making good progress.
Iraqi government spokesman Ali al Dabbagh said "no [deal to jointly develop cross-border oil fields] has been signed with Iran yet [but] we are ready to have an [understanding] on many common fields with them."
However, the spokesman also said: "Iraq will comply with sanction regulations and will never violate [them]." A spokesman for the National Iranian Oil Co. didn't return an emailed request for comment.
Much is at stake for Iran, where production has been eroded by previous sanctions and risks being further hit by the most recent measures. Last year, Iran's Oil Minister Rostam Ghasemi said the country will focus its efforts on developing new oil fields on the cross-border areas. He didn't explain the rationale behind such decision.
Iran has been able to start production from its side of the border in some of the fields. Iranian state-owned Petroleum Engineering and Development Co. said last month that Yadavaran, which is part of a field straddling both countries, has kicked off production and is expected to peak at 300,000 barrels a day, thanks to reserves of 3 billion barrels of recoverable oil.
But a lack of agreement between Iran and Iraq could impede the development of many of these oil fields--which Tehran says number 23--by making them open to legal or armed disputes.
In 2009, Iran sent soldiers to the Fakkah oil field, part of a complex that straddles both countries and altogether holds reserves of 2.5 billion barrels, after saying one of the wells was part of its territory. Fakkah hasn't been producing since 2003 and Iraq hasn't been able to find bidders for the field because of the dispute.
Write to Benoît Faucon at benoit.faucon@dowjones.com and Hassan Hafidh at hassan.hafidh@wsj.com
Credit: By Benoît Faucon And Hassan Hafidh
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 29, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 954631502
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/954631502?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Tumbles 2.5% to Six-Week Low
Author: Berthelsen, Christian
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Mar 2012: n/a.
ProQuest document link
Abstract:
Oil futures have been on a seemingly unstoppable surge since early October, rising more than 47% to their highest point as fears were inflamed that a conflict between Iran and the West would lead to global supply disruptions.
Full text: NEW YORK--Oil futures slid to their lowest level in six weeks Thursday as a combination of factors put a pin in the market, from weakening supply-and-demand fundamentals to end-of-quarter profit-taking by asset managers.
The market traded around break-even early Thursday but began to sell off in mid-morning and continued falling throughout the day, with selling accelerating at times when prices broke through technical support levels.
The market was down more than 3% at its lowest point; light, sweet crude for May delivery settled down $2.63, or 2.5%, at $102.78 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures Europe exchange ended down $1.77, or 1.4%, at $122.39 a barrel. The Nymex close was the lowest level since Feb. 16, 2012.
Oil futures have been on a seemingly unstoppable surge since early October, rising more than 47% to their highest point as fears were inflamed that a conflict between Iran and the West would lead to global supply disruptions. But Iran has receded from the front burner as rhetoric has cooled, and the U.S., the U.K. and France have begun discussing the possibility of a release from strategic petroleum reserves to cool the over-heated market. Such talk continued to make the rounds in the market on Thursday, with the French prime minister saying the outlook for an agreement on strategic releases was positive and could have an impact, albeit limited, on prices.
Meanwhile, high gas prices and increased efficiency have undercut demand and increased supplies in the U.S., while fears of a recession in Europe and an economic hard landing in China have cooled global demand growth forecasts. The U.S. Department of Energy said Wednesday that domestic crude-oil stockpiles rose 7.1 million barrels last week, far more than analyst expectations, to their highest level in seven months.
As a result, the selloff Thursday had the appearance of a potential correction that traders have been increasingly saying was in the works, with estimates that oil could fall to the $100-$101 level in the near future.
"The one bullish element has been Iran," said Pete Donovan, an oil trader and vice president of Vantage Trading. "Without the Iran piece of the puzzle, this market definitely comes off."
Other factors also weighed on the market. Oil's decline followed the trajectory set by equity markets, as a mixed bag of economic data disappointed markets. The final reading of U.S. fourth-quarter GDP came in at 3% but was below expectations, and the number of initial jobless claims was higher than expected despite falling to its lowest level in nearly four years. Traders and analysts said another reason behind the selloff was book-squaring by asset managers as the first quarter comes to a close with the end of trading Friday.
"It's not the end of the world, it's just the end of the quarter," said Tony Rosado, a broker with GA Global Markets. "Funds have to liquidate and take in a profit right away."
Front-month April reformulated gasoline blendstock, or RBOB, ended the day up 0.51 cent, or 0.2%, at $3.4006 a gallon. April heating oil fell 4.9 cents, or 1.5%, to $3.1589 a gallon.
Credit: By Christian Berthelsen
Subject: Petroleum industry
Location: United States--US New York
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 29, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 954631517
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/954631517?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Senate Rejects Attempt to End Oil Subsidies
Author: Meckler, Laura; Boles, Corey
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Mar 2012: n/a.
ProQuest document link
Abstract:
According to the auto club AAA, the average price of gasoline stood at $3.92 a gallon Thursday and many experts have predicted it could hit $5 by the summer driving months.
Full text: WASHINGTON--The White House and its Democratic allies are doing what they can to shift Americans' frustration with high gasoline prices from President Barack Obama to another group: oil and gasoline companies.
Senate Democrats pressed for a vote Thursday to end some $20 billion in federal subsidies to the largest oil and gas companies. The vote failed, as Democrats knew it would. The effort was a political gesture aimed at highlighting Republican support for the biggest oil companies at a time when some people are struggling to afford filling their gas tanks.
The bill gave Mr. Obama an opportunity to champion the measure from the White House Rose Garden earlier Thursday.
"Today, members of Congress have a simple choice to make: They can stand with the big oil companies, or they can stand with the American people," he said. The industry, he said, doesn't need taxpayer subsidies. "American oil is booming. The oil industry is doing just fine. With record profits and rising production, I'm not worried about the big oil companies," he said.
Republicans criticized Democrats for trying to impose what they called a tax increase on oil companies at a time when pump prices are rapidly escalating. According to the auto club AAA, the average price of gasoline stood at $3.92 a gallon Thursday and many experts have predicted it could hit $5 by the summer driving months.
"Is this really the best we have to offer folks who are staring at $4 a gallon of gas," Senate Minority Leader Mitch McConnell (R., Ky.) said. "A bill that even Democrats admit won't have anything to do with the price of gasoline?"
The five largest oil companies reported a combined $140 billion in profit in 2011. Democrats argue that ending the taxpayer subsidies would have no effect on the price of gasoline, while Republicans say it would drive the price up.
Separately Thursday, an industry-backed group, the American Energy Alliance, said it would begin airing $3.6 million in TV ads blaming Mr. Obama's policies for high gasoline prices. The ads will run in eight states that are expected to be competitive in the presidential election.
President Obama and congressional Democrats have sought to end the payments since he took office, but they have been blocked by Republicans.
The bill would have affected subsidies paid to BP PLC, Exxon Mobil Corp., Royal Dutch Shell PLC, Chevron Corp. and ConocoPhillips.
Rising oil prices are a major concern for Mr. Obama's re-election campaign, where officials fear that optimism about the overall improving economy could be squelched by concerns over the price of gasoline. Working to show his concern on the issue, Mr. Obama has made a series of speeches on energy in recent weeks. Last week, he made a two-day trip focused solely on energy.
Obama pollster Joel Benenson, speaking to reporters at Third Way, a Democratic think tank, said Thursday that voters are feeling the pain of gasoline prices but also want a real solution, not something gimmicky.
"This [issue] isn't going to go away if they're paying four bucks [per gallon], or four bucks, 20 cents, at the pump," he said. "But they're going to want a real answer... They're very aware that we can't keep going down the path we're on."
A March Wall Street Journal/NBC News poll found that half of Americans believe gasoline prices have had a great deal or quite a bit of impact on their lives.
In the Senate on Thursday, the Democratic effort to end oil and gasoline subsidies was killed on a nearly party-line vote. The 51-47 vote fell short of the 60-vote requirement to pass it.
Four Democrats--Sens. Mark Begich of Alaska, Mary Landrieu of Louisiana, Ben Nelson of Nebraska and Jim Webb of Virginia--joined with most Republicans in opposing ending the subsidies. Maine Republican Sens. Susan Collins and Olympia Snowe voted with Democrats in supporting ending them.
Democrats had proposed redirecting some of the $20 billion from the subsidies to renew a series of tax credits aimed at manufacturers of solar panels, wind turbines and electric cars. Those credits ran out at the end of last year, and the renewable-energy industry has been clamoring for Congress to restore them. The remaining $9 billion would have gone toward the budget deficit.
Write to Laura Meckler at laura.meckler@wsj.com and Corey Boles at corey.boles@dowjones.com
Credit: By Laura Meckler And Corey Boles
Subject: Petroleum industry; Gasoline prices; Natural gas utilities; Political advertising
People: Obama, Barack
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 29, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 955176020
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/955176020?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Senate Rejects Attempt to End Oil Subsidies
Author: Meckler, Laura; Boles, Corey
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 Mar 2012: n/a.
ProQuest document link
Abstract:
According to the auto club AAA, the average price of gasoline stood at $3.92 a gallon Thursday and many experts have predicted it could hit $5 by the summer driving months.
Full text: WASHINGTON--The White House and its Democratic allies are doing what they can to shift Americans' frustration with high gasoline prices from President Barack Obama to another group: oil and gasoline companies.
Senate Democrats pressed for a vote Thursday to end some $20 billion in federal subsidies to the largest oil and gas companies. The vote failed, as Democrats knew it would. The effort was a political gesture aimed at highlighting Republican support for the biggest oil companies at a time when some people are struggling to afford filling their gas tanks.
The bill gave Mr. Obama an opportunity to champion the measure from the White House Rose Garden earlier Thursday.
"Today, members of Congress have a simple choice to make: They can stand with the big oil companies, or they can stand with the American people," he said. The industry, he said, doesn't need taxpayer subsidies. "American oil is booming. The oil industry is doing just fine. With record profits and rising production, I'm not worried about the big oil companies," he said.
Republicans criticized Democrats for trying to impose what they called a tax increase on oil companies at a time when pump prices are rapidly escalating. According to the auto club AAA, the average price of gasoline stood at $3.92 a gallon Thursday and many experts have predicted it could hit $5 by the summer driving months.
"Is this really the best we have to offer folks who are staring at $4 a gallon of gas," Senate Minority Leader Mitch McConnell (R., Ky.) said. "A bill that even Democrats admit won't have anything to do with the price of gasoline?"
The five largest oil companies reported a combined $140 billion in profit in 2011. Democrats argue that ending the taxpayer subsidies would have no effect on the price of gasoline, while Republicans say it would drive the price up.
Separately Thursday, an industry-backed group, the American Energy Alliance, said it would begin airing $3.6 million in TV ads blaming Mr. Obama's policies for high gasoline prices. The ads will run in eight states that are expected to be competitive in the presidential election.
President Obama and congressional Democrats have sought to end the payments since he took office, but they have been blocked by Republicans.
The bill would have affected subsidies paid to BP PLC, Exxon Mobil Corp., Royal Dutch Shell PLC, Chevron Corp. and ConocoPhillips.
Rising oil prices are a major concern for Mr. Obama's re-election campaign, where officials fear that optimism about the overall improving economy could be squelched by concerns over the price of gasoline. Working to show his concern on the issue, Mr. Obama has made a series of speeches on energy in recent weeks. Last week, he made a two-day trip focused solely on energy.
Obama pollster Joel Benenson, speaking to reporters at Third Way, a Democratic think tank, said Thursday that voters are feeling the pain of gasoline prices but also want a real solution, not something gimmicky.
"This [issue] isn't going to go away if they're paying four bucks [per gallon], or four bucks, 20 cents, at the pump," he said. "But they're going to want a real answer... They're very aware that we can't keep going down the path we're on."
A March Wall Street Journal/NBC News poll found that half of Americans believe gasoline prices have had a great deal or quite a bit of impact on their lives.
In the Senate on Thursday, the Democratic effort to end oil and gasoline subsidies was killed on a nearly party-line vote. The 51-47 vote fell short of the 60 votes needed to overcome a filibuster and pass it.
Four Democrats--Sens. Mark Begich of Alaska, Mary Landrieu of Louisiana, Ben Nelson of Nebraska and Jim Webb of Virginia--joined with most Republicans in opposing ending the subsidies. Maine Republican Sens. Susan Collins and Olympia Snowe voted with Democrats in supporting ending them.
Democrats had proposed redirecting some of the $20 billion from the subsidies to renew a series of tax credits aimed at manufacturers of solar panels, wind turbines and electric cars. Those credits ran out at the end of last year, and the renewable-energy industry has been clamoring for Congress to restore them. The remaining $9 billion would have gone toward the budget deficit.
Write to Laura Meckler at laura.meckler@wsj.com and Corey Boles at corey.boles@dowjones.com
Credit: By Laura Meckler And Corey Boles
Subject: Petroleum industry; Gasoline prices; Natural gas utilities; Political advertising
People: Obama, Barack
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 30, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 955996603
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/955996603?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Notches 4.2% Gain for Quarter
Author: Strumpf, Dan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 Mar 2012: n/a.
ProQuest document link
Abstract:
Rising production from Saudi Arabia, the possibility of a diplomatic solution to the impasse on Iran and the prospect of a release of emergency oil supplies have helped to take the wind out of prices.
Full text: Oil prices finished slightly higher, ending the quarter with a gain, as traders closed out bets following declines earlier in the week.
Light, sweet crude for May delivery rose 24 cents, or 0.2%, to settle at $103.02 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange gained 49 cents, or 0.4%, to $122.88 a barrel.
On Thursday, the Nymex contract lost 2.5% in a rout driven in large part by concerns about a potential release of global emergency oil stockpiles.
"The last couple of days I think the market was oversold," said Rich Ilczyszyn, chief market strategist at iiTrader.
Friday brought an end to the first quarter, one that paid off handsomely for crude bulls. Front-month Nymex crude notched a gain of 4.2%, while Brent climbed 14% over the last three months.
Sentiment was largely dominated by geopolitical concerns, as tensions between the West and Iran raised fears of a disruption to oil supplies. Nymex crude saw a settlement high of $109.77 a barrel during the quarter, its highest since May, when Libya was in the midst of civil war.
Prices have retreated from their highs in recent weeks, and analysts are divided over whether they have room to head much higher. Rising production from Saudi Arabia, the possibility of a diplomatic solution to the impasse on Iran and the prospect of a release of emergency oil supplies have helped to take the wind out of prices.
On Thursday, the International Energy Agency said it is "closely monitoring market developments" and that it is "ready to act" in the event of a supply disruption. The energy watchdog coordinates the release of strategic energy stockpiles among its member nations.
Still, market observers have noted that any further escalation of tensions, such as a blockade of the Strait of Hormuz or a military strike against Iran, would likely send prices sharply higher.
On Friday, the White House cleared the way for fresh sanctions on Iran, saying that oil and fuel supplies were adequate to cushion the impact. The sanctions target financial institutions that do business with Iran. The European Union is set to adopt a full oil embargo on Iran starting July 1.
Front-month April reformulated gasoline blendstock, or RBOB, expired Friday, down 1.07 cents, or 0.3%, at $3.3899 a gallon. The more heavily traded May contract finished 3.16 cents, or 1%, lower at $3.3081 a gallon.
April heating oil expired 0.95 cent, or 0.3%, higher at $3.1684. May heating oil gained 0.03 cent, to $3.1701 a gallon.
Credit: By Dan Strumpf
Subject: Supplies; Oil prices
Location: United States--US
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 30, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 962258132
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/962258132?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Once Linked, Oil and Gas Break Up; The Price Gap Between the Two Is Now Extreme, In Part Due to Meddling From Mother Nature
Author: Cui, Carolyn
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 Mar 2012: n/a.
ProQuest document link
Abstract:
During the first quarter, the price gap between crude oil and natural gas widened to an extreme, as oil prices were buoyed by supply concerns amid Middle East tension while gas prices were weighed down by an usually warm winter and a supply glut in the U.S. Historically, the relationship has been steady, with a barrel of oil trading about 11 times the price of a million British thermal units of natural gas since 1990, when gas started trading at the New York Mercantile Exchange.
Full text: Oil and gas, once involved in a stable relationship, continue to grow further apart.
During the first quarter, the price gap between crude oil and natural gas widened to an extreme, as oil prices were buoyed by supply concerns amid Middle East tension while gas prices were weighed down by an usually warm winter and a supply glut in the U.S.
Historically, the relationship has been steady, with a barrel of oil trading about 11 times the price of a million British thermal units of natural gas since 1990, when gas started trading at the New York Mercantile Exchange. The oil-to-gas ratio started to climb in 2009 as a result of large discoveries of shale gas, and on March 27 reached an all-time high of 48.6 times.
The huge gap points to a fundamental imbalance in energy markets. Customers who burn cheap U.S. natural gas as a fuel currently enjoy a competitive advantage, and buyers of other fuels have a rising incentive to try to switch. That may eventually narrow the gap again, but it could be a costly and time-consuming process.
For the quarter, natural gas tumbled 28.9% to $2.1260 per million BTUs, the lowest since February 2002. Meanwhile, crude oil added 4.2% to $103.02 per barrel at the Nymex.
The divergence of crude oil and natural gas hasn't gone unnoticed among many commodities investors, who have been betting on the price ratio to head back toward historical norms. Investors put $173 million in net cash into exchange-traded products linked to natural gas in the quarter as of March 23, according to Deutsche Bank Securities Inc.
"Given the recent price drop [in natural gas], people might think this is a good entry point," said Shan Lan, head of global equity index and ETF research at Deutsche Bank.
However, Mother Nature wreaked havoc on that strategy. The winter just passed was the fourth warmest since 1896 in the U.S., according to the National Climatic Data Center. The winter was 15% warmer than normal based on the number of heating-degree days, according to National Grid; heating-degree days is a measurement designed to reflect the demand for energy needed to heat a building.
"Even a 1% change is significant," said Shawn Reynolds, a portfolio manager of Van Eck Global Hard Assets Fund, a $4.4 billion fund focused on commodities, estimating that weaker heating demand had reduced natural-gas use by about 2% to 3%.
Throughout the quarter, crude-oil prices showed resilience amid escalating tensions between the West and Iran over Tehran's nuclear program. Prices had soared in February as major oil-consuming countries, such as Japan and South Korea, reduced imports from Iran ahead of a planned oil embargo.
The surge lost some steam toward the quarter's end as high prices started to damp demand. Still, Brent crude ended the quarter at $122.88 per barrel, up 14.4%.
Natural gas also was a victim of oversupply, with production up 9% year to date, according to Chris McGill, a managing director at the American Gas Association. The blame in part goes to the growing interest in oil drilling, as more gas was found as a byproduct in oil-rich fields.
"The normal feedback loop that reduces gas production is being blocked by the high price of crude oil," said Walter Zimmermann, vice president of United-ICAP, an advisory firm for the energy industry. "The more they drill for crude to take advantage of the higher price of crude, they more gas they get, that further depresses the gas price."
During the first quarter, several major shale-gas drillers reduced production.
Still, the jury is still out on whether these moves are enough to balance an oversupplied gas market. "We are not seeing as much a reduction as anticipated," said Mike Corley, president of Mercatus Energy Advisors LLC, a Houston-based energy advisory firm. "This is the first time that natural-gas prices have stayed depressed for such a long period of time."
So, what will bring down the oil-to-gas ratio in the near term? Lower oil prices may do the trick. Analysts noted that a host of bearish catalysts were emerging for oil: Higher energy prices are starting to take a toll on demand, the U.S. and its European allies are considering tapping into strategic reserves to stem the soaring prices of gasoline at the pump and the fear over a supply disruption in Iran could fade away.
"If [oil] prices are going to fall, the time is now," Morgan Stanley analysts wrote in a paper on March 26.
Credit: By Carolyn Cui
Subject: Natural gas; Petroleum industry; Energy economics
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 30, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 962413449
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/962413449?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Putting Waste Oil to Work
Author: Hollander, Sophia
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]31 Mar 2012: n/a.
ProQuest document link
Abstract:
"Any time we can combine a solid business decision with helping the environment and also supporting a Newark entrepreneur is like scoring a hat trick," said New Jersey Devils chairman and managing partner Jeff Vanderbeek.
Full text: On a recent afternoon, the World War II-era truck that rumbles across New Jersey promoting Devils hockey was decked out in typical dressings for a game day: A Devils fan-fest banner was pulled taut across the sides, its army-green paint bright in the sun.
But in the past month, the truck has experienced one dramatic, if invisible difference.
"The fact that we're running it all on chicken tenders and fries is pretty remarkable to me," said Troy Flynn, vice president of operations for the Prudential Center, where the Devils play their home games.
In February, officials at the arena initiated an unusual experiment: They decided to try converting the 1,500 gallons of used cooking oil generated each month into biodiesel, which they are using to fuel the truck and power the arena's back-up generator.
The project was sparked after a loading dock manager at the arena became discouraged as she watched thousands of gallons of food-flecked oil carted out, "just getting thrown away, being wasted," said Sharnda Blackwell, the manager.
The oil vats filled up fast. Over the past year, 2.1 million visitors have consumed nearly 380,000 chicken tenders and more than 79,000 pounds of french fries, according to officials.
"You can't just let it sit," Ms. Blackwell said. "We were paying just to get rid of it."
She suggested that the arena consider contracting with a company that used the oil to create environmentally responsible fuels.
That month, representatives from a company called Grease Lightning appeared at the arena--without an appointment--and asked for a meeting.
Intrigued by the name, Mr. Flynn came down.
"You'd be surprised about how many meetings we get just because they like our name," said Jamie Hutson, the head of business development at the Newark-based company.
He and arena officials quickly struck a deal, selling 1,500 gallons a month and buying 1,200 gallons back. The cost is roughly equivalent to what the arena was spending on fuel before, Mr. Flynn said.
"Any time we can combine a solid business decision with helping the environment and also supporting a Newark entrepreneur is like scoring a hat trick," said New Jersey Devils chairman and managing partner Jeff Vanderbeek. "I think it's important that people keep their radar up."
It is not the first time the Devils have found innovative uses for their extra food products. Last year, the team won an award from the Environmental Protection Agency for donating unused food from events to local food pantries as part of a national program adopted by the National Hockey League. Between October 2010 and April 2011, the arena donated 9,550 pounds of food.
This was a natural extension of that philosophy, Mr. Vanderbeek said.
"It was a way to help the environment and that's always going to be good for us," he said.
Grease Lightning was founded in 2010, working mainly with local restaurants. It competes with companies trying to obtain the grease for animal feed and low-end makeup lines, Mr. Hutson said. "It's a very competitive market," he said.
The company currently works with about 3,000 restaurants in the New York area, processing "several hundred thousand gallons" of cooking oil a month, he said, adding that all 16 of the company's trucks run on the biodiesel fuel.
Creating fuel is a more intricate process than producing oil for animal feed, where the bits of food can provide nutritional value.
Grease Lightning workers strain out the chunks of chicken, potato and bread crumbs to create pure vegetable oil. Some is sold directly to customers; the rest loaded onto railcars, where it is transported to refineries that add chemicals to create the biodiesel. The fuel sells for anywhere from $3.20 to $3.50 a gallon, Mr. Hutson said.
A gallon of biodiesel fuel produces 75% to 80% lower carbon emissions than regular diesel fuel, he said.
Still, the first time arena workers filled up the truck and twisted the ignition, "we were a little nervous and hesitant," Mr. Flynn said. "I knew I was going to be held accountable if it didn't work out."
But "it feels exactly the same," he said. "It drives like a dream."
Write to Sophia Hollander at sophia.hollander@wsj.com
Credit: By Sophia Hollander
Subject: Professional hockey; Biodiesel fuels; Feeds; Food; Ice hockey
Location: New Jersey
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Mar 31, 2012
Section: New York
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 962413615
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/962413615?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Once Linked, Oil and Gas Break Up --- The Price Gap Between the Two Is Now Extreme, In Part Due to Meddling From Mother Nature
Author: Cui, Carolyn
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]31 Mar 2012: B.5.
ProQuest document link
Abstract:
During the first quarter, the price gap between crude oil and natural gas widened to an extreme, as oil prices were buoyed by supply concerns amid Middle East tension while gas prices were weighed down by an usually warm winter and a supply glut in the U.S. Historically, the relationship has been steady, with a barrel of oil trading about 11 times the price of a million British thermal units of natural gas since 1990, when gas started trading at the New York Mercantile Exchange.
Full text: Oil and gas, once involved in a stable relationship, continue to grow further apart.
During the first quarter, the price gap between crude oil and natural gas widened to an extreme, as oil prices were buoyed by supply concerns amid Middle East tension while gas prices were weighed down by an usually warm winter and a supply glut in the U.S.
Historically, the relationship has been steady, with a barrel of oil trading about 11 times the price of a million British thermal units of natural gas since 1990, when gas started trading at the New York Mercantile Exchange. The oil-to-gas ratio started to climb in 2009 as a result of large discoveries of shale gas, and on March 26 reached an all-time high of 48.6 times.
The huge gap points to a fundamental imbalance in energy markets. Customers who burn cheap U.S. natural gas as a fuel currently enjoy a competitive advantage, and buyers of other fuels have a rising incentive to try to switch. That may eventually narrow the gap again, but it could be a costly and time-consuming process.
For the quarter, natural gas tumbled 28.9% to $2.1260 per million BTUs, the lowest since February 2002. Meanwhile, crude oil added 4.2% to $103.02 per barrel at the Nymex.
The divergence of crude oil and natural gas hasn't gone unnoticed among many commodities investors, who have been betting on the price ratio to head back toward historical norms. Investors put $173 million in net cash into exchange-traded products linked to natural gas in the quarter as of March 23, according to Deutsche Bank Securities Inc.
"Given the recent price drop [in natural gas], people might think this is a good entry point," said Shan Lan, head of global equity index and ETF research at Deutsche Bank.
However, Mother Nature wreaked havoc on that strategy. The winter just passed was the fourth warmest since 1896 in the U.S., according to the National Climatic Data Center. The winter was 15% warmer than normal based on the number of heating-degree days, according to National Grid; heating-degree days is a measurement designed to reflect the demand for energy needed to heat a building.
"Even a 1% change is significant," said Shawn Reynolds, a portfolio manager of Van Eck Global Hard Assets Fund, a $4.4 billion fund focused on commodities, estimating that weaker heating demand had reduced natural-gas use by about 2% to 3%.
Throughout the quarter, crude-oil prices showed resilience amid escalating tensions between the West and Iran over Tehran's nuclear program. Prices had soared in February as major oil-consuming countries, such as Japan and South Korea, reduced imports from Iran ahead of a planned oil embargo.
The surge lost some steam toward the quarter's end as high prices started to damp demand. Still, Brent crude ended the quarter at $122.88 per barrel, up 14.4%.
Natural gas also was a victim of oversupply, with production up 9% year to date, according to Chris McGill, a managing director at the American Gas Association. The blame in part goes to the growing interest in oil drilling, as more gas was found as a byproduct in oil-rich fields.
"The normal feedback loop that reduces gas production is being blocked by the high price of crude oil," said Walter Zimmermann, vice president of United-ICAP, an advisory firm for the energy industry. "The more they drill for crude to take advantage of the higher price of crude, they more gas they get, that further depresses the gas price."
During the first quarter, several major shale-gas drillers reduced production.
Still, the jury is still out on whether these moves are enough to balance an oversupplied gas market. "We are not seeing as much a reduction as anticipated," said Mike Corley, president of Mercatus Energy Advisors LLC, a Houston-based energy advisory firm. "This is the first time that natural-gas prices have stayed depressed for such a long period of time."
So, what will bring down the oil-to-gas ratio in the near term? Lower oil prices may do the trick. Analysts noted that a host of bearish catalysts were emerging for oil: Higher energy prices are starting to take a toll on demand, the U.S. and its European allies are considering tapping into strategic reserves to stem the soaring prices of gasoline at the pump and the fear over a supply disruption in Iran could fade away.
"If [oil] prices are going to fall, the time is now," Morgan Stanley analysts wrote in a paper on March 26.
Credit: By Carolyn Cui
Subject: Natural gas; Commodity prices; Crude oil
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.5
Publication year: 2012
Publication date: Mar 31, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 962492236
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/962492236?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Obama Approves Sanctions on Iran, Deciding Oil Markets Can Handle Them
Author: Hodge, Nathan; Tracy, Tennille
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]31 Mar 2012: A.8.
ProQuest document link
Abstract:
The president said in a finding there was "sufficient supply of petroleum and petroleum products from countries other than Iran" to cushion the impact of sanctions on oil markets.
Full text: WASHINGTON -- The White House cleared the way for tough new sanctions on Iran on Friday, saying a cutoff of Iranian oil wouldn't significantly harm world markets.
The move, which was expected, allows the U.S. to move forward with new penalties approved last year by Congress and signed by President Barack Obama to target financial institutions doing business with Iran's central bank, a key conduit for the country's oil sales.
The sanctions provisions, part of a defense spending law, required the president to determine whether the nation could withstand the possible oil disruption that resulted.
The president said in a finding there was "sufficient supply of petroleum and petroleum products from countries other than Iran" to cushion the impact of sanctions on oil markets.
Also Friday, officials in Turkey, also an Iranian customer, said they would reduce purchases of Iranian oil by 10% and replace it with Libyan oil. Ankara's move came a day after Prime Minister Recep Tayyip Erdogan returned from Iran.
Mr. Obama's move comes amid rising gasoline prices across the country, a growing issue in political campaigns. Republicans are unlikely to criticize sanctions against Iran, but are certain to blame any resulting price increases on White House policies.
The sanctions, which take effect June 28, are part of a broader effort to thwart Iran's nuclear ambitions. U.S. and European Union countries say Iran is trying to build a nuclear weapon, while Iran says its intentions are peaceful. Among other steps, the European Union is instituting an oil embargo beginning July 1.
The sanctions, intended to drive Iran toward compromise on it nuclear program, are having a "significant impact" on Iran's government and economy, a senior administration official said Friday. Iran has agreed to return to talks with world powers, with negotiations likely to begin in mid-April in Turkey.
Iran is the world's No. 3 exporter of crude oil, according to U.S. Energy Information Administration, raising the possibility that sanctions might remove a significant amount of oil from the global market.
Saudi Arabia has been seen as key to filling the gap left by Iranian cutbacks. Secretary of State Hillary Clinton, meeting with Saudi King Abdullah in Riyadh Friday, raised the issue of how to maintain stability in the oil markets, according to U.S. officials.
In recent weeks, oil markets have factored in the possibility that sanctions might take a significant amount of oil off the market. The price of crude in New York trading gained $4.19 per barrel in the first quarter, or 4.24%, closing at $103.02 Friday.
Obama administration officials have hinted in recent weeks that tapping the U.S. Strategic Petroleum Reserve was a tool available to calm oil markets.
Credit: By Nathan Hodge and Tennille Tracy
Subject: Petroleum industry; Energy economics; Political campaigns; Strategic petroleum reserve; Foreign policy; Nuclear weapons; Sanctions; International relations-US -- Iran
Location: United States--US Iran
People: Obama, Barack
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.8
Publication year: 2012
Publication date: Mar 31, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 962492319
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/962492319?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
City News: Putting Waste Oil to Work
Author: Hollander, Sophia
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]31 Mar 2012: A.16. [Duplicate]
ProQuest document link
Abstract:
"Any time we can combine a solid business decision with helping the environment and also supporting a Newark entrepreneur is like scoring a hat trick," said New Jersey Devils chairman and managing partner Jeff Vanderbeek.
Full text: On a recent afternoon, the World War II-era truck that rumbles across New Jersey promoting Devils hockey was decked out in typical dressings for a game day: A Devils fan-fest banner was pulled taut across the sides, its army-green paint bright in the sun.
But in the past month, the truck has experienced one dramatic, if invisible difference.
"The fact that we're running it all on chicken tenders and fries is pretty remarkable to me," said Troy Flynn, vice president of operations for the Prudential Center, where the Devils play their home games.
In February, officials at the arena initiated an unusual experiment: They decided to try converting the 1,500 gallons of used cooking oil generated each month into biodiesel, which they are using to fuel the truck and power the arena's back-up generator.
The project was sparked after a loading dock manager at the arena became discouraged as she watched thousands of gallons of food-flecked oil carted out, "just getting thrown away, being wasted," said Sharnda Blackwell, the manager.
The oil vats filled up fast. Over the past year, 2.1 million visitors have consumed nearly 380,000 chicken tenders and more than 79,000 pounds of french fries, according to officials.
"You can't just let it sit," Ms. Blackwell said. "We were paying just to get rid of it."
She suggested that the arena consider contracting with a company that used the oil to create environmentally responsible fuels.
That month, representatives from a company called Grease Lightning appeared at the arena -- without an appointment -- and asked for a meeting.
Intrigued by the name, Mr. Flynn came down.
"You'd be surprised about how many meetings we get just because they like our name," said Jamie Hutson, the head of business development at the Newark-based company.
He and arena officials quickly struck a deal, selling 1,500 gallons a month and buying 1,200 gallons back. The cost is roughly equivalent to what the arena was spending on fuel before, Mr. Flynn said.
"Any time we can combine a solid business decision with helping the environment and also supporting a Newark entrepreneur is like scoring a hat trick," said New Jersey Devils chairman and managing partner Jeff Vanderbeek. "I think it's important that people keep their radar up."
It is not the first time the Devils have found innovative uses for their extra food products. Last year, the team won an award from the Environmental Protection Agency for donating unused food from events to local food pantries as part of a national program adopted by the National Hockey League. Between October 2010 and April 2011, the arena donated 9,550 pounds of food.
This was a natural extension of that philosophy, Mr. Vanderbeek said.
"It was a way to help the environment and that's always going to be good for us," he said.
Grease Lightning was founded in 2010, working mainly with local restaurants. It competes with companies trying to obtain the grease for animal feed and low-end makeup lines, Mr. Hutson said. "It's a very competitive market," he said.
The company currently works with about 3,000 restaurants in the New York area, processing "several hundred thousand gallons" of cooking oil a month, he said, adding that all 16 of the company's trucks run on the biodiesel fuel.
Creating fuel is a more intricate process than producing oil for animal feed, where the bits of food can provide nutritional value.
Grease Lightning workers strain out the chunks of chicken, potato and bread crumbs to create pure vegetable oil. Some is sold directly to customers; the rest loaded onto railcars, where it is transported to refineries that add chemicals to create the biodiesel. The fuel sells for anywhere from $3.20 to $3.50 a gallon, Mr. Hutson said.
A gallon of biodiesel fuel produces 75% to 80% lower carbon emissions than regular diesel fuel, he said.
Still, the first time arena workers filled up the truck and twisted the ignition, "we were a little nervous and hesitant," Mr. Flynn said. "I knew I was going to be held accountable if it didn't work out."
But "it feels exactly the same," he said. "It drives like a dream."
Credit: By Sophia Hollander
Subject: Feeds; Food; Biodiesel fuels
Location: New Jersey
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.16
Publication year: 2012
Publication date: Mar 31, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 962493449
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/962493449?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Boom Sparks River Fight; Landowners Sue as North Dakota Crude Production Reaches Missouri's Banks
Author: Nicas, Jack
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]01 Apr 2012: n/a.
ProQuest document link
Abstract:
The dispute has caused oil companies to halt payments for dozens of active wells, and even prompted one oil firm--facing overlapping claims from citizens, local governments and the state--to file a lawsuit asking the federal court in North Dakota to determine whom it should pay for the oil it has drilled along the Missouri.
Full text: The oil boom in North Dakota is sparking a high-stakes legal battle over land few people would think to fight for: the muddy banks of the Missouri River.
As energy companies race to lock up every available oil-producing acre, the state of North Dakota has been leasing mineral rights to the land beneath and along the river. Now, landowners say they deserve a share of the tens of millions of dollars in proceeds, because the state is including shoreline areas they believe belong to them.
The dispute has caused oil companies to halt payments for dozens of active wells, and even prompted one oil firm--facing overlapping claims from citizens, local governments and the state--to file a lawsuit asking the federal court in North Dakota to determine whom it should pay for the oil it has drilled along the Missouri.
"It's messy and it's complicated," said Lawrence Bender, attorney for a unit of Statoil ASA, the Norwegian oil company behind the suit. "It's been difficult to even get all the parties served, because there's so many."
With the recent development of techniques to extract largely untapped natural-gas and crude reserves in vast shale deposits--the Marcellus Shale across New York, Pennsylvania, Ohio and West Virginia, and the Bakken Shale in Montana and North Dakota--state laws are being tested anew by claims over suddenly valuable mineral rights.
In Pennsylvania, attorneys have asked the state Supreme Court to review a case that could give ownership of shale gas to landowners, not to those who own the mineral rights. In West Virginia, a landowner is suing two gas companies--both using his land as a staging area to drill beneath his property--because new technology called horizontal drilling allows them to also drill under the surface miles away from his property. In another Pennsylvania dispute, an environmental-advocacy group claims the state is violating "riparian rights"--those of riverfront landowners--by permitting drilling companies to withdraw millions of gallons of river water they need for hydraulic fracturing, or fracking, a technique to free gas trapped in the shale.
Owen Anderson, a University of Oklahoma law professor who specializes in natural resources, said there were likely to be more territorial fights in these states over waterfront rights, because state laws on the issue tend to be murky. Waterfront mineral rights have hardly been litigated, he said, because the oil beneath waterways has only recently become accessible via horizontal drilling.
"These kinds of fights occur whenever there's something worth fighting about," Mr. Anderson said. "And all of a sudden, there's something worth fighting about."
In North Dakota, the dispute centers on often-marshy areas between the high- and low-water marks that range from a few inches to several hundred yards along the shores of the Missouri. The state has collected $81.7 million for leasing the oil-rich section, which stretches to nearly twice the size of Manhattan, according to state officials. For decades, no one gave the areas much thought.
Now, they have become the latest example of how the 2008 discovery of billions of barrels of crude under the northwestern corner of North Dakota is transforming the region.
North Dakota is seeking to lease more land for drilling as it rakes in record revenue driven by the oil boom. In seven months, the state took in $1 billion in oil-tax receipts--half what budget officials forecast for the entire two-year budget. The state is benefitting from rising oil prices and unforeseen production levels. Last spring, lawmakers calculated the state budget with the estimation that daily oil production would hit 425,000 barrels by June 2013; it was at 535,000 barrels by December.
The oil is boosting the state's economy elsewhere. This year, the state took in $81 million in February sales-tax revenue--85% more than February 2010. Despite pocketing cash in a state trust fund and cutting property taxes, the state still sees the current two-year budget to approach a $1 billion surplus, which would nearly all be spent on new infrastructure to keep up with the state's swelling population.
"I consistently have good news," said the state's budget director, Pam Sharp. "It makes the job a lot more fun."
The oil is not only attracting blue-collar well workers from across the nation, but lawyers from places like Minneapolis.
In two lawsuits filed this year in Williams County District Court, groups of landowners say North Dakota has usurped thousands of acres of mineral rights along the Missouri and Yellowstone Rivers, and leased the rights to oil companies for millions of dollars. One suit, which seeks class-action status for potentially hundreds of citizens, also seeks the mineral rights in areas that have been submerged by the shifting river.
The legal dispute centers on the state's ambiguous laws regarding mineral rights beneath navigable waterways. Separate state laws appear to give ownership of the same 28,150 acres of Missouri River shore zone--the strips between the water marks--to both North Dakota and waterfront landowners. Muddying the debate is a 1994 North Dakota Supreme Court ruling that their interests in the shore zone "are coexistent and overlap."
Many landowners scoff at the state's claim the river extends to the high-water mark, which the state determines using several factors, including where aquatic vegetation ends, and say the state is making a land grab for a patch of earth it ignored before the oil drills arrived.
Jerome Bakke, a 77-year-old retired house painter, said that after his family leased its mineral rights to an oil company, the state stepped in and said it owned those rights. But Mr. Bakke said his 40 acres begin about two-thirds of a mile from the water's edge, and are separated from the river by a 20-foot-tall levy. In 50 years of living there, "water came up on our property once," he said. "We're not a part of the river."
Stan Reep, 79, a retired stockbroker, bought the mineral rights beneath his uncle's property in 1979. Since then, the Missouri River has shifted, submerging part of the land and, according to the state, forfeiting Mr. Reep's mineral rights to North Dakota. With the oil now accessible beneath those 114 acres, the state leased the mineral rights in 2010 for nearly $600,000--almost 500 times the $1,200 Mr. Reep paid for the mineral rights three decades earlier.
Mr. Reep's attorney, Jan Conlin, said her client should retain his mineral rights because North Dakota law gives the state ownership of the river for public-recreation purposes. "We don't believe that applies to mineral rights two miles below the ground," she said.
North Dakota Land Commissioner Lance Gaebe said the state believes that "where the river exists today," it owns "the riverbed and everything beneath it."But he conceded that disputes over land like Mr. Reep's--once-dry areas that over decades have become submerged by the shifting river--"are worthy and should be discussed."Mr. Gaebe said his job is to ensure all of the state's resources are utilized.
"I understand these people are fighting for their grandchildren," Mr. Gaebe said. "But I'm fighting for all the grandchildren of North Dakota."
Some of the nation's youngest states adopted similarly ambiguous riverfront laws at statehood. Mr. Gaebe said that before North Dakota began leasing the disputed shore zones, his office asked 10 states if they had legally dealt with ownership of mineral rights within those areas.
"In virtually all cases, they said, 'No, but once you figure it out, let us know,' " he said. "And now because of horizontal drilling, this question will come up a lot more than it ever has before."
Write to Jack Nicas at jack.nicas@wsj.com
Credit: By Jack Nicas
Subject: Petroleum industry; Litigation; State budgets; Natural gas utilities; Hydraulic fracturing; Petroleum production; Tax revenues
Location: North Dakota Missouri River
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 1, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 963445781
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/963445781?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. News: Oil Boom Sparks River Fight --- Landowners Sue as North Dakota Crude Production Reaches Missouri's Banks
Author: Nicas, Jack
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]02 Apr 2012: A.3.
ProQuest document link
Abstract:
The dispute has caused oil companies to halt payments for dozens of active wells, and even prompted one oil firm -- facing overlapping claims from citizens, local governments and the state -- to file a lawsuit asking the federal court in North Dakota to determine whom it should pay for the oil it has drilled along the Missouri.
Full text: The oil boom in North Dakota is sparking a high-stakes legal battle over land few people would think to fight for: the muddy banks of the Missouri River.
As energy companies race to lock up every available oil-producing acre, the state of North Dakota has been leasing mineral rights to the land beneath and along the river. Now, landowners say they deserve a share of the tens of millions of dollars in proceeds, because the state is including shoreline areas they believe belong to them.
The dispute has caused oil companies to halt payments for dozens of active wells, and even prompted one oil firm -- facing overlapping claims from citizens, local governments and the state -- to file a lawsuit asking the federal court in North Dakota to determine whom it should pay for the oil it has drilled along the Missouri.
"It's messy and it's complicated," said Lawrence Bender, attorney for a unit of Statoil ASA, the Norwegian oil company behind the suit.
With the recent development of techniques to extract natural-gas and crude reserves in vast shale deposits -- the Marcellus Shale across New York, Pennsylvania, Ohio and West Virginia, and the Bakken Shale in Montana and North Dakota -- state laws are being tested anew by claims over suddenly valuable mineral rights.
In Pennsylvania, attorneys have asked the state Supreme Court to review a case that could give ownership of shale gas to landowners, not to those who own the mineral rights. In West Virginia, a landowner is suing two gas companies -- both using his land as a staging area to drill beneath his property -- because new technology called horizontal drilling allows them to also drill under the surface miles away from his property.
Owen Anderson, a University of Oklahoma law professor who specializes in natural resources, said there were likely to be more fights in these states over waterfront rights, because state laws on the issue tend to be murky.
"These kinds of fights occur whenever there's something worth fighting about," Mr. Anderson said. "And all of a sudden, there's something worth fighting about."
In North Dakota, the dispute centers on often-marshy areas between the high- and low-water marks that range from a few inches to several hundred yards along the shores of the Missouri. The state has collected $81.7 million for leasing the oil-rich section, which stretches to nearly twice the size of Manhattan, according to state officials. For decades, no one gave the areas much thought.
Now, they have become the latest example of how the 2008 discovery of billions of barrels of crude under the northwestern corner of North Dakota is transforming the region.
The oil is not only attracting blue-collar well workers from across the nation, but lawyers from places like Minneapolis.
In two lawsuits filed this year in Williams County District Court, groups of landowners say North Dakota has usurped thousands of acres of mineral rights along the Missouri and Yellowstone Rivers, and leased the rights to oil companies for millions of dollars. One suit, which seeks class-action status for potentially hundreds of citizens, also seeks the mineral rights in areas that have been submerged by the shifting river.
The legal dispute centers on the state's ambiguous laws regarding mineral rights beneath navigable waterways. Separate state laws appear to give ownership of the same 28,150 acres of Missouri River shore zone -- the strips between the water marks -- to both North Dakota and waterfront landowners.
Many landowners scoff at the state's claim the river extends to the high-water mark, and say the state is making a land grab for a patch of earth it ignored before the oil drills arrived.
Jerome Bakke, a 77-year-old retired house painter, said that after his family leased its mineral rights to an oil company, the state stepped in and said it owned those rights. But Mr. Bakke said his 40 acres begin about two-thirds of a mile from the water's edge, and are separated from the river by a 20-foot-tall levy. "We're not a part of the river."
Stan Reep, 79, a retired stockbroker, bought the mineral rights beneath his uncle's property in 1979. Since then, the Missouri River has shifted, submerging part of the land and, according to the state, forfeiting Mr. Reep's mineral rights to North Dakota.
North Dakota Land Commissioner Lance Gaebe said the state believes that "where the river exists today," it owns "the riverbed and everything beneath it."
"I understand these people are fighting for their grandchildren," Mr. Gaebe said. "But I'm fighting for all the grandchildren of North Dakota."
Credit: By Jack Nicas
Subject: Petroleum industry; Rivers; Oil reserves; Class action lawsuits; Oil shale; Mineral rights
Location: North Dakota Missouri River
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.3
Publication year: 2012
Publication date: Apr 2, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 963476227
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/963476227?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Qatar Minister: No Shortage in Crude-Oil Markets
Author: Sharma, Rakesh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 Apr 2012: n/a.
ProQuest document link
Abstract:
There is no shortage of crude oil in the global markets and current prices aren't justified by demand-supply fundamentals, Qatar's energy and industry minister said Monday, easing concerns over supply constraints.
Full text: NEW DELHI -- There is no shortage of crude oil in the global markets and current prices aren't justified by demand-supply fundamentals, Qatar's energy and industry minister said Monday, easing concerns over supply constraints.
"Oil producers are committed to supplying. When you look at demand-supply, there is no evidence of a shortage of oil anywhere in the world," Mohammed Bin Saleh Al Sada told reporters on the sidelines of an event celebrating the founding of Petronet LNG Ltd., India's largest LNG importer by volume.
"When it comes to price, we don't interfere directly with the price. There are so many elements--not necessarily part of fundamentals of supply and demand--but other factors."
Mr. Al Sada said Qatar was running "flat out" at maximum capacity in the production of crude oil and liquefied natural gas, producing 720,000-730,000 barrels of crude oil a day and an equal amount of condensates.
He said the country was also at its peak LNG-export capacity of 77 million tons a year.
Brent crude-oil prices averaged $125.33 a barrel in March, up from $111 a barrel the same month a year earlier, due to concern that the dispute between Iran and the West over Iran's nuclear program could lead to a severe supply disruption.
Those concerns have also renewed talk in oil markets that members of the International Energy Agency may release emergency stockpiles to cool high prices that threaten to damage the fragile global economy.
The IEA last month warned that global crude-oil supplies were tight and spare capacity was declining. The global oil supply fell by 200,000 barrels a day in February, despite Saudi Arabian production hitting a 30-year high, the IEA said.
Qatar has the world's third-largest natural gas reserves after Russia and Iran.
Write to Rakesh Sharma at rakesh.sharma@dowjones.com
Credit: By Rakesh Sharma
Subject: Petroleum industry; Natural gas reserves; Prices
Company / organization: Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 2, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 963512744
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/963512744?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Encana Steps Back From Gas; Big Canadian Driller Seeks Partners for More Lucrative Oil, Gas-Liquids Finds
Author: Welsch, Edward
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 Apr 2012: n/a.
ProQuest document link
Abstract:
In 2009, it spun off its heavy-oil division into a separate company, Cenovus Energy Inc., as gas prices began a short-lived recovery to near $6 per thousand cubic feet, only to fall again to $2.15 currently as unconventional drilling across the continent created a glut. Since the start of 2010, Encana's stock has declined 42%, while Cenovus shares have risen 37%.
Full text: CALGARY, Alberta--Encana Corp. is seeking partners to speed the development of more profitable oil and liquids-rich gas properties in North America, its latest shift as it struggles with low natural-gas prices.
The Calgary-based gas producer--Canada's largest and North America's second-biggest by volume after Exxon Mobil Corp.--said it is shopping minority stakes to potential partners to help it develop some 1.6 million net acres in five oil and liquids plays.
The fields are in Mississippi, Louisiana, Michigan, Texas, Oklahoma and Kansas and the Canadian province Alberta.
The company said "it's premature to speculate on the size or value of any potential transaction." In January, Oklahoma City-based Devon Energy Corp. disclosed a similar joint-venture effort, selling minority interests in five oil-rich fields to China Petrochemical Corp. for $2.5 billion.
"Over the past two years, we have increased our prospective oil and liquids-rich holdings, and we plan to develop them using the same methodology we apply to our natural gas plays," Chief Executive Randy Eresman said in a statement.
Natural-gas liquids like ethane, propane, butane and condensate are produced as a byproduct of natural-gas wells but have become more valuable than the oversupplied dry gas. They are used for residential heating and cooking, to make petrochemicals and to dilute heavy crude oil for transport through pipelines.
The move is the latest pivot by Encana to manage low natural-gas prices resulting from a North American glut. When gas prices were high, it and many other energy firms shifted their gas exploration and development efforts into high gear.
Encana went further than most. In 2009, it spun off its heavy-oil division into a separate company, Cenovus Energy Inc., as gas prices began a short-lived recovery to near $6 per thousand cubic feet, only to fall again to $2.15 currently as unconventional drilling across the continent created a glut.
Since the start of 2010, Encana's stock has declined 42%, while Cenovus shares have risen 37%.
In 2010, Encana said it would double natural-gas production. Executives at the time said they would be able to produce at a low-enough cost to outlast smaller competitors that would be forced to decrease production. Encana and other large natural-gas producers, like U.S. giants Chesapeake Energy Corp. and ConocoPhillips, have all since begun to curtail natural gas.
Encana produced 3.3 billion cubic feet of gas a day last year but said well shutdowns and lower investment in dry gas will reduce 2012 production by some 500 million cubic feet a day.
Encana abandoned its heavy natural-gas strategy last year and sold off $1.6 billion of net assets including gas-processing plants and fields. It plans to sell another $3 billion in net assets this year.
Encana's futures-hedging strategy has protected it somewhat from the effect of low gas prices for the last few years. But most of those hedges will expire at the end of the year.
Hedges will allow Encana to sell two-thirds of its production at $5.80 per thousand cubic feet this year, more than twice current prices. But it has only a sixth of its production hedged for 2013. The company said in February that cuts to natural-gas production and asset sales will help it conserve cash to prepare for the end of those hedges.
Still, Encana's biggest investor believes its bet on gas will ultimately pay off. Stephen Jarislowsky of Jarislowsky Fraser Ltd. said in an interview Monday that he continued to believe Encana is a good investment because he thinks profits eventually will be large when gas prices do recover, even if it takes a few years.
"You have to be there now. You have to be there when people don't like it," Jarislowsky said.
Credit: By Edward Welsch
Subject: Petroleum industry; Natural gas; Investments
Location: North America
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 2, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 963521777
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/963521777?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Boom Sparks River Fight; Landowners Sue as North Dakota Crude Production Reaches Missouri's Banks
Author: Nicas, Jack
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 Apr 2012: n/a.
ProQuest document link
Abstract:
The dispute has caused oil companies to halt payments for dozens of active wells, and even prompted one oil firm--facing overlapping claims from citizens, local governments and the state--to file a lawsuit asking the federal court in North Dakota to determine whom it should pay for the oil it has drilled along the Missouri.
Full text: The oil boom in North Dakota is sparking a high-stakes legal battle over land few people would think to fight for: the muddy banks of the Missouri River.
As energy companies race to lock up every available oil-producing acre, the state of North Dakota has been leasing mineral rights to the land beneath and along the river. Now, landowners say they deserve a share of the tens of millions of dollars in proceeds, because the state is including shoreline areas they believe belong to them.
The dispute has caused oil companies to halt payments for dozens of active wells, and even prompted one oil firm--facing overlapping claims from citizens, local governments and the state--to file a lawsuit asking the federal court in North Dakota to determine whom it should pay for the oil it has drilled along the Missouri.
"It's messy and it's complicated," said Lawrence Bender, attorney for a unit of Statoil ASA, the Norwegian oil company behind the suit. "It's been difficult to even get all the parties served, because there's so many."
With the recent development of techniques to extract largely untapped natural-gas and crude reserves in vast shale deposits--the Marcellus Shale across New York, Pennsylvania, Ohio and West Virginia, and the Bakken Shale in Montana and North Dakota--state laws are being tested anew by claims over suddenly valuable mineral rights.
In Pennsylvania, attorneys have asked the state Supreme Court to review a case that could give ownership of shale gas to landowners, not to those who own the mineral rights. In West Virginia, a landowner is suing two gas companies--both using his land as a staging area to drill beneath his property--because new technology called horizontal drilling allows them to also drill under the surface miles away from his property. In another Pennsylvania dispute, an environmental-advocacy group claims the state is violating "riparian rights"--those of riverfront landowners--by permitting drilling companies to withdraw millions of gallons of river water they need for hydraulic fracturing, or fracking, a technique to free gas trapped in the shale.
Owen Anderson, a University of Oklahoma law professor who specializes in natural resources, said there were likely to be more territorial fights in these states over waterfront rights, because state laws on the issue tend to be murky. Waterfront mineral rights have hardly been litigated, he said, because the oil beneath waterways has only recently become accessible via horizontal drilling.
"These kinds of fights occur whenever there's something worth fighting about," Mr. Anderson said. "And all of a sudden, there's something worth fighting about."
In North Dakota, the dispute centers on often-marshy areas between the high- and low-water marks that range from a few inches to several hundred yards along the shores of the Missouri. The state has collected $81.7 million for leasing the oil-rich section, which stretches to nearly twice the size of Manhattan, according to state officials. For decades, no one gave the areas much thought.
Now, they have become the latest example of how the 2008 discovery of billions of barrels of crude under the northwestern corner of North Dakota is transforming the region.
North Dakota is seeking to lease more land for drilling as it rakes in record revenue driven by the oil boom. In seven months, the state took in $1 billion in oil-tax receipts--half what budget officials forecast for the entire two-year budget. The state is benefitting from rising oil prices and unforeseen production levels. Last spring, lawmakers calculated the state budget with the estimation that daily oil production would hit 425,000 barrels by June 2013; it was at 535,000 barrels by December.
The oil is boosting the state's economy elsewhere. This year, the state took in $81 million in February sales-tax revenue--85% more than February 2010. Despite pocketing cash in a state trust fund and cutting property taxes, the state still sees the current two-year budget to approach a $1 billion surplus, which would nearly all be spent on new infrastructure to keep up with the state's swelling population.
"I consistently have good news," said the state's budget director, Pam Sharp. "It makes the job a lot more fun."
The oil is not only attracting blue-collar well workers from across the nation, but lawyers from places like Minneapolis.
In two lawsuits filed this year in Williams County District Court, groups of landowners say North Dakota has usurped thousands of acres of mineral rights along the Missouri and Yellowstone Rivers, and leased the rights to oil companies for millions of dollars. One suit, which seeks class-action status for potentially hundreds of citizens, also seeks the mineral rights in areas that have been submerged by the shifting river.
The legal dispute centers on the state's ambiguous laws regarding mineral rights beneath navigable waterways. Separate state laws appear to give ownership of the same 28,150 acres of Missouri River shore zone--the strips between the water marks--to both North Dakota and waterfront landowners. Muddying the debate is a 1994 North Dakota Supreme Court ruling that their interests in the shore zone "are coexistent and overlap."
Many landowners scoff at the state's claim the river extends to the high-water mark, which the state determines using several factors, including where aquatic vegetation ends, and say the state is making a land grab for a patch of earth it ignored before the oil drills arrived.
Jerome Bakke, a 77-year-old retired house painter, said that after his family leased its mineral rights to an oil company, the state stepped in and said it owned those rights. But Mr. Bakke said his 40 acres begin about two-thirds of a mile from the water's edge, and are separated from the river by a 20-foot-tall levy. In 50 years of living there, "water came up on our property once," he said. "We're not a part of the river."
Stan Reep, 79, a retired stockbroker, bought the mineral rights beneath his uncle's property in 1979. Since then, the Missouri River has shifted, submerging part of the land and, according to the state, forfeiting Mr. Reep's mineral rights to North Dakota. With the oil now accessible beneath those 114 acres, the state leased the mineral rights in 2010 for nearly $600,000--almost 500 times the $1,200 Mr. Reep paid for the mineral rights three decades earlier.
Mr. Reep's attorney, Jan Conlin, said her client should retain his mineral rights because North Dakota law gives the state ownership of the river for public-recreation purposes. "We don't believe that applies to mineral rights two miles below the ground," she said.
North Dakota Land Commissioner Lance Gaebe said the state believes that "where the river exists today," it owns "the riverbed and everything beneath it."But he conceded that disputes over land like Mr. Reep's--once-dry areas that over decades have become submerged by the shifting river--"are worthy and should be discussed."Mr. Gaebe said his job is to ensure all of the state's resources are utilized.
"I understand these people are fighting for their grandchildren," Mr. Gaebe said. "But I'm fighting for all the grandchildren of North Dakota."
Some of the nation's youngest states adopted similarly ambiguous riverfront laws at statehood. Mr. Gaebe said that before North Dakota began leasing the disputed shore zones, his office asked 10 states if they had legally dealt with ownership of mineral rights within those areas.
"In virtually all cases, they said, 'No, but once you figure it out, let us know,' " he said. "And now because of horizontal drilling, this question will come up a lot more than it ever has before."
Write to Jack Nicas at jack.nicas@wsj.com
Credit: By Jack Nicas
Subject: Petroleum industry; Litigation; State budgets; Natural gas utilities; Hydraulic fracturing; Petroleum production; Tax revenues
Location: North Dakota Missouri River
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 2, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 963521822
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/963521822?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iraq Lashes Out at Kurds for Halting Oil Exports
Author: Hassan Hafidh; Nabhan, Ali
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 Apr 2012: n/a.
ProQuest document link
Abstract:
BAGHDAD--Iraq's deputy prime minister for energy, Hussein al-Shahristani, lashed out at Iraq's Kurdistan authorities for halting crude oil exports, accusing them of separately allowing billions of dollars worth of oil-smuggling over its northern borders, mainly to Iran.
Full text: BAGHDAD--Iraq's deputy prime minister for energy, Hussein al-Shahristani, lashed out at Iraq's Kurdistan authorities for halting crude oil exports, accusing them of separately allowing billions of dollars worth of oil-smuggling over its northern borders, mainly to Iran.
The new charges further escalate an impasse between Baghdad and the semi-autonomous region of Kurdistan in northern Iraq.
The Kurdistan regional government is embroiled in a long dispute with Iraq's central government over the rights to control the oil resources in the region. The dispute has periodically caused disruption of oil exports from the Kurdish region.
The Kurdistan government decided Sunday to halt oil exports from the region of around 90,000 to 100,000 barrels a day, accusing the central government in Baghdad of failing to make payments to companies working in Kurdistan.
The Kurdistan government produced from its oil fields some 68.1 million barrels of oil in 2011, but only 33.64 million barrels were received and exported via the Iraqi central government's oil marketing arm, the State Oil Marketing Organization, Mr. Shahristani said at a news conference in Baghdad. He expects the figure in 2012 to be more than that.
Crude-oil produced in Kurdistan and not exported via the central government's marketing company in 2010 and 2011 was worth up to $6.65 billion, Mr. Shahristani told reporters in Baghdad. He expects the figure in 2012 to be more than that.
"Most of these barrels not received but produced by Kurdistan ... are being smuggled outside Iraq via the Iranian borders," he said, adding: "This will cause a budget deficit, and our government should act to preserve Iraqi resources."
Mr. Shahristani also said that his government had talked to Iran and Turkey to prevent smuggling of Kurdish oil via their territories.
Meantime, the federal oil minister, Abdul Kareem Luaiby, said that his government has detailed evidence that the Kurdish oil is being smuggled to Iran, Afghanistan and Pakistan and being sold there at lower prices.
Kurdish government officials weren't immediately available to comment.
A Middle East shipping agent and Iraqi oil officials confirmed that the Kurds have halted exports. Iraq's crude exports from northern oil fields dropped to 300,000 barrels a day Sunday, from 370,000 to 400,000 barrels a day, a day after the autonomous region in Kurdistan decided to halt exports from their oil fields, the shipping agent said.
The Kurds say they halted the flow because the central government is delaying due payments. Baghdad, however, says it has already approved payment of $560 million to oil producers in Kurdistan and it is awaiting final audits to issue the money. The Kurds say that Baghdad owes them some $1.5 billion.
Corrections & Amplifications
In an earlier version of this article, Hussein al-Shahristani's name was misspelled.
Write to Hassan Hafidh at hassan.hafidh@wsj.com
Credit: By Hassan Hafidh And Ali Nabhan
Subject: Petroleum industry; Kurds; Iraq War-2003
Location: Iraq
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 2, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 963537934
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/963537934?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
For Chávez, Oil and Water Don't Mix
Author: Vyas, Kejal
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 Apr 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: MATURIN, Venezuela--Oil has given Venezuelan President Hugo Chávez the deep pockets to fund his "21st Century Socialist Revolution," but water has emerged as a threat to his rule.
Oil-contaminated water has become a political issue, upsetting residents of several states and leading one governor to break with Mr. Chávez in a rare public display of dissent from within the ruling-party ranks.
Mr. Chávez's United Socialist Party of Venezuela expelled the rebel governor and threatened to press criminal charges against him and media outlets that report on the subject without proving that the water is unsafe.
"After all of these days Chávez still hasn't issued a single message of solidarity with the people of Monagas, apart from a tweet," said José Gregorio Briceño, the rebel governor, who heads oil-rich Monagas state, whose water was contaminated by a Feb. 4 pipeline explosion. In the tweet, Mr. Chávez said, "Briceño got what was coming to him."
The dispute comes as Mr. Chávez, who is fighting cancer, faces on Oct. 7 his toughest election since he came to power in 1999. His challenges already include one of the world's highest inflation rates, widespread street crime and persistent shortages of power and basic consumer goods. Now, contaminated water in several states, most notably Monagas, threatens to make the resource yet another election hurdle for Mr. Chávez.
"I don't think Chávez can afford to get too comfortable with this election, given what's been going on with the water," said Alexis Pino, a supporter of the president and a taxi driver in Maturin, capital city of Monagas and a commercial hub in Venezuela's rural eastern region.
Mr. Briceño is a popular politician in Monagas, and some of the state's 500,000 voters could swing their support to the opposition if Mr. Chávez is seen as treating him unfairly.
Since his public spat with the president, Mr. Briceño now says he is open to working with Venezuela's opposition, the Democratic Unity Panel, which is trying to unseat Mr. Chávez.
In its latest survey, local pollster Consultores 21 showed Mr. Chávez with 46% and opposition candidate Henrique Capriles, 45%, within the margin of error. Another firm, Datanalisis, gave Chávez a 13-percentage-point lead in its latest poll, but that survey showed nearly a quarter of voters undecided.
In dispute in Monagas is the severity of the spill. Mr Briceño said that between 200,000 and 300,000 barrels of oil had spilled into the river because executives from state-oil company Petroleos de Venezuela, or PdVSA, failed to halt the flow for nearly two days after the accident.
The Chávez government maintains that only about 6,000 barrels spilled, that the flow was cut quickly and that more than 95% of the spill has been cleaned up. Authorities say a number of blockades to catch residual oil in the river are in place, and maintain its water is safe to drink. To quell fears, Eulogio del Pino, a senor PdVSA executive, was shown in a photo distributed by state agencies drinking a glass of water straight from the river.
But Mr. Briceño insists the spill and its impact is far greater and refused to reopen the local water plant for more than a month despite insistence from the government to do so. The plant was restarted March but is working at less-than half of capacity as the state tries to lift its filtering capacity.
As many as 70% of the state's nearly one million residents continue to suffer water shortages since the Feb. 4 explosion by the Guarapiche River, which supports much of the state, Mr. Briceño said.
Last month, Mr. Chávez called the accusations of contaminated water "war propaganda" designed to "threaten the psyche of the Venezuelan people by causing doubts about the purity of the vital liquid."
He ordered the attorney general's office to investigate, and has demanded that critics prove their allegations. "We cannot sit idly before this campaign. This is terrorism, and it cannot be permitted," said the 57-year-old leftist leader, who frequently charges media outlets and opposition politicians with trying to destabilize his government.
Mr. Chávez and other officials have criticized the governor-- who is known by his nickname "el Gato" (the Cat)--for publicly alleging mismanagement of the spill and accusing PdVSA board members of lying about the quality of the local water.
"They took the decision to expel me from the party because they say I wasn't honoring the prestige of the oil industry," Mr. Briceño said at his governor's mansion. "The problem wasn't prestige. It wasn't the revolution. It wasn't the party. It was a matter of public health," he said.
Mr. Briceño, who won 65% of the vote in his last election, now plans to run for reelection in December as an independent.
Monagas, which is Venezuela's largest oil-producing state, is in a highly strategic location at the heart of the Chávez government's ambitious plans to raise overall crude production and develop the OPEC member's vast Orinoco heavy oil belt.
Around the city of Maturin, opinions vary over the water conflict with many residents puzzled over how to respond to Briceño's split from the PSUV party.
"I think the governor is trying to politicize the situation for his own gain," said Wanda, a Maturin resident and worker at a local PdVSA facility, who said the spill's impact was being exaggerated.
Elsewhere, support for Briceño could be seen all around. Many drivers have taken to drawing "100% Gato" signs on their cars in solidarity with the governor.
Credit: By Kejal Vyas
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 2, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 963545288
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/963545288?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
For Chávez, Oil and Water Don't Mix
Author: Vyas, Kejal
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 Apr 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: MATURIN, Venezuela--Oil has given President Hugo Chávez the deep pockets to fund his "21st Century Socialist Revolution," but another liquid--water--has emerged as a threat to his rule.
Oil-contaminated water has become a political issue, roiling residents of several states and leading one governor to break with Mr. Chávez in a rare public display of dissent from within the party ranks.
Mr. Chávez's United Socialist Party of Venezuela expelled the governor and threatened to press criminal charges against him and media outlets that report on the subject without proving that the water is unsafe. The rebel governor, José Gregorio Briceño, heads Monagas state, whose water was contaminated by a Feb. 4 pipeline explosion.
"After all of these days Chávez still hasn't issued a single message of solidarity with the people of Monagas, apart from a tweet," Mr. Briceño said, referring to a missive from Mr. Chávez that said, "Briceño got what was coming to him."
The dispute comes as Mr. Chávez fights cancer and faces, on Oct. 7, his toughest election since he came to power in 1999. His challenges already include one of the world's highest inflation rates, widespread street crime and persistent shortages of power and basic consumer goods. Now, contaminated water in several states, most notably Monagas, threatens to make the resource yet another election hurdle for Mr. Chávez.
"I don't think Chávez can afford to get too comfortable with this election, given what's been going on with the water," said Alexis Pino, a supporter of the president and a taxi driver in Maturin, capital city of Monagas and a commercial hub in Venezuela's rural eastern region.
Mr. Briceño is a popular politician in Monagas, and some of the state's 500,000 voters could swing their support to the opposition if Mr. Chávez is seen as treating him unfairly.
Since his public spat with the president, Mr. Briceño now says he is open to working with Venezuela's opposition, the Democratic Unity Panel, which is trying to unseat Mr. Chávez. Mr. Briceño, who won 65% of the vote in his last election, now plans to run for re-election in December as an independent.
Though surveys vary widely, one respected poll last month put Mr. Chávez in a virtual tie with the opposition candidate Henrique Capriles and another showed nearly a quarter of voters undecided. That is a significant number for the Venezuelan leader, who is running for his third six-year term as president.
In dispute in Monagas is the severity of the spill. Mr Briceño said that between 200,000 and 300,000 barrels of oil had spilled into the river because executives from state-oil company Petroleos de Venezuela, or PdVSA, failed to halt the flow for nearly two days after the accident.
The Chávez government maintains that only about 6,000 barrels spilled, that the flow was cut quickly and that most of it has been cleaned up. Authorities say a number of filters to catch residual oil in the river are in place, and maintain its water is safe to drink. To quell fears, Eulogio del Pino, a senior PdVSA executive, was shown in a photo distributed by state agencies drinking a glass of water straight from the river.
But Mr. Briceño insists the spill and its impact is far greater and refused to reopen the local water plant for more than a month despite insistence from the government to do so. The plant was restarted March but is working at less-than half of capacity as the state tries to lift its filtering capacity.
As many as 70% of the state's nearly one million residents continue to suffer water shortages since the February explosion by the Guarapiche River, which supports much of the state, Mr. Briceño said.
Last month, Mr. Chávez called the accusations of contaminated water "war propaganda" designed to "threaten the psyche of the Venezuelan people by causing doubts about the purity of the vital liquid."
He ordered the attorney general's office to investigate, and has demanded that critics prove their allegations. "We cannot sit idly before this campaign. This is terrorism, and it cannot be permitted," said the 57-year-old populist leader, who frequently charges media outlets and opposition politicians with trying to destabilize his government.
Mr. Chávez and other officials have criticized the governor-- who is known by his nickname "el Gato" (the Cat)--for publicly alleging mismanagement of the spill and accusing PdVSA board members of lying about the quality of the local water.
"They took the decision to expel me from the party because they say I wasn't honoring the prestige of the oil industry," Mr. Briceño said at his governor's mansion. "The problem wasn't prestige. It wasn't the revolution. It wasn't the party. It was a matter of public health," he said.
Monagas, which is Venezuela's largest oil-producing state, is in a strategic location at the heart of the Chávez government's ambitious plans to raise overall crude production and develop the country's vast Orinoco heavy oil belt.
Around the city of Maturin, opinions vary over the water conflict with many residents puzzled over how to respond to Briceño's split from the party.
"I think the governor is trying to politicize the situation for his own gain," said Wanda, a Maturin resident and worker at a local PdVSA facility, who said the spill's impact was being exaggerated.
Elsewhere, support for Briceño could be seen all around. Many drivers have taken to drawing "100% Gato" signs on their cars in solidarity with the governor.
Write to Kejal Vyas at kejal.vyas@dowjones.com
Credit: By Kejal Vyas
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 3, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 963545447
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/963545447?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: For Chavez, Oil and Water Don't Mix
Author: Vyas, Kejal
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]03 Apr 2012: A.11.
ProQuest document link
Abstract:
Mr. Briceno is a popular politician in Monagas, and some of the state's 500,000 voters could swing their support to the opposition if Mr. Chavez is seen as treating him unfairly. Since his public spat with the president, Mr. Briceno now says he is open to working with Venezuela's opposition, the Democratic Unity Panel.
Full text: MATURIN, Venezuela -- Oil has given President Hugo Chavez the deep pockets to fund his "21st Century Socialist Revolution," but another liquid -- water -- has emerged as a threat to his rule.
Oil-contaminated water has become a political issue, roiling residents of several states and leading one governor to break with Mr. Chavez in a rare public display of dissent from within the party ranks.
Mr. Chavez's United Socialist Party of Venezuela expelled the governor and threatened to press criminal charges against him and media outlets that report on the subject without proving that the water is unsafe. The rebel governor, Jose Gregorio Briceno, heads Monagas state, whose water was contaminated by a Feb. 4 pipeline explosion.
"After all of these days Chavez still hasn't issued a single message of solidarity with the people of Monagas, apart from a tweet," Mr. Briceno said, referring to a missive from Mr. Chavez that said, "Briceno got what was coming to him."
The dispute comes as Mr. Chavez fights cancer and faces, on Oct. 7, his toughest election since he came to power in 1999. His challenges already include one of the world's highest inflation rates, widespread street crime and persistent shortages of power and basic consumer goods. Now, contaminated water in several states, most notably Monagas, threatens to make the resource yet another election hurdle for Mr. Chavez.
"I don't think Chavez can afford to get too comfortable with this election, given what's been going on with the water," said Alexis Pino, a supporter of the president and a taxi driver in Maturin, capital city of Monagas and a commercial hub in Venezuela's rural eastern region.
Mr. Briceno is a popular politician in Monagas, and some of the state's 500,000 voters could swing their support to the opposition if Mr. Chavez is seen as treating him unfairly.
Since his public spat with the president, Mr. Briceno now says he is open to working with Venezuela's opposition, the Democratic Unity Panel. Mr. Briceno, who won 65% of the vote in his last election, now plans to run for re-election in December as an independent.
Though surveys vary widely, one respected poll last month put Mr. Chavez in a virtual tie with the opposition candidate Henrique Capriles and another showed nearly a quarter of voters undecided. That is a significant number for the Venezuelan leader, who is running for his third six-year term as president.
In dispute in Monagas is the severity of the spill. Mr Briceno said that between 200,000 and 300,000 barrels of oil had spilled into the river because executives from state-oil company Petroleos de Venezuela, or PdVSA, failed to halt the flow for nearly two days.
The Chavez government maintains that only about 6,000 barrels spilled, that the flow was cut quickly and that most of it has been cleaned up. Authorities say a number of filters to catch residual oil in the river are in place, and maintain its water is safe to drink. To quell fears, Eulogio del Pino, a senior PdVSA executive, was shown in a photo distributed by state agencies drinking a glass of water straight from the river.
But Mr. Briceno insists the spill and its impact is far greater and refused to reopen the local water plant for more than a month despite insistence from the government to do so. As many as 70% of the state's one million residents continue to suffer water shortages, he said.
Last month, Mr. Chavez called the accusations of contaminated water "war propaganda" designed to "threaten the psyche of the Venezuelan people by causing doubts about the purity of the vital liquid."
He ordered the attorney general to investigate, and has demanded critics prove their allegations. "We cannot sit idly before this campaign. This is terrorism, and it cannot be permitted," said the populist leader.
Mr. Chavez and other officials have criticized the governor -- who is known by his nickname "el Gato" (the Cat) -- for publicly alleging mismanagement of the spill and accusing PdVSA board members of lying about the quality of the local water.
"They took the decision to expel me from the party because they say I wasn't honoring the prestige of the oil industry," Mr. Briceno said at his governor's mansion. "The problem wasn't prestige. It wasn't the revolution. It wasn't the party. It was a matter of public health," he said.
Credit: By Kejal Vyas
Subject: Governors; Elections -- Venezuela; Water pollution
Location: Venezuela
People: Briceno, Jose Gregorio Chavez, Hugo
Company / organization: Name: United Socialist Party-Venezuela; NAICS: 813940
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.11
Publication year: 2012
Publication date: Apr 3, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 963618738
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/963618738?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Gulf in Oil Prices May Set Up Market for a Fall
Author: Kent, Sarah
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 Apr 2012: n/a.
ProQuest document link
Abstract:
The price of front-month oil Brent crude futures has ballooned to more than $30 above the cost of contracts for delivery in 2018, which some say calls into question the claims of those who believe that oil output has peaked.
Full text: The price of front-month oil Brent crude futures has ballooned to more than $30 above the cost of contracts for delivery in 2018, which some say calls into question the claims of those who believe that oil output has peaked.
The disparity between the two dates suggests that current high prices may be just temporary, rather than a long-term phenomenon, some analysts said.
Concerns about disruptions to supplies from the Middle East have helped drive up prices this year. But the gap, or spread, with the December 2018 contract, one of the most distant futures contracts available, is widening because of the prospect of improved production.
The theory of "peak oil"--that world oil production has topped and supply is steadily depleting-- helped push the price of Brent crude to a record $147.50 a barrel in 2008.
But many have abandoned the theory, as new technology, such as hydraulic fracturing, or fracking, opens the prospect of significant production from large shale oil basins, while more sophisticated drilling techniques allow companies to look for oil further and further offshore. Overall, output is expected rise in a number of countries over the next few years, including in Iraq, Brazil, the U.S. and Canada.
"Peak oil is over for sure," said Olivier Jakob, managing director at Swiss Consultancy, Petromatrix. "In 2008, everything was 'peak oil' all over the place, but now it's not really a theme any more."
Analysts say that while prices for oil well into the future don't always predict where they will actually end up, in part because economic conditions can change, this wide disparity between current and futures prices is unusual and gives an indication of current market thinking. The price for a May contract of Brent crude is now $30.63 a barrel above that of a contract for delivery in December 2018.
To be sure, the gap could narrow if oil prices pull back or if the consensus shifts to expect a faster increase in demand for oil that would compensate for some of the additional supply. Still, the marked diversion in prices marks a flip in the relation between the two contracts from just two years ago.
"So much has been done in terms of shale development that everyone recognizes it's going to be a bit longer before we get to the peak-oil dilemma," Mr. Jakob said.
In the U.S., oil production is likely to increase by a fifth over the next 10 years, largely because of the development of shale oil fields and offshore drilling in the Gulf of Mexico, according to estimates from the U.S. Energy Information Agency, an arm of the U.S. government.
Neither of these developments come without significant risks. Deepwater offshore wells are very technically challenging, while environmental concerns over fracking could block some of these projects.
Further contributing to the unusually large premium for near-term oil is the hedging practice of companies working on new technology. Exploration and production companies often have to insure themselves against fluctuations in oil prices in order to get lenders to fund their projects.
But few large users, such as airlines and oil refiners, or speculators are interested in locking in the price of oil in five years. With relatively few buyers on the other side of the trade, the unusually large number of sellers is helping to drive the price lower, said James Zhang, strategist at Standard Bank.
Meanwhile, concerns over risks to supply are driving currenct prices higher. Disruptions have already affected supply from Syria, South Sudan, Yemen and Iraq this year. The most pressing concern is Iran, where tightening sanctions imposed by the U.S. and European Union are affecting supply. Petromatrix's Mr. Jacob pegs the risk premium for Brent as high as $20 a barrel.
That worry over Iran has pushed up the price of front-month Brent 16% this year, which settled Tuesday at $124.86 a barrel. Brent for delivery in December 2018 settled at $94.23 a barrel.
But should tensions in the Middle East ease, prices could tumble, analysts said.
"The elastic band is being stretched more and more and as long as we have geopolitical tension that elastic band will probably remain stretched, but the risk is that once it snaps it could snap quite hard," said Ole Hansen, manager futures on Saxo Bank's fixed-income trading desk.
Credit: By Sarah Kent
Subject: Petroleum industry; Petroleum production; Hydraulic fracturing; Prices; Oil shale; Offshore drilling
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 3, 2012
column: Market Focus
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 963707866
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/963707866?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The End of the Saudi Oil Reserve Margin; Riyadh is less and less able to cushion supply shocks as it consumes more and more of its own oil.
Author: Krane, Jim
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 Apr 2012: n/a.
ProQuest document link
Abstract:
Loss of this spare capacity would remove a crucial safety mechanism from the global economy, to say nothing of tying America's hands when it comes to future moves against oil states.
Full text: Doha, Qatar
President Obama's sanctions plan on Iran follows an old Mideast policy playbook. Western moves against an oil-exporting country take place with the cooperation of Saudi Arabia. U.S. strategy requires the Saudis to ramp up production and replace Iranian exports in hope of avoiding a damaging spike in prices.
It's a familiar scenario: At one time or another, the Saudis have been called upon to replace exports from Iran, Iraq, Kuwait and, most recently, Libya. The idea is to have your cake and eat it--to meet U.S. foreign policy goals without disrupting oil markets and antagonizing the American motorist.
But the old playbook may have to be torn up. This time Saudi Arabia is struggling to assume its usual role as the oil market's swing supplier. This can be seen in current market tightness and in U.S. gasoline prices, which are edging toward $4, a dangerous prospect at election time.
The Obama administration's sanctions plan acknowledges Saudi weakness. Rather than try to impose a blanket ban, it has introduced piecemeal measures, such as encouraging China and South Korea to demand discounts for continued imports of Iranian crude. For the first time, Saudi Arabia's vaunted spare capacity appears insufficient to cover the loss of a major exporter.
When revolution last year took Libya's 1.5 million barrels a day off the market, the Saudis and other producers were able to fill the gap. A slack oil market helped. But Iran has been exporting roughly 2.2 million barrels a day. And now something else is afoot.
Saudi Arabia isn't the same depopulated petro-state that the West found itself so dependent on in the 1970s. The kingdom and its oil-rich neighbors have seen their populations and industrial bases swell. They have become huge consumers of their own energy. The ruling sheikhs have cemented themselves in power by erecting energy-driven welfare states which provide some of the world's cheapest electricity, natural gas and gasoline.
With domestic electricity demand rising 10% per year in Saudi Arabia, the kingdom now devours more than a quarter of its oil production--nearly three million barrels per day. International Energy Agency figures show that Saudi Arabia now consumes more oil than Germany, an industrialized country with triple the population and an economy nearly five times as large.
In the medium-term, Saudi Arabia is in danger of losing its all-important "reserve margin" of oil production that so often calms market volatility. Loss of this spare capacity would remove a crucial safety mechanism from the global economy, to say nothing of tying America's hands when it comes to future moves against oil states.
Longer-term, the kingdom's very exports are at risk. A projection by Jadwa Investment of Riyadh shows that, at current rates of consumption growth, the Saudi reserve margin will dwindle until it disappears sometime before 2020. At that point, the Saudis would begin diverting oil destined for export into the domestic market.
Following the trend further, Jadwa finds that Saudi Arabia will consume its entire production capacity of 12.5 million barrels per day at home by 2043. London's Chatham House finds that the kingdom will become a net oil importer even earlier, by 2038.
These projections don't take into account the possibility that Saudi Arabia's production could rise above an expected plateau of 13 million barrels a day, or that ruling sheikhs might stop encouraging their citizens to waste energy by dropping some of the world's deepest fossil-fuel subsidies.
As U.S. drivers are now learning, however, the Gulf countries have limited ability to increase production beyond current capacity, and they show even less ability to curb their domestic demand. When it comes to competition for supply, they will retain a natural advantage. They own the supply.
America's Middle East confrontations have long depended on Saudi spare capacity. Without it, as the faceoff with Iran already shows, Washington--and the world--will be less free to intervene in the region without raising gasoline prices at home. And unless the Gulf Arab monarchies can gain control of their own consumption, their role in global energy markets will dwindle, as prices grow even more volatile.
Mr. Krane is the author of "City of Gold: Dubai and the Dream of Capitalism" (St. Martin's Press, 2009). He researches Gulf energy policy at Cambridge University's Judge Business School.
Credit: By Jim Krane
Subject: Petroleum industry; Petroleum production; Exports
Location: Saudi Arabia United States--US
People: Obama, Barack
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 3, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 963765040
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/963765040?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Court Rejects Essar Oil's Plea in Tax Case
Author: Sharma, Rakesh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]04 Apr 2012: n/a.
ProQuest document link
Abstract:
NEW DELHI - Shares of Essar Oil Ltd. tanked Wednesday after the Supreme Court of India rejected the refiner's petition against a January ruling which said it can't defer sales tax payments to the Gujarat state government.
Full text: NEW DELHI - Shares of Essar Oil Ltd. tanked Wednesday after the Supreme Court of India rejected the refiner's petition against a January ruling which said it can't defer sales tax payments to the Gujarat state government.
The court's decision means that Essar, which had asked to be allowed to defer the payments until 2021, will have to make good the full 63 billion rupees ($1.24 billion) sales tax deferment benefit it utilized.
Essar Oil, a unit of London-listed Essar Energy PLC, was granted the deferment as part of a Gujarat capital investment incentive program after it decided to build a giant refinery in the state's Vadinar area.
But the government revoked Essar's right to exemption, saying it had failed to complete construction of the refinery within a prescribed time frame.
Essar contested the case, saying the delay was due to reasons beyond its control.
But the Supreme Court on Jan. 17 ruled that Essar would no longer be eligible for the tax program.
The refiner said Wednesday the latest order won't have any "new impact on the business."
The decision sent the company's shares down 6% at one point. They closed down 5% at 56.75 rupees in a Bombay Stock Exchange market which finished the day 0.6% lower.
Essar said Wednesday it made an adjustment of 40.15 billion rupees for the case in its October-December quarter earnings, which were reported a month after the Jan. 17 ruling.
The company said it is in discussions with the Gujarat government for finalizing the terms of repayment of sales tax liabilities and with banks for meeting the repayment obligations.
Last month, Essar expanded its Vadinar refinery by 29% to 18 million tons at an investment of $1.8 billion.
Write to Rakesh Sharma at rakesh.sharma@dowjones.com
Credit: By Rakesh Sharma
Subject: Investments; Petroleum refineries; Sales taxes
Company / organization: Name: Essar Oil Ltd; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 4, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 963936684
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/963936684?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Blast Hits Turkey Oil Pipeline
Author: Hassan Hafidh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 Apr 2012: n/a.
ProQuest document link
Abstract:
Iraq has resumed crude-oil exports via its northern pipeline to Turkey's Ceyhan port after a brief suspension caused by at least one blast on the pipeline inside Turkey, an Iraqi oil ministry spokesman said Thursday.
Full text: Iraq has resumed crude-oil exports via its northern pipeline to Turkey's Ceyhan port after a brief suspension caused by at least one blast on the pipeline inside Turkey, an Iraqi oil ministry spokesman said Thursday.
Assem Jihad said exports resumed via the pipeline, which links the Kirkuk oil field to the Mediterranean port, at midday local time Thursday at their "normal" pace. Iraq usually pumps between 400,000 and 500,000 barrels a day via the pipeline.
A shipping agent in Ceyhan, however, couldn't immediately confirm that the flow had resumed. "So far I haven't received information that the pumping is resumed," the agent said.
The spokesman said the pipeline was sabotaged by unknown attackers some 40 miles north of the Iraq-Turkey border.
Analysts blame Kurdistan Workers Party, or PKK, for the attack as fighting between the Turkish army and the PKK has escalated in recent months.
Write to Hassan Hafidh at hassan.hafidh@wsj.com
Credit: By Hassan Hafidh
Subject: Sabotage; Pipelines
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 5, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 964484786
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/964484786?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Fuels Population Boom in North Dakota City
Author: Nicas, Jack
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Apr 2012: n/a.
ProQuest document link
Abstract:
The census figures underline the feverish pace of the North Dakota oil boom, which has attracted hundreds of oil rigs to the state's northwestern corner and thousands of workers to man them. Since new drilling technologies gave oil companies access to up to 4.3 billion barrels of crude in the Bakken Shale, which stretches across North Dakota, Montana and Canada, the influx of cash and oil has turned the once sleepy area into one of the most bustling regional economies in the country.
Full text: The fastest-growing small city in the U.S. is Williston, N.D., a longtime railroad outpost 540 miles from the nearest major U.S. sports franchise that has been transformed by the state's oil boom, according to new Census Bureau data.
From April 2010 to July 2011, the population in and around Williston grew far faster than in any other micropolitan area--population centers with at least one urban cluster of between 10,000 and 50,000 people--swelling by 8.8% to 24,374 residents, according to census estimates.
Dickinson, N.D., and Minot, N.D., also placed in the top eight fastest-growing micropolitan areas. The fastest-growing major metropolitan area was around Kennewick in southern Washington state, where the population grew 4.3% to 264,000.
The census figures underline the feverish pace of the North Dakota oil boom, which has attracted hundreds of oil rigs to the state's northwestern corner and thousands of workers to man them. Since new drilling technologies gave oil companies access to up to 4.3 billion barrels of crude in the Bakken Shale, which stretches across North Dakota, Montana and Canada, the influx of cash and oil has turned the once sleepy area into one of the most bustling regional economies in the country.
North Dakota passed California in December as the nation's third-biggest oil-producing state, after Texas and Alaska. Of the 15 counties in the country with the lowest unemployment rates, 11 are in North Dakota. Just 0.8% of residents in Williston's Williams County don't have a job, while the national unemployment rate has hovered above 8%.
While other states are struggling with budget misery, North Dakota's coffers are overflowing. The state government's revenue hit $139 million in February--82% more than February 2010, and 58% more than budget officials' forecast last year. In two years, motor-vehicle excise-tax revenue has more than doubled, while corporate income-tax revenue has increased fivefold.
The state is putting some of the record revenue into a state trust fund and cutting property taxes, but it still expects to run a $1 billion surplus for the two-year budget, nearly all of which will fund infrastructure in its fastest-growing areas.
Residents in Williston say the population would be growing even faster if there were more places to live. Housing has struggled to keep up with the inundation of workers, sending rents and home values soaring and forcing oil firms to erect "man camps," or dormitories for thousands of workers in the oil fields.
An answering machine at the Williston Chamber of Commerce said that because of the increased demand, the chamber is no longer mailing packets or replying individually to workers' inquiries about jobs. "Please keep in mind that while jobs are abundant, housing is scarce," the recording says.
"It's not my sleepy little town anymore," said Chuck Neff, a lifelong Williston resident and local lawyer whose receptionist has moved into an RV because of housing prices. "It's like if you turned the clocks back 200 years and you got tents up on the prairie."
Residents say local schools have struggled with staffing, police have faced rising crime rates and the volunteer fire department is overworked.
"We just don't have the infrastructure to expand as quickly as the demand. We've got growing pains," said Tim Conlin, who owns a local furniture store where annual sales have doubled since the oil boom began. "There's a lot more traffic, a lot more accidents and a lot longer lines when you go out to eat."
Write to Jack Nicas at jack.nicas@wsj.com
Credit: By Jack Nicas
Subject: Petroleum industry; Budgets; Census of Population; Unemployment
Location: North Dakota United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 7, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 970221199
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/970221199?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. News: Oil Fuels Population Boom in North Dakota City
Author: Nicas, Jack
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]07 Apr 2012: A.4. [Duplicate]
ProQuest document link
Abstract:
The census figures underline the feverish pace of the North Dakota oil boom, which has attracted hundreds of oil rigs to the state's northwestern corner and thousands of workers to man them. Since new drilling technologies gave oil companies access to up to 4.3 billion barrels of crude in the Bakken Shale, which stretches across North Dakota, Montana and Canada, the influx of cash and oil has turned the once sleepy area into one of the most bustling regional economies in the country.
Full text: The fastest-growing small city in the U.S. is Williston, N.D., a longtime railroad outpost 540 miles from the nearest major U.S. sports franchise that has been transformed by the state's oil boom, according to new Census Bureau data.
From April 2010 to July 2011, the population in and around Williston grew far faster than in any other micropolitan area -- population centers with at least one urban cluster of between 10,000 and 50,000 people -- swelling by 8.8% to 24,374 residents, according to census estimates.
Dickinson, N.D., and Minot, N.D., also placed in the top eight fastest-growing micropolitan areas. The fastest-growing major metropolitan area was around Kennewick in southern Washington state, where the population grew 4.3% to 264,000.
The census figures underline the feverish pace of the North Dakota oil boom, which has attracted hundreds of oil rigs to the state's northwestern corner and thousands of workers to man them. Since new drilling technologies gave oil companies access to up to 4.3 billion barrels of crude in the Bakken Shale, which stretches across North Dakota, Montana and Canada, the influx of cash and oil has turned the once sleepy area into one of the most bustling regional economies in the country.
North Dakota passed California in December as the nation's third-biggest oil-producing state, after Texas and Alaska. Of the 15 counties in the country with the lowest unemployment rates, 11 are in North Dakota. Just 0.8% of residents in Williston's Williams County don't have a job, while the national unemployment rate has hovered above 8%.
While other states are struggling with budget misery, North Dakota's coffers are overflowing. The state government's revenue hit $139 million in February -- 82% more than February 2010, and 58% more than budget officials' forecast last year. In two years, motor-vehicle excise-tax revenue has more than doubled, while corporate income-tax revenue has increased fivefold.
The state is putting some of the record revenue into a state trust fund and cutting property taxes, but it still expects to run a $1 billion surplus for the two-year budget, nearly all of which will fund infrastructure in its fastest-growing areas.
Residents in Williston say the population would be growing even faster if there were more places to live. Housing has struggled to keep up with the inundation of workers, sending rents and home values soaring and forcing oil firms to erect "man camps," or dormitories for thousands of workers in the oil fields.
"It's not my sleepy little town anymore," said Chuck Neff, a lifelong Williston resident and local lawyer whose receptionist has moved into an RV because of housing prices.
Residents say local schools have struggled with staffing, police have faced rising crime rates and the volunteer fire department is overworked.
"We just don't have the infrastructure to expand as quickly as the demand. We've got growing pains," said Tim Conlin, who owns a local furniture store where annual sales have doubled since the oil boom began. "There's a lot more traffic, a lot more accidents and a lot longer lines when you go out to eat."
Credit: By Jack Nicas
Subject: Census of Population; Economic impact; Population growth; Petroleum industry; Economic conditions -- Williston North Dakota
Location: Williston North Dakota
Classification: 9190: United States; 1110: Economic conditions & forecasts; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.4
Publication year: 2012
Publication date: Apr 7, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 971419388
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/971419388?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Libya, U.S. Probe Oil-Company Deals; New Government Aims to Shed Light on Petroleum Industry's Interaction With Gadhafi Regime
Author: Faucon, Benoît; Said, Summer; Moloney, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 Apr 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Authorities in the U.S. and Libya are investigating oil giants such as Italy's Eni SpA and France's Total SA over their past relations with the fallen Libyan regime, potentially casting a cloud on the companies' ambitions to expand their foothold in the country with the largest oil reserves in Africa.
Last year, a civil war that toppled Libyan leader Col. Moammar Gadhafi nearly shut down the country's crude production, stressing global oil markets. But as oil-company operations return to normal, the probes may complicate the oil companies' business in the country.
The Libyan general prosecutor's office is investigating "Libyan and foreign operators in Libya" for possible "financial irregularities," its deputy head, Abdelmajeed Saad, said in an interview.
In a March letter reviewed by The Wall Street Journal, the prosecutor's office formally asked the head of audit at Libya's National Oil Co. to supply oil-company documents. The letter mentions oil transactions between NOC and international traders Vitol Group and Glencore International PLC as examples of documents it is seeking. Though the Libyan probe focuses mostly on the Gadhafi era, the letter indicates that the request involving the traders includes the period of the country's civil war through the present.
The companies investigated also include Eni, the biggest foreign oil player in Libya, and Total, Mr. Saad said.
Neither the letter nor the deputy prosecutor mentioned any specific allegations involving the companies they named.
NOC's marketing manager, Ahmed Shawki, confirmed that NOC and its dealings with foreign companies, in general, are "under investigation from the general attorney."
"NOC submitted all documents. [The prosecutor's office is] doing the right thing," said Mr. Shawki, who wasn't in charge of the company under the late Mr. Gadhafi. He said he did "everything according to the law," but declined to comment on the Gadhafi era.
NOC Chairman Nuri Berruien declined to comment.
News of the Libyan probe comes after the U.S. Securities and Exchange Commission sent formal requests to Eni and Total related to the companies' Libyan businesses. U.S. oil giant Marathon Oil Corp. also said in its annual SEC filing in February that it was asked to hand over documents about its Libyan operations.
Eni said in its recent annual filing with the SEC that the U.S. investigation is in connection with "certain illicit payments to Libyan officials, possibly violating the U.S. Foreign Corruption Practice Act." The Italian company said the request covered the period from 2008, when Eni and others renegotiated contracts in Libya, to early 2011, when the civil war erupted.
Total also recently disclosed a request from the SEC in a filing, but didn't elaborate, except to say other companies also had been targeted.
The SEC, Eni, Glencore and Marathon all declined to comment. Total and Vitol were unavailable for comment.
The new Libyan regime, which faces its first elections in June, is under pressure to shed light on oil deals under Mr. Gadhafi, whose overthrow was driven partly by discontent over alleged corruption.
Mr. Saad, of the general prosecutor's office, said that if wrongdoing is established "the fine will be at least double the amount of money" lost to the Libyan government. Also, "it will affect securing any future contract," he said.
The pressure might complicate any future negotiation for international oil companies in Libya, one of the few countries still open to foreign investment at a time when others are tightening the noose on Westerners or are off limits due to sanctions. Eni, which normally gets about 14% of its total production form Libya, wants to double that amount and invest between $30 billion and $35 billion in the coming decade.
Ángel González in Houston, Geraldine Amiel in Paris, Alexis Flynn and Iman Dawoud in London contributed to this article.
Write to Summer Said at summer.said@dowjones.com and Liam Moloney at liam.moloney@dowjones.com and Benoît Faucon at Benoit.Faucon@wsj.com
Credit: By Benoît Faucon, Summer Said and Liam Moloney
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 8, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 985568999
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/985568999?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Libya, U.S. Probe Oil-Company Deals --- New Government Aims to Shed Light on Petroleum Industry's Interaction With Gadhafi Regime
Author: Faucon, Benoit; Said, Summer; Moloney, Liam
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]09 Apr 2012: B.3.
ProQuest document link
Abstract:
Authorities in the U.S. and Libya are investigating oil giants such as Italy's Eni SpA and France's Total SA over their past relations with the fallen Libyan regime, potentially casting a cloud on the companies' ambitions to expand their foothold in the country with the largest oil reserves in Africa.
Full text: Authorities in the U.S. and Libya are investigating oil giants such as Italy's Eni SpA and France's Total SA over their past relations with the fallen Libyan regime, potentially casting a cloud on the companies' ambitions to expand their foothold in the country with the largest oil reserves in Africa.
Last year, a civil war that toppled Libyan leader Col. Moammar Gadhafi nearly shut down the country's crude production, stressing global oil markets. But as oil-company operations return to normal, the probes may complicate the oil companies' business in the country.
The Libyan general prosecutor's office is investigating "Libyan and foreign operators in Libya" for possible "financial irregularities," its deputy head, Abdelmajeed Saad, said during an interview.
In a March letter reviewed by The Wall Street Journal, the prosecutor's office formally asked the head of audit at Libya's National Oil Co. to supply oil-company documents. The letter mentions oil transactions between NOC and international traders Vitol Group and Glencore International PLC as examples of documents it is seeking. Though the Libyan probe focuses mostly on the Gadhafi era, the letter indicates that the request involving the traders includes the period of the country's civil war through the present.
The companies investigated also include Eni, the biggest foreign oil player in Libya, and Total, Mr. Saad said.
Neither the letter nor the deputy prosecutor mentioned any specific allegations involving the companies they named.
NOC's marketing manager, Ahmed Shawki, confirmed that NOC and its dealings with foreign companies, in general, are "under investigation from the general attorney."
NOC Chairman Nuri Berruien declined to comment.
News of the Libyan probe comes after the U.S. Securities and Exchange Commission sent formal requests to Eni and Total related to the companies' Libyan businesses. U.S. oil giant Marathon Oil Corp. also said in its annual SEC filing in February that it was asked to hand over documents about its Libyan operations.
Eni said in its recent annual filing with the SEC that the U.S. investigation is in connection with "certain illicit payments to Libyan officials, possibly violating the U.S. Foreign Corruption Practice Act." The Italian company said the request covered the period from 2008, when Eni and others renegotiated contracts in Libya, to early 2011, when the civil war erupted.
Eni, which normally gets about 14% of its total production from Libya, wants to double that amount and invest between $30 billion and $35 billion in the coming decade.
Total also recently disclosed an SEC request, but didn't elaborate, except to say other companies also had been targeted.
The SEC, Eni, Glencore and Marathon all declined to comment. Total and Vitol were unavailable for comment.
---
Angel Gonzalez, Geraldine Amiel, Alexis Flynn and Iman Dawoud contributed to this article.
Credit: By Benoit Faucon, Summer Said and Liam Moloney
Subject: Petroleum industry; Investigations; Accounting procedures
Location: United States--US Libya
Company / organization: Name: Eni SpA; NAICS: 211111, 324110; Name: Total SA; NAICS: 211111, 324110, 447190
Classification: 9177: Africa; 8510: Petroleum industry; 4120: Accounting policies & procedures
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.3
Publication year: 2012
Publication date: Apr 9, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 992660008
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/992660008?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oneok Partners to Build Oil Pipeline
Author: Lefebvre, Ben
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 Apr 2012: n/a.
ProQuest document link
Abstract:
Bakken oil production could reach 1.2 million barrels a day by 2015 according to some analysts' estimates, spurring pipeline companies to announce projects that would make the oil more accessible to buyers in the U.S. Gulf Coast refining hub.
Full text: Oneok Partners LP said it will spend between $1.5 billion and $1.8 billion to build a crude-oil pipeline between the Bakken Shale in North Dakota and the Cushing, Okla., oil-market hub, a project underlining the need to move oil being produced in the increasingly prolific field.
The 1,300-mile Bakken Crude Express Pipeline will have an initial capacity to transport 200,000 barrels a day, which the company eventually could expand. The line will also be able to transport crude oil from the Niobrara Shale, another up-and-coming oil field, Oneok said.
The project marks the first foray by Oneok Partners--the gas-gathering-and-transportation unit of Oneok Inc.--into crude-oil transportation. The Tulsa, Okla., company said it will start construction in late 2013 at the earliest and expects to finish by early 2015.
The latest project will "provide producers with efficient and reliable transportation of their product directly to one of the largest crude-oil market hubs in the U.S." said Oneok Partners President Terry K. Spencer.
Production from the Bakken topped 500,000 barrels a day in November, according to the latest data from the North Dakota Pipeline Authority. That outstripped the capacity of existing regional pipelines to move it to refiners further south, with the resulting supply glut depressing prices for the crude oil.
Bakken oil production could reach 1.2 million barrels a day by 2015 according to some analysts' estimates, spurring pipeline companies to announce projects that would make the oil more accessible to buyers in the U.S. Gulf Coast refining hub. Enbridge Inc. and TransCanada Corp. are among the companies that have also announced plans to move Bakken crude closer to market.
"The [Oneok] pipeline probably will be critical to help Bakken producers realize fair prices," said Morningstar analyst Avi Feinberg. "'Now, now, now' is also probably a fair characterization of when producers would like to have that capacity."
Oneok has already said it is investing as much as $2 billion in projects related to the Bakken Shale. Most recently, the company on Wednesday said it plans to spend an additional $140 million to $160 million to construct a 270-mile natural-gas-gathering system and related infrastructure in North Dakota.
Write to Nathalie Tadena at nathalie.tadena@dowjones.com
Corrections & Amplifications
An earlier version of this story erroneously said Oneok intends to spend as much as $22 billion on projects related to the Bakken Shale through 2014. It plans to spend as much as $2 billion.
Credit: By Ben Lefebvre
Subject: Pipelines; Petroleum industry
Location: North Dakota
Company / organization: Name: ONEOK Inc; NAICS: 211111, 211112, 221210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 9, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 992865996
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/992865996?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
North Sea Oil Shock Keeps Fire Under Brent Price
Author: Faucon, Benoit; Kent, Sarah
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 Apr 2012: n/a.
ProQuest document link
Abstract:
On March 25, a gas leak forced Total SA, the French oil company, to halt production of 60,000 barrels of oil per day at the Elgin field, about 200 kilometers from the coast of Scotland. Prices for more than half of the world's oil are set in relation to the cost of physical Brent--sold for delivery to refiners, rather than on the futures market--so when it gets more expensive, the impact echoes widely.
Full text: Just when it looked as if Iran's oil shock was starting to be absorbed by the market, a problem in Europe is keeping alight the fire under crude prices.
On March 25, a gas leak forced Total SA, the French oil company, to halt production of 60,000 barrels of oil per day at the Elgin field, about 200 kilometers from the coast of Scotland. The high-profile incident has led to soul-searching that could rein in output in the Continent's largest oil patch.
Fears that the leak could result in a major disaster have significantly diminished after a gas flare that was left alight on board the platform went out. Concerns that leaked gas could come into contact with the flame and cause an explosion stymied Total's efforts to manage the leak in its first week.
There has been no disaster of the scale witnessed nearly two years ago in the Gulf of Mexico, when a blast at a BP PLC platform led to the largest offshore oil spill in U.S. history. Still, the leak is expected to lend strength to European benchmark prices for oil and gas for the foreseeable future.
The timing and location of the incident have magnified its impact.
Total has said that the leak will take as long as six months to seal, resulting in a prolonged loss of supply. The entire Elgin field is closed.
Elgin crude accounts for only about 5% of the U.K.'s North Sea production, but it is mixed with oil from other fields to produce Forties crude. Forties is part of the Brent family of crudes, whose prices are used to determine the Brent benchmark, the most widely used oil-price indicator in the world.
Prices for more than half of the world's oil are set in relation to the cost of physical Brent--sold for delivery to refiners, rather than on the futures market--so when it gets more expensive, the impact echoes widely.
Now the benchmark looks like it will get another boost, just when the oil markets can least afford it.
Prices of Brent on the futures market are just off highs hit earlier in the year and not far from the record of $147.50 hit in 2008. Monday in New York, Brent for May delivery was at $121.60.
Concern over the loss of Iranian supplies in the European Union has lent strength to the market. The EU will ban imports of Iranian crude in July in an effort to pressure Tehran to halt what it believes is an effort to develop nuclear weapons. Already, restrictions on insurance and funding have forced some buyers to cut back.
J.P. Morgan Chase & Co. warned Thursday that even before the embargo kicks in fully, existing sanctions on Iranian banks will make it impossible for many refiners in Europe and elsewhere to pay Tehran for crude. That could take a million barrels per day of Iranian oil off the market, it said.
Iran has threatened to retaliate by closing the Strait of Hormuz--a chokepoint used by tankers carrying more than one-fifth of the world's oil output.
Fears about Iranian exports "continue to underpin [Brent] in nervous choppy trading," London-based VTB Capital PLC said in a note Thursday. Disruptions to North Sea supplies are exacerbating this trend, it said.
The physical Brent benchmark rose by $1 a barrel immediately after the Total incident. Already, the Elgin leak has cut the supply of crude used to set the benchmark price by three tanker cargoes, totalling 1.8 million barrels, and many more shipments have been delayed.
But the Elgin scare will likely leave its deepest mark on the future development of the U.K.'s declining oil and gas resources.
The question of how to handle oil development highlights a dilemma for Western countries: Their oil companies must either buy expensive supplies from volatile parts of the globe or seek oil at home that will be cheaper to bring to motorists, at the risk of irreversible damage to their own backyards.
The scale could tip against environmental risks--which would support oil and gas prices. Incidents such as the Elgin leak "could very well trigger a flood of safety and regulatory measures that could radically change the offshore upstream environment as we know it," said Vienna-based consultancy JBC Energy GmbH in a recent note.
The EU said last month it may amend a proposal for stricter safety rules on offshore drilling once it has more information about the causes of the Elgin leak.
Though the overhaul would target the whole offshore-oil sector, it could have a particular impact on the development of high-pressure, high-temperature fields like Elgin, which are considered among the riskiest. Such fields represent between 12% and 15% of the total number of U.K. offshore oil and gas discoveries.
Write to Benoit Faucon at benoit.faucon@dowjones.com and Sarah Kent at sarah.kent@dowjones.com
Credit: By Benoit Faucon And Sarah Kent
Subject: Petroleum industry; Supplies; Prices
Location: United Kingdom--UK
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 9, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 992878094
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/992878094?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
New Life for the Gulf's 'Dead Sea'; High Oil Prices, Improved Technology Lure Drillers Back to Shallow Waters of the Gulf of Mexico
Author: Gilbert, Daniel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 Apr 2012: n/a.
ProQuest document link
Abstract:
"High oil prices are the top three reasons why you see a resurgence in drilling on the shelf," said David Pursell, a managing director at energy investment bank Tudor, Pickering, Holt & Co. John Schiller, chief executive of Energy XXI, said oil production made up 94% of his company's revenue last year, and he expects Energy XXI's oil output to increase by 10% to 15% a year for the next three years.
Full text: HOUSTON--Energy companies are striking oil in a place many abandoned long ago: the shallow waters of the Gulf of Mexico.
Most of the drilling on the Gulf's continental shelf in recent years has been for natural gas, and even that business has been declining for so long that some in the industry have branded the shallow waters "the dead sea."
But there are signs of an oil-fueled revival. Last week, 37 shallow-water rigs were under contract to drill there, up 32% from the low point in January 2011, according to industry tracker RigData Offshore. Federal regulators issued 10 permits for new wells in shallow Gulf waters in February, the second-highest monthly total since the 2010 Deepwater Horizon oil disaster.
And last week, private-equity firms Apollo Global Management LLC and Riverstone Holdings LLC invested $600 million in a Houston-based start-up that will buy up rights to aging fields in the Gulf's shallow waters and use new technologies to try to squeeze more oil from them.
The number of rigs drilling in the Gulf's coastal waters dwindled over the last decade as companies left to find work internationally, and production of both oil and gas there fell last year. But the firms that drill in less than 500 feet of water see new opportunity in high oil prices, stable drilling costs and improved seismic technology.
Energy Partners Ltd., a small Houston-based firm, has swung from producing 80% natural gas to 80% oil over the last two years in the Gulf's shallow waters. A competitor, Energy XXI, snapped up Exxon Mobil Corp.'s coastal holdings in 2010 for $1 billion and says it has coaxed 40% more oil from them.
Perhaps the biggest beneficiary of the uptick in drilling is Hercules Offshore Inc., the largest owner of rigs that drill in the Gulf's shallow waters. In the summer of 2010, Houston-based Hercules had just four rigs working in the Gulf; now, 18 of its 34 rigs are under contract there, and the daily rates it charges clients have nearly doubled since the start of 2011, it says.
"It caught us very much by surprise," said Jim Noe, Hercules' general counsel.
Driving the resurgence is the price of oil, which has hovered around $100 a barrel for much of the last year. Oil produced in the Gulf is even more valuable than land-bound crude because it doesn't have to be delivered to refineries using the overtaxed pipeline system. Instead, it can be loaded onto tankers and shipped anywhere in the world.
"High oil prices are the top three reasons why you see a resurgence in drilling on the shelf," said David Pursell, a managing director at energy investment bank Tudor, Pickering, Holt & Co.
John Schiller, chief executive of Energy XXI, said oil production made up 94% of his company's revenue last year, and he expects Energy XXI's oil output to increase by 10% to 15% a year for the next three years.
Companies drilling in the shallow Gulf tend to be small producers that, unlike larger rivals, don't have to find massive new fields to replenish their reserves. But Chevron Corp. last year produced about 4.5% of its total output from the shelf, and Apache Corp.'s production there accounted for 14% of its global volume.
"It's very important to us, and it will continue to be," said John Roper, an Apache spokesman. He said the company uses cash from its shelf operations to fund its global search for oil, pay down debt and make acquisitions.
Part of what has enabled the revival is an improvement in seismic technology that gives companies a clearer picture of where to drill for oil.
"In most cases, we were seeing it blurry, versus putting glasses on," said T.J. Thom, chief financial officer of Energy Partners, which drills most of its wells in about 20 feet of water. The company will spend 97% of its $168 million capital budget this year on finding and producing oil in the coastal Gulf.
Analysts don't foresee the Gulf's shelf becoming a major destination for oil producers. But while companies around the world are vying for a foothold in booming U.S. oil fields like those in Texas and North Dakota, some see an opportunity to produce oil at a low cost in the coastal Gulf. Reserves purchased in the shallow-water Gulf tend to be discounted because the fields are more mature and considered to have less growth potential.
In February, Oklahoma-based SandRidge Energy Inc. paid $1.275 billion for Dynamic Offshore Resources LLC, whose reserves in the Gulf's shallow waters are about 50% oil. But the value of Dynamic's Gulf gas and oil reserves, according to SandRidge, was $1.9 billion.
Tom Ward, SandRidge's CEO, says assets in the Gulf are undervalued and that the company will use the cash it generates from oil there to fund its drilling campaign in Kansas and Oklahoma.
"It's some of the cheapest oil in the world," Mr. Ward said.
Write to Daniel Gilbert at daniel.gilbert@wsj.com
Credit: By Daniel Gilbert
Subject: Petroleum industry; Natural gas; Drilling; Oil prices; Petroleum production
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 9, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 992884505
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/992884505?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
New Life for the Gulf's 'Dead Sea'; High Oil Prices, Improved Technology Lure Drillers Back to Shallow Waters of the Gulf of Mexico
Author: Gilbert, Daniel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 Apr 2012: n/a.
ProQuest document link
Abstract:
"High oil prices are the top three reasons why you see a resurgence in drilling on the shelf," said David Pursell, a managing director at energy investment bank Tudor, Pickering, Holt & Co. John Schiller, chief executive of Energy XXI, said oil production made up 94% of his company's revenue last year, and he expects Energy XXI's oil output to increase by 10% to 15% a year for the next three years.
Full text: HOUSTON--Energy companies are striking oil in a place many abandoned long ago: the shallow waters of the Gulf of Mexico.
Most of the drilling on the Gulf's continental shelf in recent years has been for natural gas, and even that business has been declining for so long that some in the industry have branded the shallow waters "the dead sea."
But there are signs of an oil-fueled revival. Last week, 37 shallow-water rigs were under contract to drill there, up 32% from the low point in January 2011, according to industry tracker RigData Offshore. Federal regulators issued 10 permits for new wells in shallow Gulf waters in February, the second-highest monthly total since the 2010 Deepwater Horizon oil disaster.
And last week, private-equity firms Apollo Global Management LLC and Riverstone Holdings LLC invested $600 million in a Houston-based start-up that will buy up rights to aging fields in the Gulf's shallow waters and use new technologies to try to squeeze more oil from them.
The number of rigs drilling in the Gulf's coastal waters dwindled over the last decade as companies left to find work internationally, and production of both oil and gas there fell last year. But the firms that drill in less than 500 feet of water see new opportunity in high oil prices, stable drilling costs and improved seismic technology.
Energy Partners Ltd., a small Houston-based firm, has swung from producing 80% natural gas to 80% oil over the last two years in the Gulf's shallow waters. A competitor, Energy XXI, snapped up Exxon Mobil Corp.'s coastal holdings in 2010 for $1 billion and says it has coaxed 40% more oil from them.
Perhaps the biggest beneficiary of the uptick in drilling is Hercules Offshore Inc., the largest owner of rigs that drill in the Gulf's shallow waters. In the summer of 2010, Houston-based Hercules had just four rigs working in the Gulf; now, 18 of its 34 rigs are under contract there, and the daily rates it charges clients have nearly doubled since the start of 2011, it says.
"It caught us very much by surprise," said Jim Noe, Hercules' general counsel.
Driving the resurgence is the price of oil, which has hovered around $100 a barrel for much of the last year. Oil produced in the Gulf is even more valuable than land-bound crude because it doesn't have to be delivered to refineries using the overtaxed pipeline system. Instead, it can be loaded onto tankers and shipped anywhere in the world.
"High oil prices are the top three reasons why you see a resurgence in drilling on the shelf," said David Pursell, a managing director at energy investment bank Tudor, Pickering, Holt & Co.
John Schiller, chief executive of Energy XXI, said oil production made up 94% of his company's revenue last year, and he expects Energy XXI's oil output to increase by 10% to 15% a year for the next three years.
Companies drilling in the shallow Gulf tend to be small producers that, unlike larger rivals, don't have to find massive new fields to replenish their reserves. But Chevron Corp. last year produced about 4.5% of its total output from the shelf, and Apache Corp.'s production there accounted for 14% of its global volume.
"It's very important to us, and it will continue to be," said John Roper, an Apache spokesman. He said the company uses cash from its shelf operations to fund its global search for oil, pay down debt and make acquisitions.
Part of what has enabled the revival is an improvement in seismic technology that gives companies a clearer picture of where to drill for oil.
"In most cases, we were seeing it blurry, versus putting glasses on," said T.J. Thom, chief financial officer of Energy Partners, which drills most of its wells in about 20 feet of water. The company will spend 97% of its $168 million capital budget this year on finding and producing oil in the coastal Gulf.
Analysts don't foresee the Gulf's shelf becoming a major destination for oil producers. But while companies around the world are vying for a foothold in booming U.S. oil fields like those in Texas and North Dakota, some see an opportunity to produce oil at a low cost in the coastal Gulf. Reserves purchased in the shallow-water Gulf tend to be discounted because the fields are more mature and considered to have less growth potential.
In February, Oklahoma-based SandRidge Energy Inc. paid $1.275 billion for Dynamic Offshore Resources LLC, whose reserves in the Gulf's shallow waters are about 50% oil. But the value of Dynamic's Gulf gas and oil reserves, according to SandRidge, was $1.9 billion.
Tom Ward, SandRidge's CEO, says assets in the Gulf are undervalued and that the company will use the cash it generates from oil there to fund its drilling campaign in Kansas and Oklahoma.
"It's some of the cheapest oil in the world," Mr. Ward said.
Write to Daniel Gilbert at daniel.gilbert@wsj.com
Credit: By Daniel Gilbert
Subject: Petroleum industry; Natural gas; Drilling; Oil prices; Petroleum production
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 10, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Documenttype: News
ProQuest document ID: 992884323
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/992884323?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
New Life for the Gulf's 'Dead Sea' --- High Oil Prices, Improved Technology Lure Drillers Back to Shallow Waters of the Gulf of Mexico
Author: Gilbert, Daniel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]10 Apr 2012: B.8.
ProQuest document link
Abstract:
"High oil prices are the top three reasons why you see a resurgence in drilling on the shelf," said David Pursell, a managing director at investment bank Tudor, Pickering, Holt & Co. John Schiller, chief executive of Energy XXI, said oil production made up 94% of his company's revenue last year, and he expects Energy XXI's oil output to increase by 10% to 15% a year for the next three years.
Full text: HOUSTON -- Energy companies are striking oil in a place many abandoned long ago: the shallow waters of the Gulf of Mexico.
Most of the drilling on the Gulf's continental shelf in recent years has been for natural gas, and even that business has been declining for so long that some in the industry have branded the shallow waters "the dead sea."
But there are signs of an oil-fueled revival. Last week, 37 shallow-water rigs were under contract to drill there, up 32% from the low point in January 2011, according to tracker RigData Offshore. Federal regulators issued 10 permits for new wells in shallow Gulf waters in February, the second-highest monthly total since the 2010 Deepwater Horizon oil disaster.
And last week, private-equity firms Apollo Global Management LLC and Riverstone Holdings LLC invested $600 million in a Houston-based start-up that will buy up rights to aging fields in the Gulf's shallow waters and use new technologies to try to squeeze more oil from them.
The number of rigs drilling in the Gulf's coastal waters dwindled over the last decade as companies left to find work internationally, and production of both oil and gas there fell last year. But the firms that drill in less than 500 feet of water see new opportunity in high oil prices, stable drilling costs and improved seismic technology.
Energy Partners Ltd., a small Houston-based firm, has swung from producing 80% natural gas to 80% oil over the last two years in the Gulf's shallow waters. A competitor, Energy XXI, snapped up Exxon Mobil Corp.'s coastal holdings in 2010 for $1 billion and says it has coaxed 40% more oil from them.
Perhaps the biggest beneficiary of the uptick in drilling is Hercules Offshore Inc., the largest owner of rigs that drill in the Gulf's shallow waters. In the summer of 2010, Houston-based Hercules had just four rigs working in the Gulf; now, 18 of its 34 rigs are under contract there, and the daily rates it charges clients have nearly doubled since the start of 2011, it says.
"It caught us very much by surprise," said Jim Noe, Hercules' general counsel.
Driving the resurgence is the price of oil, which has hovered around $100 a barrel for much of the last year. Oil produced in the Gulf is even more valuable than land-bound crude because it doesn't have to be delivered to refineries using the overtaxed pipeline system. Instead, it can be loaded onto tankers and shipped anywhere in the world.
"High oil prices are the top three reasons why you see a resurgence in drilling on the shelf," said David Pursell, a managing director at investment bank Tudor, Pickering, Holt & Co.
John Schiller, chief executive of Energy XXI, said oil production made up 94% of his company's revenue last year, and he expects Energy XXI's oil output to increase by 10% to 15% a year for the next three years.
Companies drilling in the shallow Gulf tend to be small producers that, unlike larger rivals, don't have to find massive new fields to replenish their reserves. But Chevron Corp. last year produced about 4.5% of its total output from the shelf, and Apache Corp.'s production there accounted for 14% of its global volume.
"It's very important to us, and it will continue to be," said John Roper, an Apache spokesman. He said the company uses cash from its shelf operations to fund its global search for oil, pay down debt and make acquisitions.
Part of what has enabled the revival is an improvement in seismic technology that gives companies a clearer picture of where to drill for oil.
"In most cases, we were seeing it blurry, versus putting glasses on," said T.J. Thom, chief financial officer of Energy Partners, which drills most of its wells in about 20 feet of water. The company will spend 97% of its $168 million capital budget this year on finding and producing oil in the coastal Gulf.
Analysts don't foresee the Gulf's shelf becoming a major destination for oil producers. But while companies around the world are vying for a foothold in booming U.S. oil fields like those in Texas and North Dakota, some see an opportunity to produce oil at a low cost in the coastal Gulf. Reserves purchased in the shallow-water Gulf tend to be discounted because the fields are more mature and considered to have less growth potential.
In February, Oklahoma-based SandRidge Energy Inc. paid $1.275 billion for Dynamic Offshore Resources LLC, whose reserves in the Gulf's shallow waters are about 50% oil. But the value of Dynamic's Gulf gas and oil reserves, according to SandRidge, was $1.9 billion.
Tom Ward, SandRidge's CEO, says assets in the Gulf are undervalued and that the company will use the cash it generates from oil there to fund its drilling campaign in Kansas and Oklahoma.
"It's some of the cheapest oil in the world," Mr. Ward said.
Credit: By Daniel Gilbert
Subject: Petroleum industry; Natural gas; Energy industry; Offshore oil exploration & development; Contracts; Permits; Offshore drilling; Startups
Location: Gulf of Mexico
Company / organization: Name: Riverstone Holdings LLC; NAICS: 523910; Name: Apollo Global Management LLC; NAICS: 523920; Name: Energy Partners Ltd; NAICS: 324110
Classification: 9190: United States; 8510: Petroleum industry; 2430: Business-government relations
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.8
Publication year: 2012
Publication date: Apr 10, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 992922374
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/992922374?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
India Grapples With Soaring Energy Costs; Government Aims to Spur Domestic Production, Minister Says, to Reduce Nation's Dependence on Imported Oil and Gas
Author: Sharma, Amol; Murray, Matt
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 Apr 2012: n/a.
ProQuest document link
Abstract:
Mr. Reddy said natural-gas imports are also set to increase markedly, partly because of the disappointing production of India's largest-known natural-gas field, operated by billionaire Mukesh Ambani's Reliance Industries Ltd. That gas field off India's east coast, known as the Krishna-Godavari basin, is likely to reach only 34% of its production target for this fiscal year and is expected to produce even less natural gas next year, Mr. Reddy said.
Full text: NEW DELHI--Indian oil and gas minister Jaipal Reddy said the nation's soaring energy import bill is becoming a growing economic challenge, but he expressed hope that prices will eventually moderate and that the government can provide incentives to spur more domestic production.
In an interview, Mr. Reddy said India has seen its oil costs increase drastically in the past year amid a jump in global prices, creating an unprecedented strain on the government at a time when economic growth is stoking energy demand.
"The world experienced oil shocks before. India did not experience it to this degree as it is today," Mr. Reddy said.
India imports about three-quarters of its oil, most from countries in the Gulf region. The country spent $128 billion on crude imports through the first 11 months of the fiscal year that ended on March 31, a roughly 40% increase over the period in the previous fiscal year.
Consumer demand for auto fuel and electricity isn't letting up. India's energy use could more than double by 2030 to the equivalent of 833 million tons of oil, according to a February report by the Confederation of Indian Industry, a trade group. Economists say high energy costs have inflationary effects that could hold India back from its goal of consistent 9% gross-domestic-product growth. India's economy grew at 6.9% in the fiscal year through March.
Annual Indian subsidies of about $30 billion that keep fuel prices low for consumers are a drag on the exchequer. India has begun reducing gasoline subsidies but hasn't yet touched diesel. "India has a very distorted system of subsidies," Mr. Reddy said. "But how in a vibrant democracy like India do you change the system suddenly?"
Mr. Reddy said geopolitical tensions over Iran, which supplies about 12% of India's oil, are buoying prices and are a major worry for New Delhi. "There is no time frame to this crisis," he said, referring to the standoff over Iran's nuclear program, which Tehran says is for peaceful energy purposes and Western nations fear is intended to develop weapons. "There are no signs of a resolution in sight."
Mr. Reddy said natural-gas imports are also set to increase markedly, partly because of the disappointing production of India's largest-known natural-gas field, operated by billionaire Mukesh Ambani's Reliance Industries Ltd. That gas field off India's east coast, known as the Krishna-Godavari basin, is likely to reach only 34% of its production target for this fiscal year and is expected to produce even less natural gas next year, Mr. Reddy said.
The minister said Reliance has attributed the shortfall to unexpected geological complexities. "They're saying the gas isn't in one reservoir, like they thought. It's in various pockets--in cups," Mr. Reddy said. He said Reliance has indicated it needs more time for seabed surveys and other work and that there could be negative consequences if it rushes exploration. "They're saying, if you hustle us, whatever [gas is] there may be damaged forever," he said.
In a statement, Reliance said "the gas volumes within the main area connected to the existing wells are lower than envisaged" and added that natural gas outside the main channel area seems to be "in disconnected sands having small uneconomic volumes."
Both Reliance and Mr. Reddy are confident the company can resolve the problems and augment production.
The crunch has hurt power producers who rely on natural gas for fuel and fertilizer companies who use it in manufacturing. The upshot of Reliance's troubles is that India will likely have to spend several billion dollars more each year on natural-gas imports and build more infrastructure to handle the imported gas. Hopes were so high for Reliance's "KG basin" that "nobody thought any gas would be required at all from outside the country," Mr. Reddy said.
This week, India has been in discussions with officials visiting from Qatar about a long-term natural-gas supply deal, but Mr. Reddy said his counterparts are demanding too high a price for New Delhi at the moment, about $20 per million British thermal units, including shipping and other costs, more than triple the cost of gas produced in India.
Mr. Reddy said in the future he would consider policy changes to encourage more domestic oil and natural-gas exploration, including potentially reviewing government-set prices that companies say are too low and possibly scrapping the current approach of the government scrutinizing companies' expenditures. India has made 87 oil and natural gas discoveries since 1998, but only three fields have gone into commercial production.
"We have reasons to believe we'll be able to encourage more discoveries," he said.
Megha Bahree contributed to this article.
Write to Amol Sharma at and Matt Murray at
Credit: By Amol Sharma and Matt Murray
Subject: Natural gas; Fiscal years
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 10, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 992957663
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/992957663?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Tumbles as Growth Worry Flares
Author: Bird, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 Apr 2012: n/a.
ProQuest document link
Abstract:
NEW YORK--Crude-oil futures prices settled at a two-month low Tuesday, pressured by fresh worries over signs of slowing Chinese oil demand.
Full text: NEW YORK--Crude-oil futures prices settled at a two-month low Tuesday, pressured by fresh worries over signs of slowing Chinese oil demand.
Light sweet crude for May delivery on the New York Mercantile Exchange fell $1.44, or 1.4%, to settle at $101.02 a barrel, the lowest level since Feb. 15.
May ICE Brent crude was $2.77 lower in late trading, at $119.90 a barrel. Brent fell sharply as traders are hopeful that talks next week on Iran's nuclear program will ease tensions about supply disruptions that have underpinned prices for several months.
China , the world's second-largest oil consumer, reported a wider-than-expected March trade surplus, sparking fears of a slowdown in the economy, which could result in lower demand for oil. China reported a drop in oil imports in March, albeit from a record-high February level.
"Everybody watches China and when they see oil imports down, they worry about a potential slowdown there," said Tom Bentz, director at BNP Paribas Prime Brokerage.
"China shocked the market with a surprise trade surplus of $5.35 billion in March," said Phil Flynn, a trader at PFGBest. "The exporting machine may be showing signs of a domestic slowdown being hit by the slowing Europe as well as rising energy costs. At the same time it seems that China's domestic consumption is raising concerns once again of a potential hard landing in the land of the dragon."
Crude prices are also under pressure from rising U.S. stockpiles, which ended March at their highest levels since mid-June. Crude stocks have gained 4.7%, or more than 16 million barrels, in the last two weeks, and weekly inventory data are expected to show a further rise last week.
Write to David Bird at
Credit: By David Bird
Subject: Petroleum industry
Location: New York
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 10, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 992983452
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/992983452?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Behind the Battle for Argentina's Oil
Author: Turner, Taos; Moffett, Matt
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 Apr 2012: n/a.
ProQuest document link
Abstract:
[...] debates are raging within the government over a number of restructuring options, from nationalizing the company outright to teaming up with a private-sector partner to launch a hostile takeover bid.
Full text: BUENOS AIRES--With its boardroom standoff and a cameo appearance by a monarch, the drama of President Cristina Kirchner's battle with Argentina's largest oil company, YPF SA, is juicy enough to compete with an over-the-top Latin American soap opera.
Incensed at YPF for Argentina's falling oil production, Mrs. Kirchner recently sent subordinates to sit in on a corporate board meeting--where they claim they were brusquely turned away by YPF officials.
Amid withering government attacks on YPF, majority owned by Repsol YPF SA of Madrid, Spain's King Juan Carlos personally called Mrs. Kirchner to ask her to ease up on the company, a person familiar with the situation has said.
Investors are getting whiplash from gyrations in the stock, which swooned 15% in just one day last week after a provincial governor said he would revoke rights to one of the company's most important oil fields.
No one knows how the script will end. Mrs. Kirchner has said she will use "all means provided by the Constitution" to get more production out of YPF, which she blames for Argentina's increasing dependence on high-cost imported energy. But debates are raging within the government over a number of restructuring options, from nationalizing the company outright to teaming up with a private-sector partner to launch a hostile takeover bid.
Many of the possible paths forward are fraught with legal and economic risks for Mrs. Kirchner. Indeed, while the campaign against YPF is providing Mrs. Kirchner a political boost with her base on the left, it is raising long-term doubts about Argentina's investment climate and energy policy.
"The impact on the investment environment is extremely negative," says Warren Levy, founder and chairman of Estrella, one of South America's fastest-growing oil-service companies.
Some industry executives theorize that the Kirchner administration has recently encouraged provincial leaders to strip YPF of oil concessions as a strategy to depress the company's stock price. Lowering YPF's market capitalization would, in turn, lower the amount the government would have to pay Repsol YPF in the event of nationalization, the line of reasoning goes. YPF'S market capitalization has been halved to around $9 billion from $17.5 billion a year ago, based on trading of its American depositary receipts.
Spokesmen for both YPF and the Kirchner government declined to comment. But, in answer to government complaints about its investments, YPF previously noted that it invested $3 billion last year, up almost 55% from 2010, and intends to invest even more in 2012.
The crux of the conflict, after a decade of accelerated economic growth in Argentina, is the mismatch between rapidly expanding energy consumption and languishing production. While consumption of oil and gas surged 38% and 25%, respectively, from 2003 to 2010, production of oil declined 12% and gas fell 2.3% in that span, according to a report by Barclays Capital.
Argentina has had to rely increasingly on costly imports. The energy trade balance swung from a surplus of about $2 billion in 2010 to a deficit of about $3 billion in 2011.
Making matters worse, Argentina is increasingly strapped for dollars to pay for energy imports, as it has been coping with a wave of capital flight.
The government has put the blame for flagging production squarely on YPF, which it says has failed to invest sufficiently. After all, Argentine officials say, the country doesn't lack for resources. Overall, Argentina ranked third in the world, behind China and the U.S., in potentially recoverable reserves of shale gas with 774 trillion cubic feet, according to a study released last year by the U.S. Energy Information Administration. In February, YPF raised its estimate for unconventional shale-oil equivalent resources to around 23 billion barrels.
"In these three years they haven't drilled a single new well," Martin Buzzi, the pro-Kirchner governor of the province of Chubut, said upon revoking several YPF concessions there last month.
But YPF, led by CEO Sebastian Eskenazi, and other private energy companies maintain the government need only look in the mirror to find the culprit. Energy companies say government policies--such as high taxes, price caps on home energy rates and unpredictable rule changes like a suspension of tax breaks on production spending--discourage investment, rather than foster it. That explains why oil reserves are stuck at late 1990s levels, the companies say.
"The situation is calamitous," says Sen. Maria Eugenia Estenssoro, a critic of government policy who says the problems with production lie with the frequently changing rules and price caps.
The drama has escalated in the past two months with the boardroom standoff and the suspension of provincial oil concessions. In recent weeks, Repsol executives have been conducting shuttle diplomacy between Madrid and Buenos Aires, stock speculators have been making big bets prior to every speech Mrs. Kirchner gives and the governing Peronist party has been handing out leaflets at YPF gas stations reading "sovereignty is recovering what belongs to us."
YPF originated as a state-controlled company in 1922, before being partially privatized by a conservative government in 1993. Repsol YPF obtained control of the company in 1999 and now holds a 57% stake.
The conflict with YPF started heating up soon after Mrs. Kirchner won reelection in a landslide in October. In both pressing for greater state control of Argentine oil and jousting with the U.K. over Argentina's claims of sovereignty over the disputed Falkland Islands, "nationalism is the banner the government is waving," says political scientist Rosendo Fraga.
In January, a report in a government-backed Buenos Aires newspaper first floated the YPF nationalization rumor. Subsequently, the Argentine tax agency prohibited YPF from importing or exporting oil due to a dispute over an outstanding tax bill. In recent weeks, provincial governors have stripped YPF of about a dozen concessions.
In a kind of vicious spiral for YPF, the company's shrinking market cap further fueled takeover talk. But some analysts say that if the government did seize YPF, Repsol might well be expected to base its claim for an indemnity on the value of its reserves, not its market cap.
"These companies are worth what they have under the ground, the number of barrels they have," says Daniel Montamat, a consultant who is a former Argentine energy secretary. In the event of nationalization, he also questions how the government would attract the capital and expertise to develop shale reserves.
Meanwhile, oil unions and some provinces are skeptical the government would do a good job of running YPF, pointing to the persistent operating problems at the state airline, Aerolineas Argentinas SA, which was renationalized several years ago.
Ilan Brat contributed to this article.
Write to Taos Turner at and Matt Moffett at
Credit: By Taos Turner And Matt Moffett
Subject: Petroleum industry; Energy policy; Investments; Oil reserves; Petroleum production
Company / organization: Name: YPF SA; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 10, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 993016186
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/993016186?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
There's Too Much Crude in the Strategic Petroleum Reserve; Are taxpayers really getting $20 billion worth of value from having an extra 25 days of oil sitting in a Louisiana salt mine?
Author: Goolsbee, Austan D
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 Apr 2012: n/a.
ProQuest document link
Abstract:
There has also been a tremendous increase in crude production from the tar sands of Canada. According to the Energy Information Administration, oil imports have dropped by more than 20% since 2006--and imports from sources outside of North America (that is, from Canada and Mexico) are down 30%, to fewer than seven million barrels per day.
Full text: When my parents moved from Texas to California in the 1970s, my mother decided that if we had to live with the chance of earthquakes, we should always have two weeks worth of toilet tissue on hand in case the "big one" hit. For years, the rolls sat there on the top shelf of the pantry. For all I know, they remained there until my father and mother retired back to Texas some 30 years later--her own quirky sort of earthquake insurance.
Lately, two camps have fought over whether the president should release oil from the Strategic Petroleum Reserve. They have debated the original intent of the Energy Policy and Conservation Act of 1975 and what constitutes a "significant reduction in supply" thoroughly enough to make Antonin Scalia proud.
I have wondered, though, if it wouldn't be wiser to learn something from my mom's old strategic toilet paper reserve and explicitly adopt a Linda Rule in the spirit of the Buffett Rule on taxes. This rule would say: In normal times, hold enough oil in reserve to cover what you would need for a set number of days in an emergency. But don't just pump more crude into the storage caverns because it fits.
It's an obvious thing to do--to tie the amount of insurance you carry to the size of the need. Yet in recent years that logic has not carried over to the size of the Strategic Petroleum Reserve.
Right now, the Linda Rule would say we should start releasing the reserve not because prices are high or because small supply disruptions should count as significant, but rather because the reserve is just too big and too full and we are not getting our money's worth to have so much in there.
Admittedly, economists are generally uneasy with the whole idea of the strategic reserve. Self-sufficiency is not really an economic concept, and it seems an odd goal for a product that trades freely around the world at a market price.
The case for reducing the current size of the Strategic Petroleum Reserve does not rely on the economics, however, so much as it follows the basic logic of protecting yourself from disruption. Self-sufficiency "insurance" like the reserve should be tied to the level of imports from potentially strategically vulnerable sources outside of North America. If you produce all the low-cost energy you need domestically, you don't need a reserve.
In recent years, new technology has unlocked large amounts of low-cost production in places like the Bakken Shale of North Dakota and the Permian basin in West Texas. There has also been a tremendous increase in crude production from the tar sands of Canada. All of this new output has reduced our demand for oil that we get from strategically uncertain suppliers.
Domestic production hit record levels in 2011, at about 9.5 million barrels per day. According to the Energy Information Administration, oil imports have dropped by more than 20% since 2006--and imports from sources outside of North America (that is, from Canada and Mexico) are down 30%, to fewer than seven million barrels per day.
Yet despite the decreasing strategic need, we have filled the Strategic Petroleum Reserve to historic levels. During the first 30 years or so of the reserve's existence, its volume averaged fewer than 550 million barrels--75% of capacity. It is now at almost 700 million barrels or 96% of capacity (and was at 100% before the release last summer). In 2005, Congress authorized more capacity, to enable the reserve to reach one billion barrels.
So for much of the last 15 years, really up until 2008, the Strategic Petroleum Reserve generally followed a Linda Rule and kept around 75 to 80 days worth of imports from non-North American sources. That number has since shot up (from both higher SPR and lower imports), and by the start of 2012 it was more than 100 days worth.
If we just returned to the traditional 75 days, we would release 184 million barrels starting now.
Keeping the extra oil in the Strategic Petroleum Reserve is a form of insurance policy and so it isn't free. If we reduced the reserve to 510 million barrels from 696 million barrels, the sales would bring in more than $20 billion to the Treasury. Are taxpayers really getting $20 billion worth of value from having an extra 25 days worth of those oil imports sitting in a salt mine in Louisiana?
Of course, we wouldn't release that much of the reserve all at once (or even as fast as physically possible). We would need to coordinate with our allies and suppliers. We would not want to make releases if speculators or other countries were planning to buy it up and hold it in their own reserves. But we might consider sales in periods where the futures market suggests prices will fall in the future--as is the case right now.
The important thing, though, is that being transparent about the goal of the Strategic Petroleum Reserve would both eliminate market uncertainty and help us see when it makes the most sense to add to the reserve (i.e., when our demand rises for imported oil).
Just as we make clear-eyed decisions about how much insurance to get on our cars, so should we on our strategic reserves. When it makes strategic sense, we should squeeze it. It ain't Charmin.
Mr. Goolsbee, a professor of economics at the University of Chicago's Booth School of Business, was chairman of President Obama's Council of Economic Advisers from 2010 to 2011.
Credit: By Austan D. Goolsbee
Subject: Petroleum industry; Strategic petroleum reserve; Earthquakes
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 10, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 993016192
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/993016192?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
China Seen Bolstering Oil Reserves
Author: Cui, Carolyn
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]11 Apr 2012: n/a.
ProQuest document link
Abstract:
The wave of imports, added to domestic production, has exceeded the amount of crude the country's refineries can process, analysts said. [...] China has been increasing its oil purchases even though prices have soared, a rare occurrence for a country that usually steps out of the market when prices are high.
Full text: China's crude-oil imports jumped to near-record levels in March, bolstering the belief among some energy analysts that the country is again hoarding oil for its strategic reserves.
If the predictions prove accurate, China's growing thirst for oil could underpin already-high crude prices and push the country's oil imports above market expectations.
On Tuesday, China said its oil imports reached 5.57 million barrels a day in March, the third-highest month on record and a rise of 8.7% from the year-ago month. For the quarter, China's crude imports rose 11% from the year-ago quarter, a much stronger pace than full-year 2011's increase of 6%, the China's General Administration of Customs said.
Analysts have been watching China's import data climb higher over recent months. The wave of imports, added to domestic production, has exceeded the amount of crude the country's refineries can process, analysts said.
Moreover, China has been increasing its oil purchases even though prices have soared, a rare occurrence for a country that usually steps out of the market when prices are high. The market's conclusion: After a three-year hiatus, China is filling up its strategic petroleum reserves.
"[China] is in the process of gradually filling the reserves" before reaching the goal of having 90 days of supply, said Zhang Guobao, former director of the National Energy Administration, China's top energy agency, in a March interview with China Securities Times, a state-run newspaper. At present, China's total oil stocks, both strategic and commercial, are enough to cover about 40 days, Liu Tienan, director of the energy agency, said at a conference last week.
By comparison, the U.S.'s strategic and commercial stockpiles can cover the country's needs for more than 90 days.
China has brought new storage facilities online in recent months, said market observers and the International Energy Agency, another sign of a potential strategic reserve buildup. Also, China's desire for energy security is becoming stronger amid turmoil in the Middle East, they said.
The added demand could amount to 50 million barrels this year, said Kang Wu, a senior fellow who follows China's energy policies at East-West Center, a Honolulu think tank. That could underpin crude-oil prices, Mr. Wu said.
Brent crude has gained 12% this year, but prices fell on Tuesday amid concerns about China's slowing demand. March imports were 6.4% lower than February's record of 5.95 million barrels a day. Brent crude declined 2.3%, to settle at $119.88 a barrel on ICE Futures U.S.
Mr. Wu estimates China's crude-oil imports will average 5.77 million barrels a day in 2012, up 13% from a year ago. Of that, about 150,000 barrels a day could find their way into storage. Chinese officials have said that the country had completed filling four storage sites in 2009, the first phase of a three-part process. Those four sites can hold 103 million barrels of oil. But it is unclear how many more barrels the country has added since then.
More storage facilities are likely to become operational later this year and early next year, indicating the recent demand "is probably just the tip of the iceberg," said Paul Ting, president of Paul Ting Energy Vision LLC, an independent energy consulting firm.
China's effort to build up its strategic reserves is going to have a long-lasting effect on oil prices, Mr. Ting said. Historically, countries' need to hoard to ensure energy security is what has moved prices over longer periods, he said.Beijing's move comes as concerns rise over Iran's nuclear ambitions. Iran supplied 11% of China's total imports in 2011, giving it an incentive to ensure it has enough oil in reserve if any global embargo against Iranian oil goes into effect. A European Union embargo on Iranian crude exports is set to take full effect this summer.
The urgency also was highlighted by the International Energy Agency, which represents the interests of industrialized oil consumers and coordinates strategic oil stocks held by its members. In its latest monthly report, the agency said China and other emerging markets have less oil on tap to provide for domestic demand than Western counterparts.
In its second phase, two more storage sites became operational in Dushanzi and Lanzhou, in the Western part of the country, late last year, each of which can hold 18.9 million barrels.
Six more are expected to come online by early next year, adding another 131 million barrels, observers said.
"Right now, there's a need to buy more simply because many storage projects are completed," Mr. Wu said. China's oil demand is expected to increase 6% this year, to 9.9 million barrels a day, according to the IEA.
China doesn't disclose its strategic stocks on a regular basis. Government officials have said that the lack of information is designed to deter speculators and to avoid sending prices higher.
The increased purchases of oil could suggest that China believes prices could be headed higher.
"Prices may seem high, but they can go even higher later," Mr. Zhang, the former director of the National Energy Administration, was quoted as saying in the March interview.
Apart from the strategic reserves, China also keeps commercial stocks of about 200 million barrels, held by national oil companies in the form of both crude and oil products, analysts said. Some of China's recent imports also might reflect a rush to replenish commercial stocks after big drawdowns last year.
Analysts from investment bank China International Capital Corp. estimated that 10.6 million barrels of oil had flowed into storage, both strategic and commercial, in February, but "a very large portion" probably went into the strategic reserves.
China already has laid out its plan for a third phase of its strategic-reserves program. That eventually would expand capacity to more than 500 million barrels by 2020, according to China Oil, Gas & Petrochemicals, a newsletter published by state-controlled Xinhua news agency.
Write to Carolyn Cui at
Credit: By Carolyn Cui
Subject: Petroleum industry; Energy policy; Crude oil prices
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 11, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 993006192
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/993006192?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: India Grapples With Rising Oil Costs --- Government Aims to Spur Domestic Production, Minister Says, to Reduce Dependence on Imports
Author: Sharma, Amol; Murray, Matt
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]11 Apr 2012: A.11.
ProQuest document link
Abstract:
Mr. Reddy said natural-gas imports are also set to increase markedly, partly because of the disappointing production of India's largest known natural-gas field, operated by billionaire Mukesh Ambani's Reliance Industries Ltd. That field off India's east coast, known as the Krishna-Godavari basin, is likely to reach only 34% of its production target for this fiscal year and is expected to produce even lessnext year, Mr. Reddy said.
Full text: NEW DELHI -- Indian Oil and Gas Minister Jaipal Reddy said the nation's soaring energy import bill is becoming a growing economic challenge, but he expressed hope that prices will eventually moderate and that the government can provide incentives to spur more domestic production.
In an interview, Mr. Reddy said India's oil costs have increased drastically in the past year amid a jump in global prices, creating an unprecedented strain on the government at a time when economic growth is stoking energy demand.
"The world experienced oil shocks before. India did not experience it to this degree as it is today," Mr. Reddy said.
India imports about three-quarters of its oil, most from countries in the Gulf region. The country spent $128 billion on crude imports through the first 11 months of the fiscal year ended March 31, a roughly 40% increase over the period in the previous fiscal year.
Consumer demand for auto fuel and electricity isn't letting up. India's energy use could more than double by 2030 to the equivalent of 833 million tons of oil, according to a February report by the Confederation of Indian Industry, a trade group. High energy costs have inflationary effects that could hold India back from its goal of consistent 9% gross-domestic-product growth, economists say. India's economy grew at a 6.9% pace in the latest fiscal year. Annual subsidies of about $30 billion that keep fuel prices low for consumers are a drag on the Indian exchequer. India has begun reducing gasoline subsidies but hasn't yet touched diesel. "India has a very distorted system of subsidies," Mr. Reddy said. "But how in a vibrant democracy like India do you change the system suddenly?"
Mr. Reddy said geopolitical tensions over Iran, which supplies about 12% of India's oil, are buoying prices and are a major worry for New Delhi. "There is no time frame to this crisis," he said, referring to the standoff over Iran's nuclear program, which Tehran says is for peaceful energy purposes and Western nations fear is intended to develop weapons. "There are no signs of a resolution in sight."
Mr. Reddy said natural-gas imports are also set to increase markedly, partly because of the disappointing production of India's largest known natural-gas field, operated by billionaire Mukesh Ambani's Reliance Industries Ltd. That field off India's east coast, known as the Krishna-Godavari basin, is likely to reach only 34% of its production target for this fiscal year and is expected to produce even lessnext year, Mr. Reddy said.
The minister said Reliance has attributed the shortfall to unexpected geological complexities.
Reliance said "the gas volumes within the main area connected to the existing wells are lower than envisaged" and added that natural gas outside the main channel area seems to be "in disconnected sands having small uneconomic volumes."
Reliance and Mr. Reddy said they are confident the company can resolve the problems.
---
Megha Bahree contributed to this article.
Credit: By Amol Sharma and Matt Murray
Subject: Imports; Natural gas; Energy resources; Crude oil prices
Location: India
People: Reddy, Jaipal
Classification: 1300: International trade & foreign investment; 1510: Energy resources; 9179: Asia & the Pacific
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.11
Publication year: 2012
Publication date: Apr 11, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 993079924
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/993079924?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Behind the Battle For Argentina's Oil
Author: Turner, Taos; Moffett, Matt
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]11 Apr 2012: B.1.
ProQuest document link
Abstract:
In recent weeks, Repsol executives have been conducting shuttle diplomacy between Madrid and Buenos Aires, stock speculators have been making big bets prior to every speech Mrs. Kirchner gives and the governing Peronist party has been handing out leaflets at YPF gas stations reading sovereignty is recovering what belongs to us.\n
Full text: BUENOS AIRES -- With its boardroom standoff and a cameo appearance by a monarch, the drama of President Cristina Kirchner's battle with Argentina's largest oil company, YPF SA, is juicy enough to compete with an over-the-top Latin American soap opera.
Incensed at YPF for Argentina's falling oil production, Mrs. Kirchner recently sent subordinates to sit in on a corporate board meeting -- where they claim they were brusquely turned away by YPF officials.
Amid withering government attacks on YPF, majority owned by Repsol YPF SA of Madrid, Spain's King Juan Carlos personally called Mrs. Kirchner to ask her to ease up on the company, a person familiar with the situation has said.
Investors are getting whiplash from gyrations in the stock, which swooned 15% in just one day last week after a provincial governor said he would revoke rights to one of the company's most important oil fields.
No one knows how the script will end. Mrs. Kirchner has said she will use "all means provided by the Constitution" to get more production out of YPF, which she blames for Argentina's increasing dependence on high-cost imported energy. But debates are raging within the government over a number of restructuring options, from nationalizing the company outright to teaming up with a private-sector partner to launch a hostile takeover bid.
Many of the possible paths forward are fraught with legal and economic risks for Mrs. Kirchner. Indeed, while the campaign against YPF is providing Mrs. Kirchner a political boost with her base on the left, it is raising long-term doubts about Argentina's investment climate and energy policy.
"The impact on the investment environment is extremely negative," says Warren Levy, founder and chairman of Estrella, one of South America's fastest-growing oil-service companies.
Some industry executives theorize that the Kirchner administration has recently encouraged provincial leaders to strip YPF of oil concessions as a strategy to depress the company's stock price. Lowering YPF's market capitalization would, in turn, lower the amount the government would have to pay Repsol YPF in the event of nationalization, the line of reasoning goes. YPF'S market capitalization has been halved to around $9 billion from $17.5 billion a year ago, based on trading of its American depositary receipts.
Spokesmen for both YPF and the Kirchner government declined to comment. But, in answer to government complaints about its investments, YPF previously noted that it invested $3 billion last year, up almost 55% from 2010, and intends to invest even more in 2012.
The crux of the conflict, after a decade of accelerated economic growth in Argentina, is the mismatch between rapidly expanding energy consumption and languishing production. While consumption of oil and gas surged 38% and 25%, respectively, from 2003 to 2010, production of oil declined 12% and gas fell 2.3% in that span, according to Barclays Capital.
Argentina has had to rely increasingly on costly imports. The energy trade balance swung from a surplus of about $2 billion in 2010 to a deficit of about $3 billion in 2011.
Making matters worse, Argentina is increasingly strapped for dollars to pay for energy imports, as it has been coping with a wave of capital flight.
The government has put the blame for flagging production squarely on YPF, which it says has failed to invest sufficiently. After all, Argentine officials say, the country doesn't lack for resources. Overall, Argentina ranked third in the world, behind China and the U.S., in potentially recoverable reserves of shale gas with 774 trillion cubic feet, according to a study last year by the U.S. Energy Information Administration.
"In these three years they haven't drilled a single new well," Martin Buzzi, the pro-Kirchner governor of the province of Chubut, said upon revoking several YPF concessions there last month.
But YPF, led by CEO Sebastian Eskenazi, and other energy companies maintain the government need only look in the mirror to find the culprit. Energy companies say government policies -- such as high taxes, price caps on home energy rates and unpredictable rule changes like a suspension of tax breaks on production spending -- discourage investment. That explains why oil reserves are stuck at late 1990s levels, the companies say.
"The situation is calamitous," says Sen. Maria Eugenia Estenssoro, a critic of government policy who says the problems with production lie with the changing rules and price caps.
The drama has escalated in the past two months with the boardroom standoff and the suspension of provincial oil concessions. In recent weeks, Repsol executives have been conducting shuttle diplomacy between Madrid and Buenos Aires, stock speculators have been making big bets prior to every speech Mrs. Kirchner gives and the governing Peronist party has been handing out leaflets at YPF gas stations reading "sovereignty is recovering what belongs to us."
YPF originated as a state-controlled company in 1922, before being partially privatized by a conservative government in 1993. Repsol YPF obtained control of the company in 1999 and now holds a 57% stake.
The conflict with YPF started heating up soon after Mrs. Kirchner won reelection in a landslide in October.
In January, a report in a government-backed newspaper first floated the YPF nationalization rumor. Subsequently, the Argentine tax agency prohibited YPF from importing or exporting oil due to a dispute over an outstanding tax bill. In recent weeks, provincial governors have stripped YPF of about a dozen concessions.
In a kind of vicious spiral for YPF, the company's shrinking market cap further fueled takeover talk. But some analysts say that if the government did seize YPF, Repsol might well be expected to base its claim for an indemnity on the value of its reserves, not its market cap.
"These companies are worth what they have under the ground, the number of barrels they have," says Daniel Montamat, a consultant who is a former Argentine energy secretary. In the event of nationalization, he also questions how the government would attract the capital and expertise to develop shale reserves.
---
Ilan Brat contributed to this article.
Credit: By Taos Turner and Matt Moffett
Subject: Petroleum industry; Energy policy; Investments; Oil reserves; Petroleum production; Business government relations
Location: Argentina
People: Juan Carlos I, King Of Spain Kirchner, Cristina Fernandez de
Company / organization: Name: YPF SA; NAICS: 211111
Classification: 1520: Energy policy; 2430: Business-government relations; 5310: Production planning & control; 8510: Petroleum industry; 9173: Latin America
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.1
Publication year: 2012
Publication date: Apr 11, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 993081182
Document URL: https://login.ezproxy.uta.edu/login?u rl=https://search-proquest-com.ezproxy.uta.edu/docview/993081182?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Climbs 1.7% Despite Supply Gain
Author: Berthelsen, Christian
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]11 Apr 2012: n/a.
ProQuest document link
Abstract:
A host of other factors also supported the market, from strife in Sudan that could disrupt oil supplies, to Fed Beige Book diagnosis of continued U.S. economic recovery and Iran reducing exports amid tensions with the West.
Full text: NEW YORK--Oil futures climbed 1.7% on Wednesday, avoiding a third-straight losing session on a variety of factors that supported the market, including new data on crude inventories that rose only slightly more than expected.
Futures were up slightly in early trading but rose more strongly after the mid-morning release of the U.S. Energy Information Administration data, and extended gains through the rest of the day.
Light, sweet crude for May delivery settled up $1.68 to $102.70 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures Europe exchange reversed early losses and ended up 30 cents or 0.3% to $120.18 a barrel, after dipping below $120 a barrel Tuesday for the first time in nearly two months.
The Energy Information Administration said U.S. crude stocks rose 2.8 million barrels in the week ended April 6. Analysts surveyed by Dow Jones projected a 2.2 million-barrel growth in supplies. However, data released late Tuesday from the American Petroleum Institute, a private industry group, reflected a 6.6 million-barrel build, which had traders anticipating a potentially bearish turn in the market.
Though the official number was higher than expected, the increase wasn't as outsized as the API data suggested.
Other data in the report were also bullish for prices. Draws on refined motor gasoline supplies were 4.3 million barrels for the week, much larger than the 1.4 million decline that was expected. And imports of raw crude declined to 8.5 million barrels per day.
"It's more or less a bullish number when you think about that," said Carl Larry, president of advisory firm Oil Outlooks and Opinions. "We're seeing a lack of imports here."
A host of other factors also supported the market, from strife in Sudan that could disrupt oil supplies, to Fed Beige Book diagnosis of continued U.S. economic recovery and Iran reducing exports amid tensions with the West. Oil's gains were reinforced by appreciation in the equity markets, which were buoyed by strong results from Alcoa to kick off earnings season and an improvement in sovereign debt yields for Spain and Italy.
The market's gains arrested a slide in oil prices that has seen the front-month contract lose more than 7% since its recent high last month amid a drum-beat of negative news for the industry.
"The selloff at least has subsided for now," said Tom Bentz, director of BNP Paribas Prime Brokerage.
Still, in the bigger picture other factors continue to weigh on the market, from renewed worries about European sovereign debt to a weak U.S. jobs recovery and an economic slowdown in China that would reduce oil demand in the world's second-largest-consuming nation. The Energy Information Administration on Tuesday reduced its forecast for U.S. and global oil demand in 2012.
In a research note, Barclays said Wednesday that it expects the benchmark U.S. oil contract, West Texas Intermediate, to be "depressed for years," as it reduced price forecasts for this year and the next three years. In its own note, advisory firm The Schork Report said: "The air that was injected into the market in February has been leaking out slowly."
Front-month May reformulated gasoline blendstock, or RBOB, settled up 4.59 cents at $3.2955 a gallon. May heating oil rose 1.92 cents to $3.1149 a gallon.
Credit: By Christian Berthelsen
Subject: Petroleum industry; Futures; Sovereign debt; Oil prices
Location: United States--US New York
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 11, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 993140524
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/993140524?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Pressure on Oil Supply Eases; Shift Could Benefit Consumers and Give West Leverage Over Iran on Eve of Talks
Author: Herron, James; Solomon, Jay; Fassihi, Farnaz
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 Apr 2012: n/a.
ProQuest document link
Abstract:
The trends, market analysts say, are pointing toward lower gasoline prices into the summer and the lead-up to the general election in the U.S. Global oil inventories grew by as much as 1.2 million barrels a day in the first quarter, meaning that the oil market could remain balanced this summer even as almost one million barrels a day of Iranian oil is taken off the market by sanctions, the IEA said.
Full text: A surprising boost in global oil inventories, aided by supply increases from Saudi Arabia, is blunting the possibility that sanctions against Iran will drive up oil prices--potentially undercutting Tehran on the eve of its first nuclear talks with the West in more than a year.
The International Energy Agency, which represents the interests of major energy-consuming rich countries, said on Thursday that more than two years of steadily tightening oil-market conditions have reversed.
"The cycle of repeatedly tightening fundamentals evident since 2009 has been broken for now," the IEA said.
As a result, many observers now see oil prices as stable or headed down, barring another spur from Mideast tensions. That outlook offers hope for consumers who have suffered for months with high prices driven in part by concerns about Iran.
The trends, market analysts say, are pointing toward lower gasoline prices into the summer and the lead-up to the general election in the U.S.
Global oil inventories grew by as much as 1.2 million barrels a day in the first quarter, meaning that the oil market could remain balanced this summer even as almost one million barrels a day of Iranian oil is taken off the market by sanctions, the IEA said.
A subsequent report from the Organization of Petroleum Exporting Countries on Thursday concluded that oil markets are well supplied.
The assessments are the result of several factors. Production from OPEC ran ahead of demand, in large part because of increased production and storage by Saudi Arabia--though the world's top exporter insists it has no plans to replace Iranian oil. China, too, has stockpiled oil.
The shifting landscape comes into focus on the eve of talks between Iran and six world powers--the U.S., Russia, China, Germany, the U.K. and France--that are set to begin in Istanbul this weekend. As sanctions loom, easing price pressures could strengthen the hand of the nations pressuring Iran to abandon what the U.S. and others say is its aim to develop nuclear weapons, a charge Tehran denies.
U.S. and European diplomats are cautious about the prospects for success in their first negotiations with Iran over its nuclear program since talks broke down in January 2011. But these officials said they believe the West's leverage over Tehran has significantly increased thanks to financial and economic sanctions imposed on Iran over the past six months.
President Barack Obama signed into law legislation that bars U.S. and foreign firms from dealings with Iran's central bank, the main conduit for Iranian oil sales. And the European Union is putting in place an embargo on Iranian oil purchases. Both measures go into effect at the end of June, but have already led many countries to dial back or sever its business with Iran.
In a sign the U.S. thinks its measures are working, Secretary of State Hillary Clinton said on Thursday in Washington that, heading into this weekend's talks, the U.S. is "receiving signals that [the Iranians] are bringing ideas to the table."
Iran, the world's fourth-largest oil producer, has long viewed its oil reserves as a leverage point with the West--and has shown confidence that the West needs its oil as much as it needs the revenue.
"The global economy will pay the price for sanctioning Iran's oil," Seyed Shamsedin Hosseini, Iran's finance minister and the government's spokesperson for economy, said on Tuesday. "The consequences of this embargo will disrupt the oil market, not Iran. We can always find other buyers."
But such market unrest has not materialized. Oil prices leapt in the first quarter, as fears of an economic meltdown in Europe receded and tension over Iran's nuclear program raised the perceived risk of a sudden supply disruption. The price of Brent crude, the European benchmark that many global oil purchases are tied to, shot up 14% in the period.
This month, however, crude has largely moved sideways, as oil buyers adjusted to Iranian sanctions and turned back to a middling economic outlook. U.S. prices are down 5.6% from their 2012 high in February. And prices are lower than they were a year ago, when war in Libya curtailed supplies and U.S. unemployment was higher.
Oil prices rose across the board on Thursday despite the IEA's report, with traders taking cues from a stronger stock market and a drop in the dollar, closing 0.92% higher in New York at $103.64 per barrel. A weaker dollar typically boosts prices of the dollar-denominated commodity.
Barring a geopolitical spur, such as a spike in tensions with Iran, prices could be relatively stagnant for a few months, said Amrita Sen, an energy analyst at Barclays. "It does look as if the oil market has opted for a period of quiet reflection," the bank said this week.
That suggests savings at the pump. "It seems inevitable with slowing economic growth and increasing crude supply" that oil and gasoline prices will head downward, says Garfield Miller, president of Aegis Energy Advisors.
Prices are already easing at U.S. gas stations. The national average price for a gallon of regular unleaded fell to $3.907 on Thursday, down nearly 3 cents from a week ago, according to AAA. Prices generally climb in the spring in anticipation of more driving during warm weather, but this year the climb started earlier--mid-December--because of concerns over Iranian oil supplies and the closing of a number of money-losing East Coast refineries.
Thursday's reports from the IEA and OPEC buttressed the view that relative calm is ahead.
The IEA said Iran's crude exports were beginning to tumble under the weight of sanctions. The country's average oil production in the first quarter was down more than 350,000 barrels a day, or 9.7%, compared with the same period in 2011. OPEC, in its monthly report, estimated a decrease of 7.1% in Iranian production in the first quarter.
Iran's oil production is in long-term decline, but the reduction seen by the IEA last quarter was almost 20 times larger than the average year-on-year decrease in the same period in 2011 and 2010, suggesting that sanctions are having a marked effect on the country's ability to sell oil. Based on the average selling price for Iran's main heavy export crude, this fall in production would have deprived the country of around $3 billion in revenue over the quarter.
Iran's National Oil Company has admitted that demand for the country's oil had dropped. Mohsen Ghamsari, the international director for the National Oil Company, told Sharq newspaper on Saturday that Iran was facing trouble negotiating new oil contracts and receiving payments because of tough international sanctions.
Yet the IEA and OPEC played down the impact on markets of lost Iranian production.
David Fyfe, the head of IEA's oil markets division, said the situation wouldn't create a need for a major draw on oil inventories in rich countries or offsetting output from other producers. He cautioned, however, that the release of emergency oil stocks--which the U.S., the U.K. and France are contemplating--couldn't be ruled out.
One reason the market will remain in balance this summer, Mr. Fyfe said, is that OPEC members have substantially increased production, "with one eye on what might happen with the potential loss of Iranian supplies."
Total OPEC oil production rose by 135,000 barrels a day to 31.43 million barrels a day in March, largely because of higher Iraqi output, the IEA report said.
Daily output from the group has risen by almost 1.4 million barrels over the last six months. Around a third of this increase comes from Saudi Arabia's spare production capacity, with improvements in Iraq and Libya's oil industry delivering the rest.
Despite its professed neutrality in the standoff between Iran and the West, Saudi Arabia--at the urging of the U.S.--has been flexing its oil muscles. Soon after European officials started discussing a ban in December, the Saudis revealed they had abruptly increased their oil production to a 30-year high.
The Saudis went a step further in March, saying they had filled up their domestic oil inventories and placed a further 10 million barrels of oil in storage close to markets in Europe and Japan. This means the Saudis are well placed to meet extra demand for their oil from refiners as the July sanctions approach, the IEA said.
Liam Pleven, Russell Gold and Daniel Strumpf
contributed to this article.
Corrections & Amplifications
Oil stocks in rich countries increased by around 500,000 barrels a day in the first quarter. An earlier version of this story said oil stocks in rich countries increased by around 500,000 million barrels a day in the first quarter.
Write to James Herron at , Jay Solomon at and Farnaz Fassihi at
Credit: By James Herron, Jay Solomon and Farnaz Fassihi
Subject: Petroleum industry; Federal legislation; Sanctions
Location: United States--US Saudi Arabia
Company / organization: Name: International Energy Agency; NAICS: 928120; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 12, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 993311202
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/993311202?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Shell Says Gulf Oil Slick Not From Its Wells
Author: Lefebvre, Ben; Ordonez, Isabel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 Apr 2012: n/a.
ProQuest document link
Abstract:
Nearly two years ago, a Transocean Ltd. rig working for BP PLC in the U.S. Gulf blew up after it lost control of the deep-water well it was drilling, killing 11 and unleashing the worst offshore oil spill in U.S. history.
Full text: HOUSTON--Royal Dutch Shell PLC said that an oil sheen floating in the Gulf of Mexico didn't stem from its two nearby oil and gas platforms, and that the amount of oil in the sheen was small.
"A thorough inspection to date of Shell assets reveals operations in the area are normal with no signs of leaks," Shell spokeswoman Kelly op de Weegh said in a statement Thursday.
Shares in London were down nearly 4% early Thursday but ended the day down 0.5%. Shares in the U.S., which opened 1.5% below their Wednesday close, were up 0.6% at $68.10 in afternoon trading.
The U.S. Bureau of Safety and Environmental Enforcement said that its personnel spotted an oil sheen in the Gulf on Wednesday, and notified Shell, which owns the closest facilities to the sheen. The BSEE is part of the U.S. Interior Department and regulates offshore oil-and-gas operations.
Shell said later Wednesday that a 10-square-mile layer of an unknown substance was floating between its Mars and Ursa platforms, which are some of the largest oil and gas-producing facilities in the Gulf.
The platforms are located about 130 miles southeast of New Orleans. In September 2005, the Mars platform was heavily damaged by Hurricane Katrina, but restarted service in mid-2006.
Shell said it confirmed that there are "no well control issues" associated with its drilling operations in the area. The company said it is still investigating the sheen, which is estimated to measure the equivalent of six barrels of oil, and will leave an oil-response vessel it dispatched Wednesday in the area to attend to what it called "the orphan sheen."
Shell also has deployed remote-operating vehicles to inspect local infrastructure and the seafloor, including permanently plugged wells in the surrounding area and a known natural seafloor seep located near the sheen, the BSEE said.
The BSEE, which sent an airplane early Thursday to monitor the sheen, ordered operators of nearby pipelines to begin surveying their lines for potential leaks, it said. The U.S. Coast Guard also said that it is conducting a flight over the area.
Nearly two years ago, a Transocean Ltd. rig working for BP PLC in the U.S. Gulf blew up after it lost control of the deep-water well it was drilling, killing 11 and unleashing the worst offshore oil spill in U.S. history. The unprecedented incident resulted in an overhaul of offshore-drilling regulations and increased vigilance about oil spills in the region.
Angel Gonzalez contributed to this article.
Write to Ben Lefebvre at and Isabel Ordonez at
Credit: By Ben Lefebvre And Isabel Ordonez
Subject: Petroleum industry
Location: United States--US Gulf of Mexico
Company / organization: Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 12, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 993484892
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/993484892?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Sudan Escalates Fight Over Oil
Author: Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 Apr 2012: n/a.
ProQuest document link
Abstract:
The African Union has also urged South Sudan to "immediately and unconditionally" withdraw from the oil field, but didn't say what action it might take to back this appeal. Since Tuesday, South Sudan troops have pushed some 70 kilometers inside Sudan, according to military officials from South Sudan, who declined to be named because they aren't authorized to speak to the media.
Full text: KAMPALA Uganda--Sudanese troops, backed by paramilitary forces, have launched an offensive to regain control of the country's largest oil field from South Sudan, marking a dangerous new stage of repeated border clashes.
On Thursday, Sudan's troops attacked South Sudanese positions using ground forces and fighter jets, according to Rabie Abdelaty, the Sudanese government spokesman. The coordinated assault attempted to dislodge South Sudanese fighters from the 60,000 barrels-a-day oil field in Heglig. The oil field was a major battle ground when the two sides---now separate countries--fought a long-running civil war. South Sudan captured the field earlier this week.
"Within the next 72 hours, we shall have pushed all of their troops out of our territories," Mr. Abdelaty said in a telephone interview.
South Sudan President, Salva Kirr, said in a speech to parliament Thursday that he would not bow to international pressure to pull his troops out of Heglig. He also threatened to send troops to the disputed border region of Abeyi, which is currently under the control of Sudan, if the United Nations does enforce a withdrawal of Sudanese troops.
"We do not want be dragged into a senseless war, but there must be a way to stop Sudan's aggression," Barnaba Benjamin, South Sudan information minister, said following President Kirr's speech.
South Sudan, after earlier claiming it had withdrawn troops from the oil field, acknowledged Thursday that its troops still controlled the territory. A South Sudanese military spokesman, Col. Philip Aguer, said the oil field was historically part of its Unity state, although Africa peace mediators haven't yet fully demarcated the border.
Sudan announced Wednesday that it had called off peace talks with South Sudan following the capture of Heglig. The same day, Sudan's parliament called for its citizens to mobilize for the nation's defense, a call echoed by South Sudan's lawmakers.
Despite pressure from foreign countries to cease hostilities, and the massive damage done to the economies of both countries, the armed conflict continues to intensify.
On Wednesday, the U.S. State Department condemned military actions of both countries. "Both governments must agree to an immediate unconditional cessation of hostilities," it said.
The African Union has also urged South Sudan to "immediately and unconditionally" withdraw from the oil field, but didn't say what action it might take to back this appeal.
Since Tuesday, South Sudan troops have pushed some 70 kilometers inside Sudan, according to military officials from South Sudan, who declined to be named because they aren't authorized to speak to the media.
On Thursday, Sudan accused its southern neighbor of marshaling mercenary forces and rebel groups to fight on its behalf, a charge that South Sudan denies.
Fighting broke out in Sudan's South Kordofan state between government troops and rebels. The rebels belonged to the Sudan People's Liberation Movement North, who were allied with the south during two decades of civil war that ended in 2005. Despite South Sudan's independence last July, the rebels have continued to operate within Sudan.
Sudan says the rebels serve as proxies for its foe, and accused South Sudan of orchestrating a recent kidnapping of Chinese nationals that strained Khartoum's ties with its most important foreign backer. South Sudan says it has severed ties with rebels, and denies any role in the kidnapping of Chinese workers.
The two countries have also traded allegations over a recent bombing attack. South Sudan accuses its rival of bombing its town of Bentiu, the capital of oil-rich Unity state. The bomb attack on Thursday killed one civilian and injured at least four others, according to Col. Aguer.
"It seems the target was to destroy the bridge and cut off communication but they missed it," he said.
Sudan denied its bombs struck its neighbor's town, saying that its war planes are only bombing South Sudanese troops inside its own territory.
The clashes over the Heglig oil field represent a dramatic escalation of a conflict that simmered for months. Before the latest fighting, the two nations were feuding over how much money landlocked South Sudan should pay to Sudan to use its pipelines and ports to transport its oil. In the wake of the spat, oil production has suffered.
The International Energy Agency on Thursday halved its estimate for South Sudan's crude oil production for the second quarter of 2012 to a mere 10,000 barrels a day, citing doubts about the viability of a proposed plan to export oil by trucks. Up until January, South Sudan was producing some 350,000 barrels of oil a day.
Write to Nicholas Bariyo at
Credit: By Nicholas Bariyo
Subject: Oil fields
Location: South Sudan Kampala Uganda
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 12, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 993489049
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/993489049?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Chiefs at Exxon Mobil, Chevron Received Hefty Boosts in 2011 Pay
Author: Ordonez, Isabel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 Apr 2012: n/a.
ProQuest document link
Abstract:
Chevron, the second-largest U.S. oil company after Exxon Mobil, is fighting a multibillion dollar ruling issued last year against it by an Ecuadorian court, which held the company responsible for environmental and punitive damages stemming from oil operations in Ecuador's Amazon region.
Full text: Exxon Mobil Corp. Chairman and Chief Executive Rex Tillerson received about $35 million in total compensation last year, up 21% from 2010, the company said in a securities filing.
Meanwhile, John Watson, the chairman and CEO of rival Chevron Corp., received about $25 million in total compensation in 2011, up 52% from the previous year, according to Chevron's securities filing.
Mr. Tillerson received around $2.4 million in base salary, $180,000 more than in 2010, and cash bonuses totaling $4.4 million, up from about $3.4 million a year earlier. He also received shares of Exxon stock valued at around $17.9 million, a 16% increase from 2010. Other compensation, including his use of a company aircraft, life insurance and home security, was valued at around $519,230. His pension in 2011 gained in value by around $9.8 million.
Exxon said Mr. Tillerson and other senior executives' compensation received a boost last year because the company's performance continued to be "very strong" compared with its oil industry competitors.
Mr. Tillerson's 2012 salary is expected to increase 8% to $2.6 million, the company said.
At Chevron, Mr. Watson received about $1.6 million in base salary, $91,000 more than a year earlier, and cash bonuses totaling $4 million, up from about $3 million in 2010.
He also received shares of Chevron stock valued at about $5.1 million, a 35% increase from 2010, and he gained $7.2 million by exercising options. Other compensation, such as Mr. Watson's use of company aircraft, life insurance and home security, was valued at about $278,000. Mr. Watson's pension value rose in 2011 by about $6.6 million.
The pay for Chevron Vice President and General Counsel R.H. Pate increased 75% to $7.8 million. Mr. Pate's compensation jumped in part because of his "outstanding management of Ecuador and other major litigation matters," the company said in the filing.
Chevron, the second-largest U.S. oil company after Exxon Mobil, is fighting a multibillion dollar ruling issued last year against it by an Ecuadorian court, which held the company responsible for environmental and punitive damages stemming from oil operations in Ecuador's Amazon region.
Write to Isabel Ordonez at
Credit: By Isabel Ordonez
Subject: Executives; Compensation; Wages & salaries; Company aircraft
People: Tillerson, Rex W
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 12, 2012
Section: Management
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 993561432
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/993561432?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Chiefs at Exxon Mobil, Chevron Received Hefty Boosts in 2011 Pay
Author: Ordonez, Isabel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]13 Apr 2012: B.5.
ProQuest document link
Abstract:
Other compensation, including his use of a company aircraft, life insurance and home security, was valued at around $519,230. Other compensation, such as Mr. Watson's use of company aircraft, life insurance and home security, was valued at about $278,000.
Full text: Exxon Mobil Corp. Chairman and Chief Executive Rex Tillerson received about $35 million in total compensation last year, up 21% from 2010, the company said in a securities filing.
Meanwhile, John Watson, the chairman and CEO of rival Chevron Corp., received about $25 million in total compensation in 2011, up 52% from the previous year, according to Chevron's securities filing.
Mr. Tillerson received around $2.4 million in base salary, $180,000 more than in 2010, and cash bonuses totaling $4.4 million, up from about $3.4 million a year earlier. He also received shares of Exxon stock valued at around $17.9 million, a 16% increase from 2010. Other compensation, including his use of a company aircraft, life insurance and home security, was valued at around $519,230. His pension in 2011 gained in value by around $9.8 million.
Exxon said Mr. Tillerson and other senior executives' compensation received a boost last year because the company's performance continued to be "very strong" compared with its oil industry competitors.
Mr. Tillerson's 2012 salary is expected to increase 8% to $2.6 million, the company said.
At Chevron, Mr. Watson received about $1.6 million in base salary, $91,000 more than a year earlier, and cash bonuses totaling $4 million, up from about $3 million in 2010.
He also received shares of Chevron stock valued at about $5.1 million, a 35% increase from 2010, and he gained $7.2 million by exercising options. Other compensation, such as Mr. Watson's use of company aircraft, life insurance and home security, was valued at about $278,000. Mr. Watson's pension value rose in 2011 by about $6.6 million.
Credit: By Isabel Ordonez
Subject: Petroleum industry; Executive compensation
People: Tillerson, Rex W Watson, John
Company / organization: Name: Chevron Corp; NAICS: 211111, 324110; Name: Exxon Mobil Corp; NAICS: 211111, 447110
Classification: 8510: Petroleum industry; 2120: Chief executive officers; 9510: Multinational corporations
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.5
Publication year: 2012
Publication date: Apr 13, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 993974727
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/993974727?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Sudan Escalates Fight Over Oil
Author: Bariyo, Nicholas
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]13 Apr 2012: A.8.
ProQuest document link
Abstract:
The African Union urged South Sudan to "immediately and unconditionally" withdraw from the oil field, but didn't say what action it might take. Since Tuesday, South Sudan troops have pushed dozens of miles inside Sudan, according to military officials from South Sudan.
Full text: KAMPALA, Uganda -- Sudanese troops, backed by paramilitary forces, launched an offensive to regain control of the country's largest oil field from South Sudan, marking a dangerous new stage of repeated border clashes.
Sudan's troops attacked South Sudanese positions using ground forces and fighter jets on Thursday, according to Rabie Abdelaty, the Sudanese government spokesman. The coordinated assault attempted to dislodge South Sudanese fighters from the 60,000 barrels-a-day oil field in Heglig. The oil field was a major battle ground when the two sides -- now separate countries -- fought a long-running civil war. South Sudan captured the field earlier this week.
"Within the next 72 hours, we shall have pushed all of their troops out of our territories," Mr. Abdelaty said in a telephone interview.
The clashes over the Heglig oil field represent a significant escalation of a conflict that has simmered for months. Before the latest fighting, the two nations were feuding over how much money landlocked South Sudan should pay to Sudan to use its pipelines and ports to transport its oil. In the wake of the spat, oil production has suffered.
The latest clashes drew expressions of concern from the U.S. and condemnation from the African Union, which called on South Sudan to withdraw its troops.
South Sudan President Salva Kirr said in a speech to parliament on Thursday that he wouldn't bow to international pressure to pull his troops out of Heglig. He also threatened to send troops to the disputed border region of Abeyi, which is currently under the control of Sudan, if the United Nations doesn't enforce a withdrawal of Sudanese troops.
"We do not want be dragged into a senseless war, but there must be a way to stop Sudan's aggression," South Sudan Information Minister Barnaba Benjamin said following President Kirr's speech.
A South Sudan military spokesman, Col. Philip Aguer, said the oil field was historically part of its Unity state, although peace mediators haven't yet fully demarcated the border.
Sudan said Wednesday that it had called off peace talks with South Sudan following the capture of Heglig. The same day, Sudan's parliament called for its citizens to mobilize for the nation's defense, a call echoed by South Sudan's lawmakers.
Despite pressure from foreign countries to cease hostilities, and the damage done to the economies of both countries, the conflict continues to intensify.
President Barack Obama called the South Sudan president on April 2, as hostilities were building, urging that talks be kept on track and stressing the need for an agreement on oil resources. The failure of Mr. Obama's appeal was a disappointment to U.S. officials, and the administration condemned the actions of both countries this week.
The African Union urged South Sudan to "immediately and unconditionally" withdraw from the oil field, but didn't say what action it might take.
Since Tuesday, South Sudan troops have pushed dozens of miles inside Sudan, according to military officials from South Sudan.
On Thursday, Sudan accused its neighbor of marshaling mercenary forces and rebel groups to fight on its behalf, a charge South Sudan denies, after fighting broke out in Sudan's South Kordofan state between government troops and rebels.
The rebels belong to the Sudan People's Liberation Movement North, who were allied with the south during two decades of civil war that ended in 2005. Despite South Sudan's independence in July, the rebels have continued to operate within Sudan.
The two countries have also traded allegations over a recent bombing attack. South Sudan accuses its rival of bombing its town of Bentiu, the capital of oil-rich Unity state. The attack on April 5 killed one civilian and injured at least four, according to Col. Aguer. Sudan denied the charge
The International Energy Agency on Thursday halved its estimate for South Sudan's crude-oil production for the second quarter to a mere 10,000 barrels a day. Up until January, South Sudan was producing 350,000 barrels of oil a day.
Credit: By Nicholas Bariyo
Subject: Petroleum production; Oil fields; Paramilitary groups; Military engagements
Location: South Sudan Sudan
Classification: 9177: Africa; 8510: Petroleum industry; 1210: Politics & political behavior
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.8
Publication year: 2012
Publication date: Apr 13, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 993974730
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/993974730?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Pressure Eases On Oil Supply
Author: Herron, James; Solomon, Jay; Fassihi, Farnaz
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]13 Apr 2012: A.1.
ProQuest document link
Abstract:
The trends, market analysts say, are pointing toward lower gasoline prices into the summer and the lead-up to the general election in the U.S. Global oil inventories grew by as much as 1.2 million barrels a day in the first quarter, meaning that the oil market could remain balanced this summer even as almost one million barrels a day of Iranian oil is taken off the market by sanctions, the IEA said.
Full text: A surprising boost in global oil inventories, aided by supply increases from Saudi Arabia, is blunting the possibility that sanctions against Iran will drive up oil prices -- potentially undercutting Tehran on the eve of its first nuclear talks with the West in more than a year.
The International Energy Agency, which represents the interests of major energy-consuming rich countries, said on Thursday that more than two years of steadily tightening oil-market conditions have reversed.
"The cycle of repeatedly tightening fundamentals evident since 2009 has been broken for now," the IEA said.
As a result, many observers now see oil prices as stable or headed down, barring another spur from Mideast tensions. That outlook offers hope for consumers who have suffered for months with high prices driven in part by concerns about Iran.
The trends, market analysts say, are pointing toward lower gasoline prices into the summer and the lead-up to the general election in the U.S.
Global oil inventories grew by as much as 1.2 million barrels a day in the first quarter, meaning that the oil market could remain balanced this summer even as almost one million barrels a day of Iranian oil is taken off the market by sanctions, the IEA said.
A subsequent report from the Organization of Petroleum Exporting Countries on Thursday concluded that oil markets are well supplied.
The assessments are the result of several factors. Production from OPEC ran ahead of demand, in large part because of increased production and storage by Saudi Arabia -- though the world's top exporter insists it has no plans to replace Iranian oil. China, too, has stockpiled oil.
The shifting landscape comes into focus on the eve of talks between Iran and six world powers -- the U.S., Russia, China, Germany, the U.K. and France -- that are set to begin in Istanbul this weekend. As sanctions loom, easing price pressures could strengthen the hand of the nations pressuring Iran to abandon what the U.S. and others say is its aim to develop nuclear weapons, a charge Tehran denies.
U.S. and European diplomats are cautious about the prospects for success in their first negotiations with Iran over its nuclear program since talks broke down in January 2011. But these officials said they believe the West's leverage over Tehran has significantly increased thanks to financial and economic sanctions imposed on Iran over the past six months.
President Barack Obama signed into law legislation that bars U.S. and foreign firms from dealings with Iran's central bank, the main conduit for Iranian oil sales. And the European Union is putting in place an embargo on Iranian oil purchases. Both measures go into effect at the end of June, but have already led many countries to dial back or sever its business with Iran.
In a sign the U.S. thinks its measures are working, Secretary of State Hillary Clinton said on Thursday in Washington that, heading into this weekend's talks, the U.S. is "receiving signals that [the Iranians] are bringing ideas to the table."
Iran, the world's fourth-largest oil producer, has long viewed its oil reserves as a leverage point with the West -- and has shown confidence that the West needs its oil as much as it needs the revenue.
"The global economy will pay the price for sanctioning Iran's oil," Seyed Shamsedin Hosseini, Iran's finance minister and the government's spokesperson for economy, said on Tuesday. "The consequences of this embargo will disrupt the oil market, not Iran. We can always find other buyers."
But such market unrest has not materialized. Oil prices leapt in the first quarter, as fears of an economic meltdown in Europe receded and tension over Iran's nuclear program raised the perceived risk of a sudden supply disruption. The price of Brent crude, the European benchmark that many global oil purchases are tied to, shot up 14% in the period.
This month, however, crude has largely moved sideways, as oil buyers adjusted to Iranian sanctions and turned back to a middling economic outlook. U.S. prices are down 5.6% from their 2012 high in February. And prices are lower than they were a year ago, when war in Libya curtailed supplies and U.S. unemployment was higher.
Oil prices rose across the board on Thursday despite the IEA's report, with traders taking cues from a stronger stock market and a drop in the dollar, closing 0.92% higher in New York at $103.64 per barrel. A weaker dollar typically boosts prices of the dollar-denominated commodity.
Barring a geopolitical spur, such as a spike in tensions with Iran, prices could be relatively stagnant for a few months, said Amrita Sen, an energy analyst at Barclays. "It does look as if the oil market has opted for a period of quiet reflection," the bank said this week.
That suggests savings at the pump. "It seems inevitable with slowing economic growth and increasing crude supply" that oil and gasoline prices will head downward, says Garfield Miller, president of Aegis Energy Advisors.
Prices are already easing at U.S. gas stations. The national average price for a gallon of regular unleaded fell to $3.907 on Thursday, down nearly 3 cents from a week ago, according to AAA. Prices generally climb in the spring in anticipation of more driving during warm weather, but this year the climb started earlier -- mid-December -- because of concerns over Iranian oil supplies and the closing of a number of money-losing East Coast refineries.
Thursday's reports from the IEA and OPEC buttressed the view that relative calm is ahead.
The IEA said Iran's crude exports were beginning to tumble under the weight of sanctions. The country's average oil production in the first quarter was down more than 350,000 barrels a day, or 9.7%, compared with the same period in 2011. OPEC, in its monthly report, estimated a decrease of 7.1% in Iranian production in the first quarter.
Iran's oil production is in long-term decline, but the reduction seen by the IEA last quarter was almost 20 times larger than the average year-on-year decrease in the same period in 2011 and 2010, suggesting that sanctions are having a marked effect on the country's ability to sell oil. Based on the average selling price for Iran's main heavy export crude, this fall in production would have deprived the country of around $3 billion in revenue over the quarter.
Iran's National Oil Company has admitted that demand for the country's oil had dropped. Mohsen Ghamsari, the international director for the National Oil Company, told Sharq newspaper on Saturday that Iran was facing trouble negotiating new oil contracts and receiving payments because of tough international sanctions.
Yet the IEA and OPEC played down the impact on markets of lost Iranian production.
David Fyfe, the head of IEA's oil markets division, said the situation wouldn't create a need for a major draw on oil inventories in rich countries or offsetting output from other producers. He cautioned, however, that the release of emergency oil stocks -- which the U.S., the U.K. and France are contemplating -- couldn't be ruled out.
One reason the market will remain in balance this summer, Mr. Fyfe said, is that OPEC members have substantially increased production, "with one eye on what might happen with the potential loss of Iranian supplies."
Total OPEC oil production rose by 135,000 barrels a day to 31.43 million barrels a day in March, largely because of higher Iraqi output, the IEA report said.
Daily output from the group has risen by almost 1.4 million barrels over the last six months. Around a third of this increase comes from Saudi Arabia's spare production capacity, with improvements in Iraq and Libya's oil industry delivering the rest.
Despite its professed neutrality in the standoff between Iran and the West, Saudi Arabia -- at the urging of the U.S. -- has been flexing its oil muscles. Soon after European officials started discussing a ban in December, the Saudis revealed they had abruptly increased their oil production to a 30-year high.
The Saudis went a step further in March, saying they had filled up their domestic oil inventories and placed a further 10 million barrels of oil in storage close to markets in Europe and Japan. This means the Saudis are well placed to meet extra demand for their oil from refiners as the July sanctions approach, the IEA said.
---
Liam Pleven, Russell Gold and Daniel Strumpf contributed to this article.
Credit: By James Herron, Jay Solomon and Farnaz Fassihi
Subject: Federal legislation; Sanctions; Gasoline prices; Crude oil prices; Petroleum production
Location: United States--US Saudi Arabia Iran
Company / organization: Name: International Energy Agency; NAICS: 928120; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910
Classification: 8510: Petroleum industry; 9178: Middle East; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.1
Publication year: 2012
Publication date: Apr 13, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 993990830
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/993990830?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Russia to Cancel Oil Export Tax for New Arctic Projects
Author: Gronholt-Pedersen, Jacob; Kolyandr, Alexander
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Apr 2012: n/a.
ProQuest document link
Abstract:
Under a 2008 investment law, all private companies, Russian and foreign, must team up with OAO Rosneft or OAO Gazprom, the state oil and gas companies, in order to participate in an offshore project and are limited to minority control.
Full text: MOSCOW--Moving to harness Russia's vast Arctic oil and gas reserves, Prime Minister Vladimir Putin promised to scrap taxes on exports from new offshore fields and to consider letting private companies secure licenses to develop them.
The shift is expected to make two Arctic exploration projects--in which Exxon Mobil Corp., Norway's Statoil ASA and France's Total SA hold minority stakes--more feasible, analysts said. But Mr. Putin said most such projects would remain under Russian control.
Mr. Putin's announcement Thursday indicated that new energy exploration will be a top priority of his third presidential term, which starts May 7. Russia, the world's top crude oil producer, needs to tap new deposits in the Arctic and eastern Siberia to offset declining output in its western Siberian fields.
Under a 2008 investment law, all private companies, Russian and foreign, must team up with OAO Rosneft or OAO Gazprom, the state oil and gas companies, in order to participate in an offshore project and are limited to minority control.
This week the heads of Russia's top private energy companies, which have been effectively shut out of the Arctic, sent Mr. Putin an open letter seeking access to such projects.
Mr. Putin acknowledged that the law had hampered investment in offshore energy and signaled an imminent change, instructing the cabinet to "think about ways of more effectively inviting purely Russian companies into these projects."
The Russian leader outlined a package of tax incentives aimed at drawing $500 billion in investment in offshore energy projects over the next 30 years. Export duties for offshore oil that now stand as high as $460 per ton would be abolished for five to 15 years, depending on a project's profitability.
Other taxes would be low and remain fixed for 15 years after production starts. Mineral extraction tax in the most complex Arctic projects would be as low as 5% of the realized price, Mr. Putin said, and value added tax on imported equipment Russia doesn't manufacture would be abolished.
Mr. Putin's guidelines would require at least 70% of offshore projects to remain under Russian ownership. But he said the tax breaks, for which foreign companies had lobbied, should encourage investment.
"We expect the world's largest corporations to partner with our Russian companies on the shelf," he said, without mentioning any firms by name.
Changes in tax rules will be submitted to Parliament by October, officials said Friday.
Energy analysts said Mr. Putin's pledges sent an encouraging signal to foreign and private Russian companies, even though they may take months or years to enact.
"While the Arctic playing field is still tilted in favor of Russian companies, at least the government will be more open to foreign participation," said Andrew Neff, a consultant at IHS Global Insight.
Mr. Putin didn't name specific projects that would get tax breaks. Ron Smith, an analyst at Citibank, said participants in the giant Shtokman gas project in the Barents Sea--Gazprom, Total and Statoil--were likely to benefit. The partners decided last month to postpone the project, partly due to uncertainty over taxes.
A Statoil spokesman, Baard Glad Pedersen, said Mr. Putin's announcement "is obviously a positive sign that the Russian authorities are ready to make complex offshore projects possible."
Such capital intensive projects are risky because they depend heavily on tax relief to turn a profit. Exxon Mobil has been seeking a long-term tax break from the Russian government since teaming up with Rosneft last August in a deal to explore three Kara Sea oil fields in the Arctic.
Write to Alexander Kolyandr at
Credit: By Jacob Gronholt-Pedersen And Alexander Kolyandr
Subject: Petroleum industry; Natural gas utilities; Natural gas reserves; Oil reserves; Energy industry; Taxes; Tax incentives; Tax cuts; Tariffs
People: Putin, Vladimir
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 13, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 995713906
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/995713906?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Heavy Casualties in Sudan Oil-Field Battle
Author: Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]14 Apr 2012: n/a.
ProQuest document link
Abstract:
After weeks of clashes along the border, the fighting reached a dangerous stage this past week after South Sudan captured Heglig, claiming it is part of its Unity state. Since Tuesday, South Sudan has suffered lost 19 troops in the fighting, which has also left 28 wounded.
Full text: KAMPALA, Uganda--Fierce clashes between Sudan and South Sudan over the Heglig oil field continued Saturday, officials said, with both sides registering heavy casualties and ignoring international calls to stop the fighting.
In what is drawing closer to a resumption of the full-scale civil war, South Sudanese trooops fought Sudanese troops Saturday along the Kersana road, some 41 kilometers north of the 60,000 barrels-a-day oil field, military officials said.
"Our forces are pushing northwards, we have just repelled a Sudanese attack in Kersana and we are still in control of the oil field," said Col. Philip Aguer, spokesman for the South Sudan army.
After weeks of clashes along the border, the fighting reached a dangerous stage this past week after South Sudan captured Heglig, claiming it is part of its Unity state. Since Tuesday, South Sudan has suffered lost 19 troops in the fighting, which has also left 28 wounded. The South claims to have so far killed more than 240 Sudanese troops and taken dozens as prisoners of war in the fight over Heglig.
A Sudanese government spokesman acknowledged there have been casualties but declined to offer numbers.
"We shall liberate Heglig no matter the cost," he said.
A southern military official told the Associated Press on Saturday that Sudanese planes had bombarded the town.
Southern troops moved north Saturday, blocking all the three roads to Heglig, where most facilities were damaged during the fighting this past week, according to Pagan Amum, South Sudan's chief oil negotiator. Oil production there, which accounts for more than half of Sudan's estimated daily production of 115,000 barrels, has since been halted since its capture by South Sudan.
South Sudan President Salva Kiir told parliament Thursday that he wouldn't bow to international pressure to pull his troops out of Heglig. He also threatened to send troops to the disputed border region of Abeyi, currently under the control of Sudan, if the United Nations doesn't enforce a withdrawal of Sudanese troops.
Write to Nicholas Bariyo at
Credit: By Nicholas Bariyo
Subject: Petroleum production; Oil fields
Location: South Sudan
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 14, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1000277980
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1000277980?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Chevron Battles Exxon for Big Oil's Crown
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 Apr 2012: n/a.
ProQuest document link
Abstract:
[...] Exxon's stock trades at 9.8 times future earnings, compared with Chevron's 7.7 times. Exxon's fell behind in late 2009, coinciding with the announcement of its $41 billion purchase of U.S. natural-gas producer XTO Energy. [...] gas prices have slumped, diluting Exxon's profits.
Full text: Big Oil's moniker suggests it is a monolith. But the majors are increasingly differentiated, as underlined by recent strategy show-and-tells. ConocoPhillips, for example, will soon split in two, reversing the consolidation that created it. That will leave Chevron and Exxon Mobil as the two U.S. giants.
Exxon has long led in every way. Its market capitalization, $394 billion, is almost double Chevron's. Exxon produced 67% more oil and gas last year. It also earned more profit per barrel of oil equivalent produced than Chevron in eight of the past 12 years, according to consultancy IHS Herold. Its annual return on capital was on average 4.7 percentage points higher than Chevron's, according to Standard & Poor'sCapital IQ. Consequently, Exxon's stock trades at 9.8 times future earnings, compared with Chevron's 7.7 times.
But the performance gap is closing or, in some cases, has closed. Since late 2009, Chevron has earned higher net income per barrel. It has also discovered more oil and gas as a share of output, excluding purchases and estimate revisions, on a one- and three-year view. And it is fast closing the gap on return on capital.
Total shareholder return, incorporating dividends, over the past 10 years tells the story: Chevron's is 237%; Exxon's is 153%. Exxon's fell behind in late 2009, coinciding with the announcement of its $41 billion purchase of U.S. natural-gas producer XTO Energy. Since then, gas prices have slumped, diluting Exxon's profits.
Exxon says that on a long-term view, it has staked out an enviable position in unconventional resources like shale oil and gas. Perhaps, but profitability will likely suffer for some time. By 2015, about 18% of Exxon's output will come from unconventional resources in North America, compared with less than 4% at Chevron, according to Goldman Sachs.
Chevron's relatively greater leverage to global oil prices, rather than U.S. gas, bolstered the company's quarterly update last week. It could also help Chevron finally close the return-on-capital gap altogether.
Moreover, while Chevron hasn't done an XTO-sized deal, it has a good portfolio of unconventional prospects. With gas prices so low, the best prospects hold oil or "wet gas," containing a bigger proportion of higher value natural-gas liquids. Credit Suisse analyst Ed Westlake estimates Chevron's "liquids rich" land portfolio in North America at almost two million net acres and significantly higher than Exxon's.
Raoul LeBlanc, head of global gas at consultancy PFC Energy, says "Chevron in general has more options" when it comes to shifting investment towards liquids in the onshore U.S. He points to a drop in the proportion of wells drilled and operated by Chevron producing "dry" gas to 30% in 2011, down from half for much of the past decade. In contrast, Exxon's share is about 80%, according to PFC's database.
Exxon maintains that it is "well-positioned" and is shifting its considerable resources towards liquids-rich prospects.
At this point, Exxon is essentially in the process of gaining experience in U.S. unconventional resources--a big reason for buying XTO was to bring its expertise in house. The company says it has been "very successful" in retaining XTO's employees.
U.S. onshore development represents a new kind of risk for the majors, who have traditionally focused on so-called megaprojects such as Exxon's Qatari gas operations. But the U.S. shale boom was launched by smaller, more nimble, independent companies. Their success required different skills and, according to Mr. LeBlanc, a "decentralized" approach less suited to the majors' established corporate processes. Shale fields, requiring multiple wells and much trial and error, can be thought of as many small, linked projects rather than a traditional megaproject.
Chevron faces its own challenges in the next few years as it tries to develop Australia's enormous Gorgon liquefied natural gas project on time and on budget. But this, at least, is more traditional territory.
Given Exxon's formidable track record, it is a brave soul who would bet against it over the long term. But Chevron, particularly over the next few years, looks the better bet. The discount to its bigger rival looks ever less defensible.
Liam Denning
Write to Liam Denning at
Credit: By Liam Denning
Subject: Petroleum industry; Energy economics; Natural gas
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 15, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1000360598
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1000360598?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Sudan, South Move Troops to Border --- Growing Tension Around Disputed Oil-Rich Region Has Big Economic Implications for Both Nations
Author: Moore, Solomon
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]16 Apr 2012: A.16.
ProQuest document link
Abstract:
Heglig has become a flash point for renewed hostilities between the two sides, which in July reached a tense divorce deal that created the world's youngest republic, South Sudan. The colonel was speaking at Juba International Airport, where he had presented a group of 14 prisoners of war captured over the weekend.
Full text: JUBA, South Sudan -- Sudan and South Sudan on Sunday moved more troops to an ill-defined border town, foreshadowing a bloodier conflict between the neighbors over a disputed oil-rich region.
Heglig has become a flash point for renewed hostilities between the two sides, which in July reached a tense divorce deal that created the world's youngest republic, South Sudan. The settlement of the civil war failed to resolve historical ambiguities around the border or age-old animosities between the people.
Heglig is home to a vital oil refinery for the south, whose borders hold most of the two nations' oil reserves and virtually no industrial infrastructure. The facility would help the nascent country process and sell oil without help from its northern neighbor. For the north, which houses most of the refining capability of the two nations, Heglig has what much of the country lacks: oil.
The two sides have engaged in fierce skirmishes over Heglig, but both say they are now moving more firepower to the region.
Sudan military spokesman Al-Sawarmi Khalid told reporters in Khartoum that the Sudan Armed Forces were advancing on Heglig. And while they vowed not to occupy the town, Mr. Khalid said they would defeat the south's "war machine."
After battles with South Sudan along three fronts on Saturday, Sudanese troops are around four miles from Heglig's oil field, he said. "The liberation of Heglig is eminent and South Sudan forces are now in disarray" said Mr. Khalid, who declined to reveal details of casualities.
Col. Philip Aguer, a spokesman for the south's Sudan People's Liberation Army, said one infantry division has controlled Heglig since Saturday. He said the southern army has killed 240 Sudanese soldiers since entering Heglig and lost 19 of its own, mainly as a result of air raids. Those figures couldn't be independently verified.
"There are four or six planes a day," the colonel said. "We don't have an air force, we don't have planes to do the same, but we have been fighting them without planes or anything for 21 years."
The colonel was speaking at Juba International Airport, where he had presented a group of 14 prisoners of war captured over the weekend. The men sat in a row on the hot airstrip. They appeared tired, dirty and mostly unharmed.
Lt. Khalid Hasan Ahmed, 30 years old, said he was a medic who was captured by the SPLA after they overran a hospital on Saturday where he was treating at least 50 SAF soldiers. He said the hospital morgue had received 20 dead soldiers when he was taken prisoner at gunpoint.
"We have five divisions of soldiers around Heglig," or about 1,000 men, Lt. Ahmed said. He said he and his men had been treated well, but was reprimanded by SPLA soldiers when he tried to give his parents' phone number to a reporter.
South Sudan Information Minister Barnaba Marial Benjamin said the SPLA has repulsed northern attacks from Heglig since the beginning of March and that the army would stay until Khartoum agreed to stop staging attacks on its territory.
"They are the aggressors and this is what we have been telling the [United Nations] Security Council," Mr. Benjamin said.
Meanwhile, Egyptian Foreign Minister Mohammed Kamel Amr held talks with Sudan's President Omar al-Bashir on Sunday, expressing Egypt's willingness to mediate the escalating conflict, Sudan's state media reported.
The state-run Sudan News agency quoted Mr. Bashir as saying Sudan wouldn't enter talks with South Sudan until it withdrew its forces from the oil field.
Both Sudan and South Sudan have marshaled historic and political arguments to make cases as to why the region belongs to them. Sudan says Heglig belongs to it, according to a division of territory that came after 1956.
The south claims that after oil was found in Heglig in the 1970s, Gaafar Nimeiry, Sudan's president from 1969 to 1985, named the state where it is located Unity, hoping oil wealth would tie the north and south together. The area's borders have been redrawn repeatedly since then.
The African Union, the U.N. and others in the international community locate Heglig inside South Kordofan, which is inside Sudan.
Juba officials say Heglig belongs to them, according to their July secession agreement. They say those borders respected a 1956 territorial definition set by departing British colonial administrators.
Unity is one of 10 states in South Sudan and is home to the Nuer and Dinka peoples. Heglig is one of six disputed areas along the Sudans' common border. Oil production in Unity, believed to be about 150 million barrels annually, has ceased. South Sudan halted the entirety of its oil distribution to Sudan -- about 350,000 barrels a day -- after alleging Khartoum was charging unreasonable fees to refine and transport its crude.
More than 70% of Sudan's economy depends on oil revenue, while more than 90% of South Sudan's economy does. The south's secession has been a severe blow to Khartoum's oil industry.
After fighting between the two countries intensified in recent weeks, the two nations called off negotiations to deal with matters left unresolved by their July 2011 split, including border demarcation and oil-revenue sharing.
---
Nicholas Bariyo in Kampala, Uganda, contributed to this article.
Credit: By Solomon Moore
Subject: Boundaries; Towns; Armed forces; Territorial issues
Location: South Sudan Sudan
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.16
Publication year: 2012
Publication date: Apr 16, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1000397635
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Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Exxon Sets Russian Projects
Author: Fowler, Tom; González, Ángel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 Apr 2012: n/a.
ProQuest document link
Abstract:
Exxon Mobil Corp. and Russian oil firm OAO Rosneft unveiled details about their partnership, including plans to form joint ventures in the Kara Sea and Black Sea and agreements to give Rosneft subsidiaries ownership stakes in three Exxon projects in North America.
Full text: Exxon Mobil Corp. and Russian oil firm OAO Rosneft on Monday unveiled new details of a partnership that will tap oil and gas reserves in the Arctic Ocean and in the Black Sea and will provide a foothold for Rosneft in the U.S. and Canada.
The deal, originally disclosed in August, signaled a significant win for Exxon Mobil over a range of competitors lining up for access to some of the last major untapped oil and gas reserves in the world.
The proposed exploration projects in Russia between Exxon Mobil and Rosneft are in the Kara Sea, north of the Arctic Circle, and in the Black Sea. The companies initially are expected to spend about $3.2 billion developing the two projects.
The North American projects, which were revealed for the first time on Monday, have Rosneft subsidiary Neftegaz Holding America Ltd. gaining a 30% stake in Exxon's La Escalera Ranch project in West Texas, where the oil firm is employing the most advanced exploration techniques. Three exploration wells have been drilled so far in the project, which is expected to hold oil and "wet gas," a mix of natural gas and liquid fuels such as ethane, propane and butane.
Neftegaz also will have the right to buy a 30% stake in 20 still to be determined drilling areas held by Exxon in the western part of the Gulf of Mexico; while another Neftegaz unit will hold a 30% stake in the Cardium formation in Alberta, Canada, where the Russian company hopes to learn more about drilling in unconventional oil fields.
The venture is the first time a Russian government-controlled energy firm has taken a significant stake in an American energy project, said Lysle Brinker, director of equity research at the research firm IHS Herold.
"If anyone could pull it off politically it would be have to be the national oil company of the U.S., which is essentially what Exxon Mobil is," Mr. Brinker said. Exxon is the largest publicly traded oil company in the world by market value.
Other state-owned oil companies have invested in U.S. oil and gas projects in the past, including China Petrochemical Corp., or Sinopec, which announced a $2.5 billion deal with Devon Energy Corp. earlier this year in which it received a one-third stake in five emerging oil and gas fields.
Exxon and Rosneft said they began exploration activity in the Black Sea in September and that their seismic program is 70% complete. It is expected to be completed in the second quarter and exploratory drilling is scheduled to start in 2014.
The companies have started environmental assessments in the Kara Sea in anticipation of a potential exploration well in 2014.
Rosneft and Exxon also agreed to jointly develop technologies to allow drilling in difficult to tap oil fields in Western Siberia, positioning the companies for future joint ventures in Russia.
Exxon shares rose 1.3%, or $1.06, to $84.01 in 4 p.m. trading Monday on the New York Stock Exchange.
Write to Ángel González at
Credit: By Tom Fowler and Ángel González
Subject: Petroleum industry; Joint ventures; Equity stake
Location: Kara Sea Black Sea North America
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: OAO Rosneft; NAICS: 324110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 16, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1000437052
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1000437052?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Argentina to Seize Control of Oil Firm
Author: Moffett, Matt; Turner, Taos
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 Apr 2012: n/a.
ProQuest document link
Abstract:
Under the proposal, which declares the petroleum industry of "national public interest," Argentina's federal and provincial governments would take 51% of the company, now majority owned by Repsol YPF SA of Spain. The administration blames YPF for low production that has forced Argentina to spend heavily for imported energy, at a time when it is enduring a scarcity of dollars due to capital flight.
Full text: BUENOS AIRES--President Cristina Kirchner, in a move that marks a watershed in expanding the state's grip on the economy, said she will send a bill to Congress to nationalize Argentina's largest oil-and-gas company, YPF SA.
The move fired up a battle with the company's Spanish controlling shareholder and the Madrid government.
Under the proposal, which declares the petroleum industry of "national public interest," Argentina's federal and provincial governments would take 51% of the company, now majority owned by Repsol YPF SA of Spain. The move is sure to be approved in Argentina's Congress, where the leftist Mrs. Kirchner's governing Peronist party holds a majority.
Initial indications were that the government would take its stake entirely out of Repsol's shares, which would leave the company with roughly 6% of YPF, down from 57%.
YPF's market value was $10.6 billion as of Friday in Argentina. Its American depositary shares fell 11% in New York trading on Monday. Mrs. Kirchner's bill calls for YPF's shareholders to be compensated at a value to be determined by a federal tribunal.
The nationalization marks the culmination of a monthslong battle between YPF and the Kirchner government. The administration blames YPF for low production that has forced Argentina to spend heavily for imported energy, at a time when it is enduring a scarcity of dollars due to capital flight.
YPF, which has maintained that the government's own interventionist economic policies are to blame for the energy crunch, had no comment. As of Monday afternoon, YPF's spokesman started referring all press calls to Argentina's planning ministry, saying the government is now running the company.
Repsol said it believes Argentina's move is "manifestly illegal and gravely discriminatory" and said it is studying all legal action it can take in response.
The Spanish government said it will take clear and forceful measures against Argentina. "This is a terrible decision," Foreign Minister Jose Manuel Garcia-Margallo said at a press conference. Industry Minister Jose Manuel Soria said Spain will take legal measures against Argentina in coming days. He declined to disclose further details.
Mrs. Kirchner, who last week faced warnings from Spanish and European leaders over rumors of nationalization, struck a defiant tone in making the announcement in an address to the nation. "This president will not answer threats, nor insolent phrases," she said.
The nationalization appeared certain to spark an intense legal fight between the government and Repsol, while also straining the Kirchner government's relationship with Spain, a big investor and trading partner. In addition, the action is likely to further damage Argentina's reputation among investors while adding tension to relations with the European Union.
"This sends a real negative signal to pretty much the entire world in terms of the rules of the game and investing in Argentina," said Mark Jones, a political scientist at Rice University. Indeed, analysts question how Argentina will obtain the capital and expertise needed to develop YPF's significant shale reserves, after its strong-arm move on Repsol.
The Kirchner government evidently didn't waste time in asserting control.A person familiar with the situation said some Spanish executives were barred from YPF's Buenos Aires headquarters Monday afternoon. After Mrs. Kirchner's speech, the government issued an emergency decree announcing an "intervention" in the company's operations, which will be put under the authority of Planning Minister Julio De Vido.
Argentina would be required to make an offer for all of YPF's shares even if it wanted to obtain only 51% of them, according to the company's bylaws.
YPF originated as a state-controlled company in 1922, before being partially privatized by a conservative government in 1993. Repsol obtained control of the company in 1999, and currently holds 57%.
YPF accounts for more than 50% of Repsol's consolidated daily output.
Argentina's Buenos Aires Stock Exchange suspended trading in YPF shares following the announcement. YPF American depositary shares fell 11% to $19.50 in New York and are down 43% this year amid talk of the nationalization plans. The company's shares have fallen 31% in Buenos Aires this year, while Repsol shares have lost 26% of their value in Spain.Spanish officials said they would have support from the rest of the continent in contesting the move. "Our European partners are with us," Maria Dolores Cospedal, the second-ranking official at Spain's ruling Popular Party, said at a press conference.
Mrs. Kirchner blamed YPF for declining oil and gas production and said the company is largely responsible for forcing Argentina to become dependent on imported oil and gas for the first time in 17 years. She said a lack of investment in the sector led Argentina to incur an energy deficit surpassing $3 billion last year.
"This situation almost turned us into an unviable country," Mrs. Kirchner said.
Argentina is the only major Latin American country without a significant state presence in the oil industry, she said. Mexico, Chile, Brazil, Venezuela, Peru, Colombia, Bolivia, and even tiny Uruguay, all boast state-run firms that are important players in their respective oil and gas industries. "We are the only country in Latin America that doesn't control its own energy policy," she said.
Though Repsol owns 57% of YPF, it is Argentina's Eskenazi family, which holds a 25.5% stake, that is responsible for daily management of the firm. The rest of the company's shares trade on exchanges in New York and Buenos Aires.
The mismatch in Argentina between rapidly growing energy consumption and languishing oil production after a decade of accelerated economic growth appears to be spurring the country's stance on YPF. Consumption of oil and gas increased 38% and 25%, respectively, from 2003 to 2010, but oil and gas production decreased 12% and 2.3% in that period, according to Barclays Capital.
Following Mrs. Kirchner's cue, provincial governments in recent weeks have rescinded more than a dozen of YPF's production concessions and unleashed a wave of vitriol against the company.
Certainly Argentina has big potential. Overall, Argentina ranked third in the world, behind China and the U.S., in potentially recoverable reserves of shale gas with 774 trillion cubic feet, according to a study last year by the U.S. Energy Information Administration.
But critics and industry officials say government policies such as high taxes, price caps on home energy rates and unpredictable rule changes like a suspension of tax breaks on production spending have discouraged investment.
"The government is now in a vicious circle in which it feels it must take increasingly extreme measures to try to resolve problems its own policies are creating," said Aldo Abram, an economist in Buenos Aires. "I don't know where it stops, but this will not solve Argentina's energy problem."
Ever since declaring a default of its foreign debt in 2001, Argentina has been considered something of a renegade nation by the international financial community. But analysts say that Mrs. Kirchner's oil nationalization takes state economic dominance to a new level. "We've shown that state projects can be managed well too," she said in response to critics who have claimed the government doesn't have the technical expertise or the money to run YPF.
The nationalization fits with recent interventionist moves since Mrs. Kirchner's re-election last October, when she has imposed new capital controls and tightened restrictions on imports. She has also struck a more nationalist tenor in diplomatic relations, reviving Argentina's long dormant claim for the Falkland Islands from the U.K.
Ilan Brat and Santiago Perez contributed to this article.
Write to Taos Turner at
Credit: By Matt Moffett and Taos Turner
Subject: Nationalization
Location: Argentina New York
Company / organization: Name: YPF SA; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 16, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1000437421
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1000437421?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Exxon Sets Russian Projects
Author: Fowler, Tom; Gonzalez, Angel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]17 Apr 2012: B.2.
ProQuest document link
Abstract:
Other state-owned oil companies have invested in U.S. oil and gas projects in the past, including China Petrochemical Corp., or Sinopec, which announced a $2.5 billion deal with Devon Energy Corp. earlier this year in which it received a one-third stake in five emerging oil and gas fields.
Full text: Exxon Mobil Corp. and Russian oil firm OAO Rosneft on Monday unveiled new details of a partnership that will tap oil and gas reserves in the Arctic Ocean and in the Black Sea and will provide a foothold for Rosneft in the U.S. and Canada.
The deal, originally disclosed in August, signaled a significant win for Exxon Mobil over a range of competitors lining up for access to some of the last major untapped oil and gas reserves in the world.
The proposed exploration projects in Russia between Exxon Mobil and Rosneft are in the Kara Sea, north of the Arctic Circle, and in the Black Sea. The companies initially are expected to spend about $3.2 billion developing the two projects.
The North American projects, which were revealed for the first time on Monday, have Rosneft subsidiary Neftegaz Holding America Ltd. gaining a 30% stake in Exxon's La Escalera Ranch project in West Texas, where the oil firm is employing the most advanced exploration techniques. Three exploration wells have been drilled so far in the project, which is expected to hold oil and "wet gas," a mix of natural gas and liquid fuels such as ethane, propane and butane.
Neftegaz also will have the right to buy a 30% stake in 20 still to be determined drilling areas held by Exxon in the western part of the Gulf of Mexico; while another Neftegaz unit will hold a 30% stake in the Cardium formation in Alberta, Canada, where the Russian company hopes to learn more about drilling in unconventional oil fields.
The venture is the first time a Russian government-controlled energy firm has taken a significant stake in an American energy project, said Lysle Brinker, director of equity research at the research firm IHS Herold.
"If anyone could pull it off politically it would be have to be the national oil company of the U.S., which is essentially what Exxon Mobil is," Mr. Brinker said. Exxon is the largest publicly traded oil company in the world by market value.
Other state-owned oil companies have invested in U.S. oil and gas projects in the past, including China Petrochemical Corp., or Sinopec, which announced a $2.5 billion deal with Devon Energy Corp. earlier this year in which it received a one-third stake in five emerging oil and gas fields.
Exxon and Rosneft said they began exploration activity in the Black Sea in September and that their seismic program is 70% complete. It is expected to be completed in the second quarter and exploratory drilling is scheduled to start in 2014.
The companies have started environmental assessments in the Kara Sea in anticipation of a potential exploration well in 2014.
Rosneft and Exxon also agreed to jointly develop technologies to allow drilling in difficult to tap oil fields in Western Siberia, positioning the companies for future joint ventures in Russia.
Exxon shares rose 1.3%, or $1.06, to $84.01 in 4 p.m. trading Monday on the New York Stock Exchange.
Credit: By Tom Fowler and Angel Gonzalez
Subject: Petroleum industry; Partnerships; Oil exploration
Location: Black Sea United States--US Kara Sea Arctic Ocean
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: OAO Rosneft; NAICS: 324110
Classification: 9190: United States; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.2
Publication year: 2012
Publication date: Apr 17, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1000893976
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1000893976?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Argentina To Seize Control of Oil Firm
Author: Moffett, Matt; Turner, Taos
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]17 Apr 2012: B.1.
ProQuest document link
Abstract:
Under the proposal, which declares the petroleum industry of "national public interest," Argentina's federal and provincial governments would take 51% of the company, now majority owned by Repsol YPF SA of Spain. The administration blames YPF for low production that has forced Argentina to spend heavily for imported energy, at a time when it is enduring a scarcity of dollars due to capital flight.
Full text: BUENOS AIRES -- President Cristina Kirchner took a watershed step in expanding the state's grip on the economy, saying she will nationalize Argentina's largest oil-and-gas company, YPF SA.
The move fired up a battle with the company's Spanish controlling shareholder and the Madrid government.
Under the proposal, which declares the petroleum industry of "national public interest," Argentina's federal and provincial governments would take 51% of the company, now majority owned by Repsol YPF SA of Spain. The move is sure to be approved in Argentina's Congress, where the leftist Mrs. Kirchner's governing Peronist party holds a majority.
Initial indications were that the government would take its stake entirely out of Repsol's shares, which would leave the company with roughly 6% of YPF, down from 57%.
YPF's market value was $10.6 billion as of Friday in Argentina. Its American depositary shares fell 11% in New York trading on Monday. Mrs. Kirchner's bill calls for YPF's shareholders to be compensated at a value to be determined by a federal tribunal.
The nationalization marks the culmination of a monthslong battle between YPF and the Kirchner government. The administration blames YPF for low production that has forced Argentina to spend heavily for imported energy, at a time when it is enduring a scarcity of dollars due to capital flight.
YPF, which has maintained that the government's own interventionist economic policies are to blame for the energy crunch, had no comment. As of Monday afternoon, YPF's spokesman started referring all press calls to Argentina's planning ministry, saying the government is now running the company.
Repsol said it believes Argentina's move is "manifestly illegal and gravely discriminatory" and said it is studying all legal action it can take in response.
The Spanish government said it will take clear and forceful measures against Argentina. "This is a terrible decision," Foreign Minister Jose Manuel Garcia-Margallo said at a press conference. Industry Minister Jose Manuel Soria said Spain will take legal measures against Argentina in coming days. He declined to disclose further details.
Mrs. Kirchner struck a defiant tone in making the announcement in an address to the nation. "This president will not answer threats, nor insolent phrases," she said.
The nationalization is likely to further damage Argentina's reputation among investors while adding tension to relations with the European Union.
"This sends a real negative signal to pretty much the entire world in terms of the rules of the game and investing in Argentina," said Mark Jones, a political scientist at Rice University. Indeed, analysts question how Argentina will obtain the capital needed to develop YPF's significant shale reserves.
The government evidently didn't waste time in asserting control. After Mrs. Kirchner's speech, the government issued an emergency decree announcing an "intervention" in the company's operations, which will be put under the authority of Planning Minister Julio De Vido.
Argentina would be required to make an offer for all of YPF's shares even if it wanted to obtain only 51% of them, according to the company's bylaws.
YPF originated as a state-controlled company in 1922, before being partially privatized by a conservative government in 1993. Repsol obtained control of the company in 1999, and currently holds 57%. YPF accounts for more than 50% of Repsol's consolidated daily output.
Argentina's Buenos Aires Stock Exchange suspended trading in YPF shares after the announcement. YPF American depositary shares fell 11% to $19.50 in New York and are down 43% this year amid talk of the nationalization plans. YPF's shares have fallen 31% in Buenos Aires this year.
Mrs. Kirchner blamed YPF for declining oil and gas production and said the company is largely responsible for forcing Argentina to become dependent on imported oil and gas for the first time in 17 years. She said a lack of investment in the sector led Argentina to incur an energy deficit surpassing $3 billion last year.
"This situation almost turned us into an unviable country," Mrs. Kirchner said. Argentina is the only major Latin American country without a significant state presence in the oil industry, she said.
Though Repsol owns 57% of YPF, it is Argentina's Eskenazi family, which holds a 25.5% stake, that is responsible for daily management of the firm.
The mismatch in Argentina between rapidly growing energy consumption and languishing oil production appears to be spurring the country's stance on YPF. Consumption of oil and gas increased 38% and 25%, respectively, from 2003 to 2010, but oil and gas production decreased 12% and 2.3% in that period, according to Barclays Capital.
Following Mrs. Kirchner's cue, provincial governments in recent weeks have rescinded more than a dozen of YPF's production concessions.
Overall, Argentina ranked third in the world, behind China and the U.S., in potentially recoverable reserves of shale gas with 774 trillion cubic feet, according to the U.S. Energy Information Administration.
But critics and industry officials say government policies such as high taxes, price caps on home energy rates and unpredictable rule changes have discouraged investment.
"The government is now in a vicious circle in which it feels it must take increasingly extreme measures to try to resolve problems its own policies are creating," said Aldo Abram, an economist in Buenos Aires.
---
Ilan Brat and Santiago Perez contributed to this article.
Credit: By Matt Moffett and Taos Turner
Subject: Petroleum industry; Nationalization
Location: Argentina
People: Kirchner, Cristina Fernandez de
Company / organization: Name: YPF SA; NAICS: 211111
Classification: 9173: Latin America; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.1
Publication year: 2012
Publication date: Apr 17, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1000933507
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1000933507?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Argentina's Oil Grab Draws Fire; Spain Threatens Measures After Buenos Aires Proposes Nationalizing Repsol Unit; Minister Scoffs at Compensation Demand
Author: Brat, Ilan; Moffett, Matt
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Apr 2012: n/a.
ProQuest document link
Abstract:
Argentina's President Kirchner said on Monday that Argentina has shown that it can run large, important companies on its own. Because the move was long anticipated, several analysts said the nationalization was largely priced into Repsol shares.
Full text: Madrid threatened to retaliate as soon as this week in response to Argentina's proposed seizure of a prized unit of Spain's flagship oil company, as Argentina's nationalization drive drew international rebuke and threatened to drive the relationship between Spain and its former colony to its lowest level in decades.
Spain will take "clear and forceful measures," said Spanish Foreign Minister José Manuel García-Margallo. These could affect commercial, energy and industrial relations between the two countries, senior officials said, and could be announced during Friday's weekly cabinet meeting.
"This is bad news for Spain, but terrible news for Argentina," Mr. García-Margallo said, adding that the Argentine government "is shooting itself in the foot."
President Cristina Kirchner's government on Monday proposed effectively nationalizing Argentina's largest oil-and-gas company, YPF SA. She proposed taking 51% of YPF from Spain's Repsol YPF SA at a price that is yet to be determined, leaving the Spanish firm with a 6% stake.
Repsol shares fell as much as 9% Tuesday amid uncertainty over the possibility of compensation. Repsol values its stake in YPF, which represents more than 50% of Repsol's total hydrocarbon output, at $10.5 billion.
Later Tuesday, one of Mrs. Kirchner's most influential economic advisers scoffed at Repsol's $10 billion compensation request. "The idiots think the state must be so stupid that it will do what the company says," Deputy Economy Minister Axel Kicillof said during a testimony to Congress about YPF's future.
Repsol had vowed to battle for full compensation for YPF, and sought to reassure investors that the company would have enough funds to finance its capital expenditures without YPF.
European Commission President José Manuel Barroso said he is "seriously concerned" about Argentina's decision, which a commission spokeswoman called "illegal." The European Union has postponed a meeting with Argentina scheduled for Thursday and Friday.
Mexican President Felipe Calderón assailed Argentina's decision late Monday, saying it "shows little sense of responsibility and rationality." Mexico's state-run oil monopoly Petroleos Mexicanos, or Pemex, owns nearly 10% of Repsol.
Spain's scope for retaliation is limited, said those familiar with bilateral trade. While its $1.41 trillion economy is four times the size of Argentina's and Spain is one of Argentina's top 10 trading partners, Argentina does more trade with Brazil and China. According to Spanish external commerce data, in 2011 Spain exported [euro]1 billion ($1.31 billion) worth of machines, cars, books and pharmaceutical products to Argentina, while Spain imported more than [euro]2 billion worth of food and seafood, chemicals, oils and minerals from Argentina.
Moreover, Spain was unable to prevent the nationalization of air carrier Aerolineas Argentinas from the now bankrupt Spanish travel company Grupo Marsans in the late 2000s.
Spanish officials didn't say what sorts of measures they might take against Argentina. Repsol Chairman Antonio Brufau speculated that Spain could adopt import controls or lodge a complaint to the Group of 20 leading nations.
Mr. Brufau called on Spain to enforce its bilateral agreements with Argentina and help ensure that the rule of law prevails. "A government that doesn't make sure its agreements with other governments are respected isn't really a government," he said.
The affair threatens to upend the close but complex relations between two countries bound by culture and language. Cross-Atlantic migration has often served as a safety valve both for Spaniards and Argentines. Spaniards fled to the former colony and other Latin countries during that country's Civil War in the 1930s. Argentines have fled to Spain during Argentina's recurrent financial crises.
But the two have rarely faced off as equals, said Raanan Rein, a specialist on Latin American and Spanish history at Tel Aviv University. "The trade and economic relationships between Spain and Argentina have always been characterized by misunderstanding and mistrust," Mr. Rein said. "During certain periods, the balance of economic power tended to favor Spain. During others it tended to favor Argentina."
In the 1940s, when Spain was destitute after World War II, Argentina was one of the few countries that came to its aid, Mr. Rein said. The government of Gen. Juan Domingo Perón sent money and grain to Madrid, and his hugely popular wife, Eva Perón, crossed the Atlantic to try to boost morale in Spain. But Mr. Rein said the Argentine helping hand wasn't a gift--and the Perón government charged a high financial price for assisting Spain.
During the 1990s, when a conservative Argentine government started privatizing state-run companies, there was controversy in Argentina when Repsol, Telefónica SA and other Spanish firms emerged as acquirers. Argentine nationalists carped about a "reconquest" by their former colonial masters.
Nevertheless, during Argentina's brutal economic collapse in 2002, Spanish companies maintained operations in Argentina and the Spanish government contributed money to helping ameliorate the crisis, analysts said.
The latest spat over YPF is another "link in a chain of minicrises over issues of trade, investment and debt," between Spain and Argentina, Mr. Rein said, adding that "It does have potential to be the biggest [bilateral] crisis since the end of World War II."
Executives at Repsol vowed to fight aggressively Argentina's takeover. "This is not lost," Mr. Brufau, the chairman, told reporters. "The battle will go on."
The Argentine government blames YPF for low production that has forced it to spend heavily on importing energy, at a time when capital flight has made dollars scarce. Coming alongside other moves such as import limits, Argentina's government hopes to boost hydrocarbon production and decrease its recent reliance on imported gas and oil.
Mr. Brufau argued Tuesday that Repsol had boosted investment in YPF, including doubling the number of employees and raising natural-gas production to peak levels in 2004. But he said aging oil and gas wells are naturally weighing on output.
He said Repsol hadn't been counting on YPF cash to finance operations outside Argentina in the next four to five years. YPF won't generate cash in any case, as it will pay this year's dividend in shares, he said. Repsol's dividend payment plan remains unchanged, Mr. Brufau said, but may need to be revised in the near future.
Mr. Brufau added that Repsol would seek compensation for the full value of YPF, amounting to about $10.5 billion for Repsol's 57.4% stake.
Repsol faces a tough road ahead in contesting the nationalization, said Carlos Alfaro, an Argentine who practices law in New York, Buenos Aires and Madrid and who has served as an arbitrator for the American Arbitration Association.
"It will be very hard for Repsol to do something," he said. Repsol can take its claim to the World Bank's International Center for Settlement of Invesment Disputes, he said, but added that multinationals that pressed cases against Argentina there concerning contracts broken after the 2002 peso devaluation didn't fare well.
"Settlements were not substantial because it's very difficult to determine what is the real damage suffered by companies," Mr. Alfaro said. "And the nature of arbitrators is that they settle in the middle."
Andrea Kay Bjorklund, a visiting law professor at McGill University in Montreal, noted that the Kirchner government has refused to pay the awards rendered against Argentina by the World Bank dispute settlement body. "I can't say that Repsol has no options, but I don't think Repsol's options are attractive," she said.
Mr. Alfaro said another option is for Repsol to sue in Argentina. Argentine courts are known for being highly politicized, but Mr. Alfaro said Repsol could always hope for an eventual change in Argentina's government.
Because Argentina's move was long anticipated, several analysts said the nationalization was largely priced into Repsol shares, although the steep share decline seemed to contradict that view.
Repsol shares closed down 6.1% at [euro]16.42 Tuesday, underperforming a sharply higher stock market in Madrid.
On a call, Repsol Chief Financial Officer Miguel Martinez said the company's credit ratings could come under pressure without YPF, which accounted for 25% of Repsol's operating income and 16% of its debt in 2011.
Analysts concurred, with Barclays and others saying that should it lose YPF, Repsol would have difficulty maintaining its Baa2 rating from Moody's Investors Service Inc. and BBB from Standard & Poor's and Fitch Ratings.
On Tuesday, Moody's said it had downgraded YPF's Global Local Currency Rating to B3 from Ba3 and National Scale Rating to Baa3.ar from Aa2.ar. All ratings remain on review for downgrade.
David Gualtieri, director of equity sales at Intermoney brokerage in Madrid, said uncertainty over the level of compensation and the effect on Repsol's credit rating and dividend payout will likely continue to weigh on the company's shares.
Compensation, to be determined by an Argentine tribunal, could take months or years to reach Repsol coffers, and in any case is likely to be far less than the company's preferred value.
Art Patnaude, Taos Turner and Ken Parks contributed to this article.
Write to Ilan Brat at and Matt Moffett at
Credit: Ilan Brat; Matt Moffett
Subject: Nationalization; Natural gas; Investments; Compensation; Credit ratings
People: Brufau, Antonio
Company / organization: Name: YPF SA; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 17, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1001016547
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1001016547?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Argentina to Seize Control of Oil Firm
Author: Moffett, Matt; Turner, Taos
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Apr 2012: n/a.
ProQuest document link
Abstract:
Under the proposal, which declares the petroleum industry of "national public interest," Argentina's federal and provincial governments would take 51% of the company, now majority owned by Repsol YPF SA of Spain. The administration blames YPF for low production that has forced Argentina to spend heavily for imported energy, at a time when it is enduring a scarcity of dollars due to capital flight.
Full text: BUENOS AIRES--President Cristina Kirchner, in a move that marks a watershed in expanding the state's grip on the economy, said she will send a bill to Congress to nationalize Argentina's largest oil-and-gas company, YPF SA.
The move fired up a battle with the company's Spanish controlling shareholder and the Madrid government.
Under the proposal, which declares the petroleum industry of "national public interest," Argentina's federal and provincial governments would take 51% of the company, now majority owned by Repsol YPF SA of Spain. The move is sure to be approved in Argentina's Congress, where the leftist Mrs. Kirchner's governing Peronist party holds a majority.
Initial indications were that the government would take its stake entirely out of Repsol's shares, which would leave the company with roughly 6% of YPF, down from 57%.
YPF's market value was $10.6 billion as of Friday in Argentina. Its American depositary shares fell 11% in New York trading on Monday. Mrs. Kirchner's bill calls for YPF's shareholders to be compensated at a value to be determined by a federal tribunal.
The nationalization marks the culmination of a monthslong battle between YPF and the Kirchner government. The administration blames YPF for low production that has forced Argentina to spend heavily for imported energy, at a time when it is enduring a scarcity of dollars due to capital flight.
YPF, which has maintained that the government's own interventionist economic policies are to blame for the energy crunch, had no comment. As of Monday afternoon, YPF's spokesman started referring all press calls to Argentina's planning ministry, saying the government is now running the company.
Repsol said it believes Argentina's move is "manifestly illegal and gravely discriminatory" and said it is studying all legal action it can take in response.
The Spanish government said it will take clear and forceful measures against Argentina. "This is a terrible decision," Foreign Minister Jose Manuel Garcia-Margallo said at a press conference. Industry Minister Jose Manuel Soria said Spain will take legal measures against Argentina in coming days. He declined to disclose further details.
Mrs. Kirchner, who last week faced warnings from Spanish and European leaders over rumors of nationalization, struck a defiant tone in making the announcement in an address to the nation. "This president will not answer threats, nor insolent phrases," she said.
The nationalization appeared certain to spark an intense legal fight between the government and Repsol, while also straining the Kirchner government's relationship with Spain, a big investor and trading partner. In addition, the action is likely to further damage Argentina's reputation among investors while adding tension to relations with the European Union.
"This sends a real negative signal to pretty much the entire world in terms of the rules of the game and investing in Argentina," said Mark Jones, a political scientist at Rice University. Indeed, analysts question how Argentina will obtain the capital and expertise needed to develop YPF's significant shale reserves, after its strong-arm move on Repsol.
The Kirchner government evidently didn't waste time in asserting control.A person familiar with the situation said some Spanish executives were barred from YPF's Buenos Aires headquarters Monday afternoon. After Mrs. Kirchner's speech, the government issued an emergency decree announcing an "intervention" in the company's operations, which will be put under the authority of Planning Minister Julio De Vido.
Argentina would be required to make an offer for all of YPF's shares even if it wanted to obtain only 51% of them, according to the company's bylaws.
YPF originated as a state-controlled company in 1922, before being partially privatized by a conservative government in 1993. Repsol obtained control of the company in 1999, and currently holds 57%.
YPF accounts for more than 50% of Repsol's consolidated daily output.
Argentina's Buenos Aires Stock Exchange suspended trading in YPF shares following the announcement. YPF American depositary shares fell 11% to $19.50 in New York and are down 43% this year amid talk of the nationalization plans. The company's shares have fallen 31% in Buenos Aires this year, while Repsol shares have lost 26% of their value in Spain.Spanish officials said they would have support from the rest of the continent in contesting the move. "Our European partners are with us," Maria Dolores Cospedal, the second-ranking official at Spain's ruling Popular Party, said at a press conference.
Mrs. Kirchner blamed YPF for declining oil and gas production and said the company is largely responsible for forcing Argentina to become dependent on imported oil and gas for the first time in 17 years. She said a lack of investment in the sector led Argentina to incur an energy deficit surpassing $3 billion last year.
"This situation almost turned us into an unviable country," Mrs. Kirchner said.
Argentina is the only major Latin American country without a significant state presence in the oil industry, she said. Mexico, Chile, Brazil, Venezuela, Peru, Colombia, Bolivia, and even tiny Uruguay, all boast state-run firms that are important players in their respective oil and gas industries. "We are the only country in Latin America that doesn't control its own energy policy," she said.
Though Repsol owns 57% of YPF, it is Argentina's Eskenazi family, which holds a 25.5% stake, that is responsible for daily management of the firm. The rest of the company's shares trade on exchanges in New York and Buenos Aires.
The mismatch in Argentina between rapidly growing energy consumption and languishing oil production after a decade of accelerated economic growth appears to be spurring the country's stance on YPF. Consumption of oil and gas increased 38% and 25%, respectively, from 2003 to 2010, but oil and gas production decreased 12% and 2.3% in that period, according to Barclays Capital.
Following Mrs. Kirchner's cue, provincial governments in recent weeks have rescinded more than a dozen of YPF's production concessions and unleashed a wave of vitriol against the company.
Certainly Argentina has big potential. Overall, Argentina ranked third in the world, behind China and the U.S., in potentially recoverable reserves of shale gas with 774 trillion cubic feet, according to a study last year by the U.S. Energy Information Administration.
But critics and industry officials say government policies such as high taxes, price caps on home energy rates and unpredictable rule changes like a suspension of tax breaks on production spending have discouraged investment.
"The government is now in a vicious circle in which it feels it must take increasingly extreme measures to try to resolve problems its own policies are creating," said Aldo Abram, an economist in Buenos Aires. "I don't know where it stops, but this will not solve Argentina's energy problem."
Ever since declaring a default of its foreign debt in 2001, Argentina has been considered something of a renegade nation by the international financial community. But analysts say that Mrs. Kirchner's oil nationalization takes state economic dominance to a new level. "We've shown that state projects can be managed well too," she said in response to critics who have claimed the government doesn't have the technical expertise or the money to run YPF.
The nationalization fits with recent interventionist moves since Mrs. Kirchner's re-election last October, when she has imposed new capital controls and tightened restrictions on imports. She has also struck a more nationalist tenor in diplomatic relations, reviving Argentina's long dormant claim for the Falkland Islands from the U.K.
Ilan Brat and Santiago Perez contributed to this article.
Write to Taos Turner at
Credit: By Matt Moffett and Taos Turner
Subject: Nationalization
Location: Argentina New York
Company / organization: Name: YPF SA; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 17, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1001016755
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1001016755?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Obama Calls for Stricter Oil-Market Curbs
Author: Favole, Jared A; Tracy, Tennille
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Apr 2012: n/a.
ProQuest document link
Abstract:
The president said Congress should boost enforcement staff at the Commodity Futures Trading Commission to oversee energy markets and increase penalties for market manipulation to $10 million from $1 million, to be levied for every day a violation occurs.
Full text: WASHINGTON--President Barack Obama on Tuesday called for increasing penalties on oil speculators and boosting oversight of U.S. energy as part of a plan to crack down on an "irresponsible few" who he says rig oil markets.
"Rising gas prices means a rough ride for a lot of families," President Obama said from the White House Rose Garden. "We can't afford a situation where speculators artificially manipulate markets by buying up oil, creating the perception of a shortage and driving prices higher, only to flip the oil for a quick profit."
The president said Congress should boost enforcement staff at the Commodity Futures Trading Commission to oversee energy markets and increase penalties for market manipulation to $10 million from $1 million, to be levied for every day a violation occurs. He is also asking Congress to give the CFTC authority to raise margin requirements on traders who buy and sell oil futures.
The plan follows daily criticisms from Republicans that the president isn't doing enough to lower gasoline prices, which have jumped 10% in recent months. It isn't clear what impact it would have on prices. "None of these steps by themselves will bring gas prices down overnight," Mr. Obama said.
Energy experts have long debated the role of speculative trading in determining oil prices, the primary factor in gasoline costs. Some experts say such traders play a valuable role by providing liquidity to the commodity markets. Others say they make the market more volatile because they bet on future price swings.
The bulk of the president's proposal would require approval from Congress, leaving its fate partly in the hands of Republicans, who control the House. Unlike their Democratic colleagues, they haven't shown interest in passing such legislation, saying restrictions on domestic oil production play a central role in driving up fuel costs.
Republicans were quick to criticize the president's announcement. "If I were to guess, I'd say today's proposal by the president probably polls pretty well," Senate Minority Leader Mitch McConnell (R., Ky.) said. "But I guarantee you it won't do a thing to lower the price of gas at the pump. It never has in the past. White House officials admit as much. Why it would it now?"
The president said that anyone who thinks oil speculators can't raise prices should "just think back to how Enron traders manipulated the price of electricity to reap huge profits at everybody else's expense." Enron Corp., one the largest energy-trading companies, filed for bankruptcy in 2001 in a historic accounting scandal.
He has said the recent rise in gas prices is the result of global forces, too, including demand from countries like China and India. Also helping to push up prices are concerns over Iran, which is facing tighter sanctions from the U.S. and the European Union. Iran is the third-largest exporter of crude oil, according to the Energy Information Administration.
The Commodity Futures Trading Commission is currently writing rules to limit speculative trading in oil and other commodity markets. Democrats have said the commission is moving too slowly and have pressed it to publish the rules in the coming weeks.
Write to Jared A. Favole at and Tennille Tracy at
Credit: By Jared A. Favole and Tennille Tracy
Subject: Petroleum industry; Energy policy; Gasoline prices; Fines & penalties; Futures trading; Commodity futures
Location: United States--US
People: Obama, Barack
Company / organization: Name: Commodity Futures Trading Commission; NAICS: 926140, 926150
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 17, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1001077943
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1001077943?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permissi on.
Last updated: 2017-11-19
Database: The Wall Street Journal
Indian Oil: Price Hike Inevitable Unless Government Acts
Author: Sharma, Rakesh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Apr 2012: n/a.
ProQuest document link
Abstract:
According to Indian Oil, excise tax on each liter of gasoline is 14.78 rupees, while sales tax varies between 10.30 rupees and 18.74 rupees.
Full text: NEW DELHI - Indian Oil Corp. said Tuesday it will have to raise gasoline prices unless the government cuts taxes on the fuel or fully compensates the company for selling it below market rates.
Gasoline prices haven't officially been under state control since June 2010, but the government has restrained state-run retailers from raising prices in line with global rates since December, wary of the political fallout.
State-run Indian Oil, Bharat Petroleum Corp. and Hindustan Petroleum Corp. control almost the entire local fuels market.
The three companies are partly compensated by the government for selling diesel, kerosene and cooking gas at state-set discounted prices. But they don't get a subsidy on gasoline.
Indian Oil, the country's largest refiner and fuel retailer by market share, last revised gasoline prices on Dec. 1, when it cut rates by 0.65 rupees per liter after benchmark global prices fell.
Its losses on selling the fuel at discounted prices since have added up to 13.67 billion rupees ($265 million), the company said.
Indian Oil said it wants to raise gasoline rates by 8.04 rupees a liter, excluding state levies.
Gasoline currently sells at 65.64 rupees per liter in New Delhi. Prices vary across states due to local taxes.
The three state-run retailers have asked the government either to fully compensate them for their losses on gasoline sales or reduce excise and sales taxes.
According to Indian Oil, excise tax on each liter of gasoline is 14.78 rupees, while sales tax varies between 10.30 rupees and 18.74 rupees.
"The company is awaiting the government's response to its requests and should no relief come forward, it will have no option but to effect the aforesaid increase in motor spirit prices," Indian Oil said.
Write to Rakesh Sharma at
Credit: By Rakesh Sharma
Subject: Gasoline prices
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 17, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1001114630
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1001114630?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
America's Lost Energy Decade; If we had begun exploring in the Arctic National Wildlife Refuge in 2002, its oil and gas (and jobs and revenue) would be flowing now.
Author: Murkowski, Lisa
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Apr 2012: n/a.
ProQuest document link
Abstract:
[...] the most blatant excuse is one that officially expires this week. Because oil might take up to 10 years to reach market, we were told that the nonwilderness portion of ANWR could not be part of the solution to our energy challenges.
Full text: Ten years ago this week, the U.S. Senate debated whether to open a small section of the Arctic National Wildlife Refuge to oil and natural gas production. Under the terms of the ANWR amendment, a maximum of 2,000 acres in the nonwilderness portion of the refuge (less than 0.01% of the whole) would have been opened to surface development. But the amendment was defeated, and we are paying the price today.
In an energy-strategy speech Tuesday, President Obama once again listed the importance of producing "more oil and gas here at home." Whether that happens depends on what the president and other policy makers have learned since the ANWR debate a decade ago.
Despite Alaska's stellar record of balancing energy production with environmental protection, opponents threw out a litany of excuses to oppose development in ANWR, none tethered to reason or reality. One senator urged her colleagues to think of the local wildlife, although wildlife has thrived on nearby state lands with oil and gas production. Another declared that there aren't enough pristine areas left in the world, ignoring the fact that the federal government alone has designated nearly 110 million acres in the U.S. as wilderness.
Some chose to claim that America was running out of oil, as if that would be a compelling reason to ignore our largest untapped field. Others alleged that the proposed drilling area only holds a six-month supply of oil--both understating the size of the resource and strangely believing it would somehow be the sole source of oil for our entire country over that period.
But the most blatant excuse is one that officially expires this week. Because oil might take up to 10 years to reach market, we were told that the nonwilderness portion of ANWR could not be part of the solution to our energy challenges. Nearly every senator who spoke against the amendment in 2002 listed this as a factor in his or her decision.
Now, 10 years later, it is plain to see that the argument was not just wrong, but backward. Instead of being a reason to oppose development in ANWR, the time it takes to develop the resource should be treated as a reason to approve it as quickly as possible.
Consider what would be different today had the Senate agreed to open those 2,000 acres a decade ago. If production were coming online right now as expected, it would be providing our nation with a number of much-needed benefits--including a lot more oil.
Oil prices would be restrained, if not reduced, as Alaskan crude made up for both actual and threatened losses around the world. Billions of dollars in new revenues would be generated for the U.S. Treasury, reducing the deficit and providing us with a means to invest in new energy technologies.
Oil imports would be reduced, keeping dollars within our economy to promote growth here at home. Thousands of ANWR-related, well-paying new jobs would be created at zero cost to taxpayers. And a looming national catastrophe--the shutdown for economic reasons of the increasingly empty trans-Alaska pipeline--would be averted.
It's a shame that we are forced to forgo these benefits at a time when all are desperately needed. But this is not just a missed opportunity; it's a cautionary tale. The shortsighted decision made 10 years ago is relevant to the current debate on energy policy.
Today, we again find ourselves at a moment when federal policy makers could dramatically increase domestic oil and gas production. But instead of embracing that possibility, many of the same members of Congress are making the same antisupply arguments. What we should realize is that these are empty excuses that hurt our nation's future prosperity.
It's time to revisit whether ANWR itself should be opened to development. Opening ANWR is not a silver bullet that will unilaterally or immediately solve our energy challenges. To demand that sets an impossibly high bar that no resource or regulation can ever reach. Instead we should see ANWR for what it can provide in terms of energy, jobs, revenue and security.
I'm particularly hopeful that President Obama will lead the way by living up to his recent promise to allow oil production "everywhere we can." If that's not just election-year rhetoric, this tiny patch of tundra in northeast Alaska would be a perfect place to start.
Ms. Murkowski is a Republican senator from Alaska.
Credit: By Lisa Murkowski
Subject: Energy policy; Petroleum industry; Debates
Company / organization: Name: Senate; NAICS: 921120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 17, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1001499299
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1001499299?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Argentina's Oil Grab Draws Fire --- Spain Threatens Measures After Buenos Aires Proposes Nationalizing Repsol Unit; Minister Scoffs at Compensation Demand
Author: Brat, Ilan; Moffett, Matt
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]18 Apr 2012: A.8.
ProQuest document link
Abstract:
Madrid threatened to retaliate as soon as this week in response to Argentina's proposed seizure of a prized unit of Spain's flagship oil company, as Argentina's nationalization drive drew international rebuke and threatened to drive the relationship between Spain and its former colony to its lowest level in decades. Repsol had vowed to battle for full compensation for YPF, and sought to reassure investors that the company would have enough funds to finance its capital expenditures without YPF.
Full text: Madrid threatened to retaliate as soon as this week in response to Argentina's proposed seizure of a prized unit of Spain's flagship oil company, as Argentina's nationalization drive drew international rebuke and threatened to drive the relationship between Spain and its former colony to its lowest level in decades.
Spain will take "clear and forceful measures," said Spanish Foreign Minister Jose Manuel Garcia-Margallo. These could affect commercial, energy and industrial relations between the two countries, senior officials said, and could be announced during Friday's cabinet meeting.
"This is bad news for Spain, but terrible news for Argentina," Mr. Garcia-Margallo said, adding that the Argentine government "is shooting itself in the foot."
President Cristina Kirchner's government on Monday proposed effectively nationalizing Argentina's largest oil-and-gas company, YPF SA. She proposed taking 51% of YPF from Spain's Repsol YPF SA at a price that is yet to be determined, leaving the Spanish firm with a 6% stake.
Repsol shares fell as much as 9% Tuesday amid uncertainty over the possibility of compensation. Repsol values its stake in YPF, which represents more than 50% of Repsol's total hydrocarbon output, at $10.5 billion.
Later Tuesday, one of Mrs. Kirchner's most influential economic advisers scoffed at Repsol's $10 billion compensation request. "The idiots think the state must be so stupid that it will do what the company says," Deputy Economy Minister Axel Kicillof said during a testimony to Congress about YPF's future.
Repsol had vowed to battle for full compensation for YPF, and sought to reassure investors that the company would have enough funds to finance its capital expenditures without YPF.
European Commission President Jose Manuel Barroso said he is "seriously concerned" about Argentina's decision, which a commission spokeswoman called "illegal."
Mexican President Felipe Calderon assailed Argentina's decision late Monday, saying it "shows little sense of responsibility and rationality." Mexico's state-run oil monopoly Petroleos Mexicanos, or Pemex, owns nearly 10% of Repsol.
Spain's scope for retaliation is limited, said those familiar with bilateral trade. While its $1.41 trillion economy is four times the size of Argentina's, Argentina does more trade with Brazil and China. Spain was unable to prevent the nationalization of Aerolineas Argentinas from the now bankrupt Spanish travel company Grupo Marsans in the late 2000s.
Spanish officials didn't say what measures they might take against Argentina. Repsol Chairman Antonio Brufau speculated that Spain could adopt import controls or lodge a complaint to the Group of 20 leading nations.
Mr. Brufau called on Spain to enforce its bilateral agreements with Argentina. "A government that doesn't make sure its agreements with other governments are respected isn't really a government," he said.
The affair threatens to upend the close but complex relations between two countries bound by culture and language. Spaniards fled to the former colony and other Latin countries during that country's Civil War in the 1930s. Argentines have fled to Spain during Argentina's recurrent financial crises.
But the two have rarely faced off as equals, said Raanan Rein, a specialist on Latin American and Spanish history at Tel Aviv University. "The trade and economic relationships between Spain and Argentina have always been characterized by misunderstanding and mistrust," Mr. Rein said. "During certain periods, the balance of economic power tended to favor Spain. During others it tended to favor Argentina."
In the 1940s, when Spain was destitute after World War II, Argentina was one of the few countries that came to its aid, Mr. Rein said. The government of Gen. Juan Domingo Peron sent money and grain to Madrid, and his wife, Eva Peron, crossed the Atlantic to try to boost morale in Spain. But Mr. Rein said the Peron government charged a high price for assisting Spain.
During the 1990s, when a conservative Argentine government started privatizing state-run companies, there was controversy in Argentina when Repsol, Telefonica SA and other Spanish firms emerged as acquirers. Argentine nationalists carped about a "reconquest" by their former colonial masters.
Nevertheless, during Argentina's brutal economic collapse in 2002, Spanish companies maintained operations in Argentina and the Spanish government contributed money.
The Argentine government blames YPF for low production that has forced it to spend heavily on importing energy, at a time when capital flight has made dollars scarce.
Mr. Brufau argued Tuesday that Repsol had boosted investment in YPF, including doubling the number of employees and raising natural-gas production to peak levels in 2004. But he said aging oil and gas wells are naturally weighing on output.
He said Repsol hadn't been counting on YPF cash to finance operations outside Argentina in the next four to five years. YPF won't generate cash in any case, as it will pay this year's dividend in shares, he said.
---
Art Patnaude, Taos Turner and Ken Parks contributed to this article.
---
Takeover Artists
A history of selected Latin American nationalizations
1938: Mexico nationalizes its oil industry and creates Petroleos Mexicanos, a state-run monopoly, marking the start of a global wave of nationalizations. Pemex is still one of the world's biggest oil producers, but is widely seen as inefficient, lacking both capital and know-how. Mexico's oil output has fallen in recent years.
1947: Argentine populist dictator Juan Domingo Peron nationalizes vast swaths of the economy and puts up high trade barriers to protect state industries from import competition. This helps weaken the economy and is largely reversed in the early 1990s under President Carlos Menem.
1953: Brazil nationalizes its oil industry and creates Petroleos Brasileros, or Petrobras. After becoming an oil importer, Brazil changes tack and opened its oil market to competition in 1997. In 2010, Petrobras sells a minority stake on the stock market in 2010, raising $70 billion.
1960: Mexico nationalizes its electricity sector. In the 1990s, it starts to allow private generation, which now accounts for up to a third of total generation.
1971: Chile completes a gradual process of nationalizing the copper industry. Today, state-run Codelco is the world's leading producer of copper.
1982: A month after defaulting on its debt, Mexico nationalizes its banking sector, ushering in years of low growth and high inflation. In 1991 and 1992, Mexico sells the banks to the private sector.
2003-present: Argentina takes control of its postal company, the first step in a renewed process of greater state control of the economy. In 2006, it takes control of the country's largest water company, and in 2008 its flagship airline and pension system. The process culminates with this week's bid to nationalize Repsol YPF.
2006-present: Venezuela's President Hugo Chavez kicks off a nationalization spree, starting with oil companies that operate joint ventures in Venezuela and moving on to steel, cement and telecommunications.
2006: Bolivian President Evo Morales nationalizes the country's natural-gas reserves, allowing a more restricted role for private companies to operate. Gas production in Bolivia has declined since.
Credit: Ilan Brat; Matt Moffett
Subject: Capital expenditures; Nationalization; Compensation; International relations
Location: Argentina Spain
People: Kirchner, Cristina Fernandez de
Company / organization: Name: RepsolYPF SA; NAICS: 213111, 213112, 324110; Name: YPF SA; NAICS: 211111
Classification: 9175: Western Europe; 9173: Latin America; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.8
Publication year: 2012
Publication date: Apr 18, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1001964230
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1001964230?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
China Plans Crude-Oil Futures This Year
Author: Ma, Wayne
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Apr 2012: n/a.
ProQuest document link
Abstract:
Most financial markets in China heavily restrict foreign investment. Since becoming chairman in October, Mr. Guo has launched some small overhauls of the nation's securities markets and outlined ambitions for further changes.
Full text: BEIJING--China plans this year to offer a crude-oil futures contract, according to the country's securities regulator, a move that could help domestic companies cope with fluctuating oil prices and increase China's influence over global pricing.
The contract is part of a series of financial products that could be launched this year, Guo Shuqing, chairman of the China Securities Regulatory Commission, was quoted as saying by the state-run Xinhua news agency.
China could become the third-largest crude futures market in the world after the U.K. and U.S., Mr. Guo said, adding that it would give China greater influence over global pricing. China consumes more than nine million barrels of oil a day, according to the International Energy Agency, making it the world's No. 2 consumer after the U.S.
Mr. Guo didn't elaborate. Any futures contract would face questions including what currency it would trade in and how it would be settled. Most financial markets in China heavily restrict foreign investment.
Since becoming chairman in October, Mr. Guo has launched some small overhauls of the nation's securities markets and outlined ambitions for further changes. He has been vocal about offering new futures contracts. Allowing more and different types would make China's financial markets more liquid and link them more closely to their international counterparts.
China's government already has a framework for a crude-oil futures contract, drafted by the securities commission, futures regulators and the National Development and Reform Commission, China's top economic planning body, among others, Xinhua reported.
The government has typically been extremely cautious about futures trading since rampant speculation hobbled efforts in the 1990s.
This isn't the first time Chinese state media have reported a crude-oil futures contract is in the works. In March 2011, Xinhua's Oil, Gas and Petrochemicals newsletter said the Shanghai municipal government wanted to begin offering one that year. In June 2009, the state-run Global Times said the Shanghai Futures Exchange planned to introduce one, and that the CSRC would support the move.
China currently has a futures contract on fuel oil, which began trading in 2004 and is still active on the Shanghai Futures Exchange. It is denominated in yuan and calls for physical delivery instead of a cash settlement, discouraging speculators but encouraging those actually involved in buying and selling oil to participate.
Sarah Chen contributed to this article.
Write to Wayne Ma at
Credit: By Wayne Ma
Subject: Studies; Securities markets; Futures
People: Guo Shuqing
Company / organization: Name: Securities Regulatory Commission-China; NAICS: 926150
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 18, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1002181910
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1002181910?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Argentina Moves Closer to Control of YPF; Plan to Nationalize Big Oil Producer Adds to Spanish Business Worries
Author: Moffett, Matt; Brat, Ilan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Apr 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: BUENOS AIRES--An Argentine Senate committee approved a bill to nationalize Spanish-controlled oil producer YPF SA, while Spanish companies with Argentine operations fretted over the possibility of further incursions by the leftist government here.
The committee approval Wednesday sets the stage for a vote next week by the full Senate on President Cristina Kirchner's proposal to take over 51% of YPF, in which Repsol YPF SA of Spain now has a controlling interest. The governing Perónist party has a majority in both houses and many opposition legislators were supporting the plan, which would leave the Argentine federal and provincial governments in control of the company and reduce Repsol's stake to 6%.
Both Repsol and Spain's government have denounced the Argentine takeover as illegal, and Repsol has vowed to take the dispute to court.
Other Spanish companies with operations in Argentina are growing more concerned that the Argentine government will further tighten its economic grip at their expense, Spanish officials say. "Investors look for regulatory certainty. Who would want to invest if regulatory certainty isn't guaranteed?" Spanish Industry Minister José Manuel Soria told Spanish state broadcaster TVE.
N2S, a small Spanish energy technology and communications company, said on Wednesday that it would suspend plans to open an office in Buenos Aires, complaining about "the legal uncertainty" created by the nationalization. The company said it had been considering Argentina as its next step, after starting operations in Brazil, Mexico and several other Latin American countries.
Spanish companies expanded aggressively in Argentina during the 1990s, in their first major push to seek overseas growth across Latin America. Spain's largest business association, the CEOE, called on the government of Spain and the European Union to help "re-establish a climate of basic confidence." to foster bilateral business relations Spanish government officials have stressed they would seek to continue dialogue with Argentina.
Repsol YPF's shares closed down 6.2% at [euro]15.40 ($20.21) on Wednesday, following hefty losses Tuesday, as the Spanish government and analysts alike expressed concern about Argentina's move. The Argentine uncertainty has weighed on Repsol's stock, which is down more than 35% since the start of the year. Moody's Investors Service on Wednesday placed Repsol's ratings on review for downgrade."The expropriation [of YPF] will reduce the scale and diversity of Repsol's business profile and increase its relative exposure to the challenged European downstream sector," which includes refining operations and sales at gas stations, Moody's said.
Repsol Chairman Antonio Brufau said Wednesday that Repsol is more than a company with operations in Argentina, according to news reports.
U.S.-listed shares of YPF resumed trading Wednesday, skidding in the wake of Argentina's government's move. YPF's American depositary shares fell 33% to $13.12.
Yet many other Spanish firms with Argentine operations have far less exposure than Repsol, which relies on YPF for more than half of its total hydrocarbon output. As global champions such as telecommunications giant Telefónica SA have expanded beyond Latin America into mature economies such as the U.K., their reliance on Argentina has diminished. Argentina accounts for only about 5% of Telefónica's total annual revenue and earnings before interest, taxes, depreciation and amortization, or Ebitda. A Telefónica spokesman declined to comment.
Banco Bilbao Vizcaya Argentaria SA, Spain's No. 2 bank by assets behind Banco Santander SA, owns BBVA Banco Francés. Its Argentine operations represented 3.6% of the group's global gross income in 2011. "So far, nothing has changed for us," said BBVA spokesman Paul Tobin.
Santander, which also operates a retail bank network in Argentina and has expanded aggressively in the U.S. and the U.K., generates about 2% of its banking revenue from Argentina. Santander declined to comment.
Some analysts expressed concerns that a foreign and domestic investor backlash could harm the Argentine economy. The oil nationalization "creates a pretty terrible environment for investment and you have to ask what the likely effect will be on economic activity," said Bret Rosen, an economist at Standard Chartered Bank.He said he is considering lowering his 3% growth projection for Argentina for this year. Last year the Argentine economy grew around 7%, economists here say.
In recent years, Argentina has been losing ground to neighboring South American countries as a destination for foreign investment, due in part to the interventionist policies of the Kirchner government. From 2000 to 2005, Argentina was third, behind Brazil and Chile, in average flows of foreign direct investment, according to the United Nations' Economic Commission for Latin America and the Caribbean. In 2009 and 2010, however, Argentina has slipped into fifth place behind Peru and Colombia. Argentine authorities have pointed out that their economy has enjoyed brisk growth even without large foreign flows, though analysts note that the economy has benefited from high prices for soybeans, the main cash crop.
Art Patnaude contributed to this article.
Write to Matt Moffett at and Ilan Brat at
Credit: By Matt Moffett And Ilan Brat
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 18, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1002347766
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1002347766?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The Obama Oil Embargo
Author: Kreutzer, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Apr 2012: n/a.
ProQuest document link
Abstract:
[...] for speculation to drive up prices, the speculators must either cause oil production to slow down (which they haven't) or to pull oil off the market.
Full text: From the Heritage Foundation
From canceling oil leases in his second week in office to denying the XL Pipeline this year President Obama and his administration have offered up a non-stop assault on affordable energy. Now that high gasoline prices have come home to roost, the president is flailing around for an energy policy.
His recent attempts at energy policy include:
*Nobody can do anything about high gasoline prices.
*Maybe I should release crude from the Strategic Petroleum Reserve.
*There is a lot of drilling that I haven't been able to stop. Don't I get credit for that?
The latest attempt is to blame everything on speculators. And why not? Previous polling shows that 80 percent of Americans believe petroleum price spikes are caused by speculation, which means no more than 20 percent believe it is caused by the fundamentals of supply and demand.
There are several flaws in "the speculators did it" theory. The first is why do they only do it occasionally? That is, why don't speculators want to make unconscionable profits all the time?
Second, why do the index funds and all the other bad guys only speculate in oil? Where are the profiteering speculators in natural gas, whose current price is about half of what it averaged over the last decade?
Third, there are sophisticated traders on both sides of the petroleum markets. For every speculator who makes money on a trade, somebody else will lose money. Blaming speculators on continued price increases requires an endless string of chumps to take the other side of the speculators' deals. If anybody should be the chumps, it should be the newbies from the insurance industry and hedge funds, but they are at the top of the most-wanted list.
Finally, for speculation to drive up prices, the speculators must either cause oil production to slow down (which they haven't) or to pull oil off the market. If the flow of petroleum and its products remains unchanged, the price at the pump will not change. If petroleum is pulled off the market, which can happen even though there are limits to what can be stored, it will eventually come back on the market. And the question becomes, "When the oil comes back on the market, is the price higher or lower than when it was pulled off the market?" The price will only be higher if the amount supplied at that time is lower or the demand is higher. In either of those cases, speculators have helped moderate price fluctuations and will be rewarded with profits. If the price is lower, then the speculators did a bad thing and will be punished by losing money.
The real problem is that combating high gasoline prices requires a greater supply, and this administration's policies have pushed the other way. It seems the administration does not really want lower gasoline prices. Steven Chu, Obama's non-car-owning Secretary of Energy, famously said we need to get our gasoline prices up to the $8-$10/gallon level they are in Europe.
Unfortunately for the president, the voters want more gasoline and lower prices. So, in the time-honored Washington tradition, he creates a boogeyman and blames his energy failures on speculators.
Credit: By David Kreutzer
Subject: Energy policy; Strategic petroleum reserve; Profits; Speculation; Index funds
People: Obama, Barack
Company / organization: Name: Heritage Foundation; NAICS: 541720
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 18, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1002348833
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1002348833?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Speculation Points to a Drop in Price of Crude Oil
Author: Rozhnov, Konstantin
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Apr 2012: n/a.
ProQuest document link
Abstract:
The rest of the market is composed of oil companies, traders in physical crude and industrial oil consumers, such as power companies and refineries, that mainly use the futures market to hedge risks associated with their physical-market exposure, but who also trade for profit.
Full text: Hedge funds and banks are moving their investments out of oil futures in anticipation that the price of crude will taper off in the coming weeks, investors and analysts say.
In the first quarter, speculators who trade on behalf of financial clients were pouring money into long positions on oil futures, or bets that prices would continue rising. But more recently the picture has changed, as signs point to cooling demand and the risks to global oil supplies fade.
Speculative bets on a rise in global benchmark Brent crude futures jumped by 60% between the start of the year and the end of March, to more than 190,000 contracts, according to weekly data provided by IntercontinentalExchange Inc.
But in the two weeks through April 10, the spread between those betting on higher prices versus those expecting lower prices shrank by 20%. This was influenced by worries over weaker global economic growth, and the impact that could have on oil demand.
"Some of the released funds [from betting on higher prices] are going to support increased trading in the short-term [bets on lower prices], and some are going in cash positions," said Jayesh Parmar, lead partner in the Energy Advisory Services Practice at Baringa Partners, an international consulting company.
Others see potential in switching money into other commodities for the moment. Louis Goh, chief strategist at Avitah Capital, a London-based investment manager specializing in energy products, said his company has moved out of oil and is mainly focusing on the European power market, which he said is more predictable.
"[Oil futures] have been knocked around by macroeconomics," Mr. Goh said, adding that he would put money back into oil futures only when returns improve.
Speculators represent only about a quarter of the money flowing through the market, but provide needed liquidity. Their investment decisions are closely watched because they can move faster than others in the market and their positions aren't tied to physical oil deliveries. Such swift moves can often flag a change of direction in prices.
The rest of the market is composed of oil companies, traders in physical crude and industrial oil consumers, such as power companies and refineries, that mainly use the futures market to hedge risks associated with their physical-market exposure, but who also trade for profit.
While the bulk of other investors in the oil market have to remain in oil futures to hedge their physical positions, speculators have the luxury of pulling their money out and investing it elsewhere if conditions change dramatically.
In addition to a potential change in the macroeconomic picture, the supplyand-demand balance has also changed in recent weeks.
Brent crude prices rose 20% between early January and the beginning of March, touching $128.20 a barrel, the highest since the end of July 2008. But in March the growth stalled, and started heading lower in April. Brent was trading around $117 on Wednesday.
The restarting of talks on Iran's nuclear program last weekend has defused some of the immediate tension over disruptions to oil supplies.
Also, the International Energy Agency said last week that, after more than two years of steadily tightening oil-market conditions, the global oil market is looking well-supplied--a view the Organization of Petroleum Exporting Countries agrees with.
This comes as weaker-than-expected macroeconomic data from the U.S. and China have sparked doubts that oil demand will be as strong as previously forecast. However, while many factors appear to be signaling a softening of oil prices going forward, the picture is still not completely clear in the longer term.
Beyond May, speculators' behavior will depend on three main factors, investors and analysts said: Iran, the health of the global economy and U.S. summer fuel demand.
"As we approach the U.S. driving season we may again start seeing another significant shift [towards expectations of higher prices] particularly if this is supported by positive economic sentiment," Mr. Parmar said.
Credit: By Konstantin Rozhnov
Subject: Petroleum industry; Crude oil prices; Crude oil
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 18, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1002434589
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1002434589?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Russian Banker Sees 20% of Oil Funds Being Repatriated
Author: Casey, Michael
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Apr 2012: n/a.
ProQuest document link
Abstract:
The bank, which recently launched a program of deposits in Chinese yuan and sold a bond in Singapore dollars, is looking to issue more debt denominated in those currencies this year, as well as in Malaysian ringgit, Indonesian rupiah and the Brazilian real, he said.\n
Full text: Russia likely will decide soon to bring some of its giant pool of foreign-currency reserves home to invest in infrastructure projects, the head of country's second-largest bank said Wednesday.
"I expect that ... some of the national wealth funds could be used for domestic infrastructure projects," said Andrei L. Kostin, chairman and chief executive of majority state-owned VTB Bank, in an interview with Dow Jones Newswires and Wall Street Journal editors in New York. He said he expected such a decision to be made shortly after newly elected President Vladimir Putin returns to office and selects his cabinet.
Asked how much of those funds could be repatriated for this purpose, Mr. Kostin predicted a 20% proportion could be applied. Russia's two sovereign-oil-wealth funds, which accumulate assets based on revenues from Russia's oil-and-gas exports, were valued at a combined 4.4 trillion rubles ($150 billion) as of March 1. Separately, the Russian central bank's gold-and-foreign-exchange reserves stood at $516.7 billion as of April 6.
Mr. Kostin said he expects a large portion of Russia's reserves to continue being invested in U.S. Treasury securities.
"The Russian government believes it is a great achievement to have a big stabilization fund that can be used for investments" in domestic industries, he said.
VTB Chief Financial Officer Herbert Moos, who accompanied Mr. Kostin, said he expects the Russian ruble to perform well in the near term. That is partly because of high oil prices but also because some of the capital that fled Russia before the recent election is returning as investors take stock of the strength of the government's fiscal position. It boasted a second-consecutive annual surplus and public debt at just 8% to gross domestic product.
Yet Mr. Kostin believes demand for Russian assets may not be strong enough yet to absorb simultaneous public offerings by the countries' two biggest banks. The government has plans to sell stakes in both VTB and competitor Sberbank, Russia's largest bank, this year, but Mr. Kostin believes it would "reasonable" if either one postponed its offering until next year.
Last week, Sberbank Chief Executive German Gref denied rumors that a 7.6% stake in his bank would be listed on the London Stock Exchange within two weeks and said market conditions would determine the timing of the offering.
The offerings are part of a government plan to privatize $34 billion in state-owned assets, within which outgoing President Dmitry Medvedev has issued orders for Russia to reduce its stake in state-owned lenders to below 50%.
Mr. Kostin also said he wants the central bank to cut its benchmark interest rate below its current 8% level. With inflation expected to come in at "no more than 6%," the 2% premium for the official rate is too high, he said.
He added that VTB also wants the central bank to provide longer-term lending facilities than its 364-day program because regulatory constraints limit its medium-term lending options under these terms.
Meanwhile, VTB will continue with a program to internationally diversify its financing base to maintain a low-cost funding framework that has helped it achieve an impressive 16% return on equity, said Moos, the CFO.
The bank, which recently launched a program of deposits in Chinese yuan and sold a bond in Singapore dollars, is looking to issue more debt denominated in those currencies this year, as well as in Malaysian ringgit, Indonesian rupiah and the Brazilian real, he said.
Write to Michael Casey at
Credit: By Michael Casey
Subject: Central banks; Foreign exchange rates; Monetary policy
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 18, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1002434619
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1002434619?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Obama's Seinfeld Strategy; Hang the evil oil speculators, if anyone can find them.
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Apr 2012: n/a.
ProQuest document link
Abstract:
Things that we can do administratively, we are doing. [...] I call on Congress to pass a package of measures to crack down on illegal activity and hold accountable those who manipulate the market for private gain at the expense of millions of working families.
Full text: On Tuesday President Barack Obama gave a speech about . . . nothing. At 11:27 a.m. in the Rose Garden, Mr. Obama did announce a crackdown on speculators in the oil markets. And he did call for more investigations, more regulation and more money for regulators. But we couldn't help wondering if perhaps a few pages had been left out of the TelePrompter.
Nowhere in his remarks did the President claim that speculation is doing any harm. He did not cite any negative impact on the oil market. He did not say that speculators are manipulating oil prices, nor did he describe in even the vaguest terms the individuals or institutions that might be involved. He didn't cite any research. Mr. Obama didn't even, well, speculate about whether oil prices would be higher or lower if not for unnamed actors who may or may not be affecting the markets.
But the President did make clear that if speculators were manipulating markets, that would be bad. "We can't afford a situation where speculators artificially manipulate markets by buying up oil, creating the perception of a shortage, and driving prices higher--only to flip the oil for a quick profit," he said. "And for anyone who thinks this cannot happen, just think back to how Enron traders manipulated the price of electricity to reap huge profits at everybody else's expense."
The Enron scandal happened more than a decade and two major financial-regulation laws ago. "So today, we're announcing new steps to strengthen oversight of energy markets," said Mr. Obama. "Things that we can do administratively, we are doing. And I call on Congress to pass a package of measures to crack down on illegal activity and hold accountable those who manipulate the market for private gain at the expense of millions of working families. And be specific."
That last line, delivered after a speech that contained not a sliver of evidence that even hinted at illegal activity, shows that at least Mr. Obama has a sense of humor.
But speaking of regulation, we doubt that MF Global customers are laughing. While $1.6 billion of their money remains missing and no federal charges have been brought against those who presided over the firm's 2011 collapse, the President is now directing the relevant federal agencies to search elsewhere for offenses that he imagines might exist.
The Commodity Futures Trading Commission (CFTC) will soon find out if federal judges share Mr. Obama's sense of humor. The CFTC, which was asleep on the MF Global watch, was nonetheless hailed by Mr. Obama Tuesday as deserving a bigger budget and more authority. But whether or not Congress chooses to reward the CFTC, the commission now must defend in court a rule it enacted last fall to curb speculation.
Like Mr. Obama in the Rose Garden, the regulator has to find a way to carry the argument without the evidence to support it. "No one has proven that the looming specter of excessive speculation in the futures markets we regulate even exists," said then-Commissioner Michael Dunn before the CFTC voted on the new rule last October.
And you should hear what the rule's opponents said. Mr. Dunn, a Democrat, provided the swing vote in favor of new limits on the size of trading positions only because he believed the Dodd-Frank law left him no choice.
But even though he voted for the rule, Mr. Dunn said that "position limits may actually lead to higher prices for the commodities we consume on a daily basis." Less liquidity makes it more difficult for market participants to hedge their risks, which could raise costs for everyone.
The CFTC is now using Mr. Dunn's "Dodd-Frank defense" in a federal lawsuit brought by market players who say the CFTC didn't demonstrate the need for its rule or perform an adequate cost-benefit analysis. In other words, the agency isn't trying to argue that speculation is a problem and must be reduced but is simply saying that the 2010 financial law forced the agency to act.
Bashing anonymous Wall Street "speculators" may be more effective as a political argument than as a legal strategy, but we suspect that even the demands of politics will eventually require Mr. Obama to provide some specifics.
At least with the Buffett Rule the President has a real live billionaire willing to serve as a prop. For now we'll have to call this latest Obama policy the Seinfeld Rule. Much like the TV show, it's a policy about nothing.
Subject: Prices
People: Obama, Barack
Company / organization: Name: Commodity Futures Trading Commission; NAICS: 926140, 926150
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 18, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1002445521
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1002445521?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Notable & Quotable; Ron Bailey on global oil capacity and the supposed 'limits to growth.'
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Apr 2012: n/a.
ProQuest document link
Abstract:
In 1972, the Limits researchers estimated known global oil reserves at 455 billion barrels. [...] the world has produced very nearly 1 trillion barrels of oil and current known reserves hover around 1.2 trillion barrels, a 40-year supply at current consumption rates.
Full text: Ron Bailey writing at Reason.com, April 18:
Forty years ago, The Limits to Growth, a report to the Club of Rome, was released with great fanfare at a conference at the Smithsonian Institution. The study was based on a computer model developed by researchers at the Massachusetts Institute of Technology (MIT) and designed "to investigate five major trends of global concern--accelerating industrial development, rapid population growth, widespread malnutrition, depletion of nonrenewable resources, and a deteriorating environment." . . . In 1972, the Limits researchers estimated known global oil reserves at 455 billion barrels. Since then the world has produced very nearly 1 trillion barrels of oil and current known reserves hover around 1.2 trillion barrels, a 40-year supply at current consumption rates. With regard to natural gas supplies, the International Energy Agency last year issued a report asserting, "Conventional recoverable resources are equivalent to more than 120 years of current global consumption, while total recoverable resources could sustain today's production for over 250 years."
Subject: Petroleum industry; Studies
Company / organization: Name: Massachusetts Institute of Technology; NAICS: 611310; Name: Smithsonian Institution; NAICS: 712110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 18, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1002445553
Document URL: https://login.ezprox y.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1002445553?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Argentina Moves Closer to Control of YPF --- Plan to Nationalize Big Oil Producer Spurs Worries at Other Spanish Firms
Author: Moffett, Matt; Brat, Ilan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]19 Apr 2012: A.14.
ProQuest document link
Abstract:
The governing Peronist party has a majority in both houses and many opposition legislators were supporting the plan, which would leave the Argentine federal and provincial governments in control of the company and reduce Repsol's stake to 6%.
Full text: BUENOS AIRES -- An Argentine Senate committee approved a bill to nationalize Spanish-controlled oil producer YPF SA, while Spanish companies with Argentine operations fretted over the possibility of further incursions by the leftist government here.
The committee approval Wednesday sets the stage for a vote next week by the full Senate on President Cristina Kirchner's proposal to take over 51% of YPF, in which Repsol YPF SA of Spain now has a controlling interest. The governing Peronist party has a majority in both houses and many opposition legislators were supporting the plan, which would leave the Argentine federal and provincial governments in control of the company and reduce Repsol's stake to 6%.
Both Repsol and Spain's government have denounced the Argentine takeover as illegal, and Repsol has vowed to take the dispute to court.
Other Spanish companies with operations in Argentina are growing more concerned that the Argentine government will further tighten its economic grip at their expense, Spanish officials say. "Investors look for regulatory certainty. Who would want to invest if regulatory certainty isn't guaranteed?" Spanish Industry Minister Jose Manuel Soria told Spanish state broadcaster TVE.
Spanish companies expanded aggressively in Argentina during the 1990s, in their first major push to seek overseas growth across Latin America. Spain's largest business association, the CEOE, called on the government of Spain and the European Union to help "re-establish a climate of basic confidence." Spanish government officials have stressed they would seek to continue dialogue with Argentina.
Repsol YPF's shares closed down 6.2% at 15.40 euros ($20.21) on Wednesday, following hefty losses Tuesday, as the Spanish government and analysts expressed concern about Argentina's move. Repsol's stock is down more than 35% since the start of the year. Moody's Investors Service on Wednesday placed Repsol's ratings on review for downgrade.
Repsol Chairman Antonio Brufau said Wednesday that Repsol is more than a company with operations in Argentina, according to news reports.
U.S.-listed shares of YPF resumed trading Wednesday, skidding in the wake of Argentina's move. YPF's American depositary shares fell 33% to $13.12.
Yet many other Spanish firms with Argentine operations have far less exposure than Repsol, which relies on YPF for more than half of its total hydrocarbon output. As global champions such as telecom giant Telefonica SA have expanded beyond Latin America into mature economies such as the U.K., their reliance on Argentina has diminished. Argentina accounts for only about 5% of Telefonica's annual revenue. Telefonica declined to comment.
Banco Bilbao Vizcaya Argentaria SA, Spain's No. 2 bank by assets behind Banco Santander SA, owns BBVA Banco Frances. Its Argentine operations represented 3.6% of the group's global gross income in 2011. "So far, nothing has changed for us," said BBVA spokesman Paul Tobin.
Santander, which also operates a retail bank network in Argentina and has expanded aggressively in the U.S. and the U.K., generates about 2% of its banking revenue from Argentina. Santander declined to comment.
Some analysts expressed concerns that an investor backlash could harm the Argentine economy. The oil nationalization "creates a pretty terrible environment for investment and you have to ask what the likely effect will be on economic activity," said Bret Rosen, an economist at Standard Chartered Bank.
Argentina has been losing ground to neighboring South American countries as a destination for foreign investment. Argentine authorities have pointed out that their economy has enjoyed brisk growth.
---
Art Patnaude contributed to this article.
Credit: By Matt Moffett and Ilan Brat
Subject: International finance; Investments; Banks; Congressional committees; Petroleum industry; Nationalization; Petroleum production
Location: Argentina
Company / organization: Name: YPF SA; NAICS: 211111; Name: RepsolYPF SA; NAICS: 213111, 213112, 324110
Classification: 9173: Latin America; 9550: Public sector; 9110: Company specific; 8510: Petroleum industry; 1300: International trade & foreign investment
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.14
Publication year: 2012
Publication date: Apr 19, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Econ omics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1002490604
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1002490604?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Growing Fight Tests Oil-Dependent Sudans
Author: Moore, Solomon; Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 Apr 2012: n/a.
ProQuest document link
Abstract:
The country joined the World Bank and the International Monetary Fund this week, and is eager to attract international investors to finance infrastructure projects, including an oil pipeline to ports in Kenya or Djibouti that would wean the country from dependency on the north.
Full text: Sudan's President Omar al-Bashir threatened to invade the capital of South Sudan and topple its government, in a widening fight over an oil-rich border region that is turning into a test of economic survival for the east African neighbors.
Mr. Bashir made the comments in a rally of his troops, who are now engaged on at least three fronts with South Sudan, including the oil hub of Heglig, after launching two fresh assaults the day before. "Heglig isn't the end, it is the beginning, and we shall go all the way to Juba," the southern capital, he told the troops.
Mr. Bashir has moved to mobilize jihadist groups and other paramilitary forces to augment his army, which has more than 100,000 soldiers, hundreds of tanks and fleets of Russian helicopters and MiG fighter planes.
South Sudan's Col. Philip Aguer dismissed the threats, saying the former civil war rebels from the south were now a fully equipped fighting force capable of defending their nation's sovereignty. "If they didn't defeat us when we were a green army, how will they defeat us now?" said the army spokesman.
The 20-year Sudanese conflict has seen two civil wars believed to have claimed the lives of more than two million people. The south's secession in July left several issues unresolved, including how to share oil revenue and production between the reserve-rich south and the infrastructure-rich north, both of which depend on oil for survival.
After a series of air raids by the north escalated this year, South Sudan's army this month moved into Heglig, a major oil refinery and distribution point, claiming the town was inside their territory according to borders drawn by departing British colonialists in 1956.
But United Nations Secretary-General Ban Ki-moon on Thursday called the seizure of Heglig illegal and "an infringement on the sovereignty of Sudan." He urged a negotiated resolution between the two sides.
The Arab League has scheduled an emergency meeting of foreign ministers in Cairo next week to discuss the violence, after a request by Sudan, according to the Associated Press.
Beijing, a big buyer of Sudanese oil, also voiced concern, calling "for the two sides to immediately cease the conflict and respect their mutual sovereignty," a Ministry of Foreign Affairs spokesman said.
Tens of thousands of Sudanese and South Sudanese have been fleeing the fighting, overburdening refugee camps near the border, aid workers said.
"We're trying to provide as many basic services as possible before the rainy season," said Luca Pupulin, program director in South Sudan for the French aid group ACTED. "Many of the families have been split up."
Continued fighting will increasingly drain the economies of the neighbors, both of which are struggling to reduce dependence on each other.
Khartoum relies on oil for more than 60% of its economy. The halt of oil production at Heglig halved Sudan's oil output.
But war could be especially difficult for South Sudan, a new country with virtually no industrial infrastructure and where 98% of the economy traditionally depends on petroleum revenues. The South Sudan pound has weakened against the dollar by as much as around 60% since the beginning of the month.
South Sudan already shut its entire 350,000 barrels a day of production--most of which was bought by China--in January because of a dispute with the north over transport fees. Officials in Juba say that while the shutoff hurts their economy, Khartoum's demand for as much as $36 a barrel in fees deprived them of oil proceeds anyway.
The country joined the World Bank and the International Monetary Fund this week, and is eager to attract international investors to finance infrastructure projects, including an oil pipeline to ports in Kenya or Djibouti that would wean the country from dependency on the north.
A high-level delegation of South Sudan officials has been in Washington this week seeking financing and other help to create a self-sufficient oil industry.
Next week, President Salva Kiir will lead a similar delegation to Beijing, one of the largest investors in both Sudans.
In January, before fighting broke out, China indicated its willingness to provide $1 billion in infrastructure loans.
"There is a move for the government of South Sudan to look for loans from international banks," said Deputy Minister of Petroleum Elizabeth Bol. "There is no continuous flow of hard currency in South Sudan."
The country, which has virtually no debt, is seeking as much as $2.5 billion in loans, according to government officials. Ms. Bol said the nation was offering future petroleum profits and mineral rights for collateral.
On Thursday, South Sudan oil ministry officials met with petroleum executives from China, the U.S. and other nations at a U.S. Agency for International Development conference in Juba exploring the feasibility of the multibillion-dollar pipeline project.
American advisers and South Sudanese officials discussed the complexity of the proposal, with challenges including the removal of populations in the path of the pipeline, skittish investors and myriad technical issues including elevated terrain, marshes, temperature fluctuations and billions of dollars in maintenance, not to mention the possibility of air raids by Sudan.
Anne Itto Leonardo, a former agriculture minister and current secretary-general of the ruling party of the south, the Sudan People's Liberation Movement, said the government needed to diversify its economy. Traditionally, the south has relied on oil revenues to fund food imports. Now, Ms. Leonardo said, the country, which she said faces annual grain production deficits of 400,000 metric tons a year, must invest in its own agriculture.
"Oil has been our curse," she said. "Even before independence, we were so dependent upon oil that we didn't think to diversify beyond oil."
The intensifying fighting around oil-rich Heglig has underscored that dependency for both nations.
South Sudan Deputy Defense Minister Majak D'Agoot described a five-hour battle on Wednesday during which his forces, the Sudan People's Liberation Army, killed 300 soldiers of the Sudan Armed Forces, the army of the north. The SPLA suffered 18 deaths, he said.
Mr. D'Agoot claimed the SPLA also repelled a northern assault Wednesday on a town in Western Bahar Ghazal, killing 46 northern soldiers while losing six SPLA soldiers. Those reports couldn't be independently verified.
Mr. D'Agoot said that the south's army SPLA has improved since the Sudans' last peace accord in 2005, through training, the integration of 40,000 irregular fighting forces and the acquisition of new weapons.
South Sudan acquired 10 Russian transport helicopters and 33 T-72 tanks in 2010 and 2011, according to a report this month by the Human Security Baseline Assessment, an arms-monitoring program funded by Denmark, the Netherlands and the U.S.
Dinny McMahon in Beijing contributed to this article.
On a visit Thursday to the oil-rich, restive border state of South Kordofan, Mr. Bashir rallied his troops, which are now engaged on three fronts with South Sudan.
"Heglig isn't the end, it is the beginning, and we shall go all the way to [South Sudanese capital] Juba," Mr. Bashir told a rally.
South Sudan's army spokesman, Col. Philip Aguer, dismissed Mr. Bashir's threat, saying that the South's army would keep Sudan's aggression at bay.
"If they didn't defeat us when we were a green army, how will they defeat us now," he said.
Sudan and South Sudan have been at odds for 20 years, a time that included two civil wars believed to have claimed the lives of more than two million people. The South's secession left several issues unresolved, including how to share oil revenue and production between the reserve-rich South and the north, center of refineries, ports and other infrastructure.
Battles around Heglig continued Thursday, with Sudanese planes continuing aerial bombardments, damaging oil wells and buildings, according to Col. Aguer. South Sudan said it repulsed a Sudanese ground attack on Heglig Wednesday evening, forcing Sudanese troops to retreat to Kersana, some 40 kilometers north of the oil field.
Troops also engaged around Bahr el Ghazal and South Sudan captured a base used by Sudan to train militias. These claims couldn't be verified independently. Both countries accuse each other of sponsoring proxy rebels in the others territory.
Mr. Bashir accuses the South of implementing the agenda of foreign countries which backed its secession bid, at the expense of its own people.
Many say that the war rhetoric has been escalated by the loss of oil revenues, the lifeline of both Sudan and South Sudan.
The capture of Heglig and the subsequent halt of oil production there has halved Sudan's oil output to 55,000 barrels a day, while a separate dispute over transit fees has seen South Sudan shut in its entire 350,000 barrels a day of production since January.
South Sudan has called for talks to end the current dispute, with Information Minister Barnaba Benjamin saying that its people would never look at Sudan as its enemy because of their "long history and long common border."
Many say hard-liners with a history of taking rigid negotiating positions seem to be running the show in both Sudan and South Sudan, a situation that may stymie attempts for a peaceful settlement of post secession disputes.
Write to Nicholas Bariyo at
Credit: Solomon Moore; Nicholas Bariyo
Subject: Infrastructure; Sovereignty
Location: South Sudan
People: Bashir, Omar Hassan Ahmed
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 19, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1002590318
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1002590318?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iraq Bars Exxon From Energy Auction
Author: Hassan Hafidh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 Apr 2012: n/a.
ProQuest document link
Abstract:
Earlier this month the KRG suspended the export of some 90,000 barrels of oil a day through the Baghdad export pipeline over payment issues, while Iraq's deputy prime minister, Hussein al-Shahristani, accused the Kurdish authorities of allowing the smuggling $6.5 billion worth of oil and oil products via Iran for sale in Iran, Afghanistan and Pakistan in 2010 and 2011, something the Kurds denied.
Full text: Iraq Thursday officially barred U.S. energy giant Exxon Mobil Corp. from taking part in the country's fourth oil- and gas-licensing auction, scheduled for May, because of deals it struck with the semiautonomous Kurdistan region.
Iraq has asked the Texas-based company to choose between its deals with the Kurdistan Regional Government in northern Iraq and its central-government contract to develop the giant West Qurna-1 oil field n the south. Exxon last month told the Baghdad government it froze its deals with the KRG, but the government wants the deals completely canceled.
"We want more action from Exxon," said Sabah Abdul Kadhim, deputy of the Iraqi Oil Ministry's petroleum contracts. "We want Exxon to cancel its Kurdistan deals."
Mr. Abdul Kadhim warned that Exxon could face further action if it didn't terminate its deals with Kurdistan. He didn't explain what action would be taken, but he is thought to be referring to West Qurna-1.
"So far Exxon's West Qurna-1 contract is valid," Mr. Abdul Kadhim said, however.
An Exxon media officer in the U.S. declined to comment.
Exxon's deals with the KRG have angered Baghdad, which maintains that it must approve all deals signed within Iraq. Some of the Kurdistan blocks are in a hotly contested oil-rich territory claimed by both the central government and the KRG. The territory stretches from the Iranian border in the east to the Syrian border in the northwest.
Analysts also said Iraq was angry with Exxon's stance. While Exxon informed Baghdad that it has frozen its deals with Kurdistan, its chief executive, Rex Tillerson, recently told KRG President Massoud Barzani that it will continue its operations in Kurdistan.
Tension between Baghdad and Kurdistan has escalated over the last few weeks. Earlier this month the KRG suspended the export of some 90,000 barrels of oil a day through the Baghdad export pipeline over payment issues, while Iraq's deputy prime minister, Hussein al-Shahristani, accused the Kurdish authorities of allowing the smuggling $6.5 billion worth of oil and oil products via Iran for sale in Iran, Afghanistan and Pakistan in 2010 and 2011, something the Kurds denied.
At West Qurna-1, Exxon and minority partner Royal Dutch Shell PLC have raised output to nearly 400,000 barrels a day from 244,000 barrels a day when the pair signed up for the project in early 2010. The contract targets eventual output of 2.825 million barrels a day.
The venture will get some $1.90 for each extra barrel of oil produced above the 244,000 barrels a day baseline. Were the contract to be terminated, Exxon and Shell would lose some $106.7 million a year at current output rates and a potential $1.8 billion a year when the production plateau is reached in 2017.
The KRG has signed nearly 50 oil and gas deals with international oil companies, mostly second-tier or wildcat explorers. The KRG was hopeful that Exxon's presence would ease the passage of other majors, such as Total SA, which is active in Iraq.
In May Iraq plans to auction 12 promising exploration blocks, seven of which are believed to contain natural gas, and five thought to contain crude. The twice-delayed bidding round is expected to add some 10 billion barrels of oil and some 29 trillion cubic feet of gas to Iraq's reserves.
Tom Fowler contributed to this article.
Write to Hassan Hafidh at
Credit: By Hassan Hafidh
Subject: Petroleum industry; Iraq War-2003; Oil sands; Natural gas
Location: United States--US
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 19, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1002596203
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1002596203?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Obama's Seinfeld Strategy; Hang the evil oil speculators, if anyone can find them.
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Apr 2012: 7.
ProQuest document link
Abstract:
Things that we can do administratively, we are doing. [...] I call on Congress to pass a package of measures to crack down on illegal activity and hold accountable those who manipulate the market for private gain at the expense of millions of working families.
Full text: On Tuesday President Barack Obama gave a speech about . . . nothing. At 11:27 a.m. in the Rose Garden, Mr. Obama did announce a crackdown on speculators in the oil markets. And he did call for more investigations, more regulation and more money for regulators. But we couldn't help wondering if perhaps a few pages had been left out of the TelePrompter.
Nowhere in his remarks did the President claim that speculation is doing any harm. He did not cite any negative impact on the oil market. He did not say that speculators are manipulating oil prices, nor did he describe in even the vaguest terms the individuals or institutions that might be involved. He didn't cite any research. Mr. Obama didn't even, well, speculate about whether oil prices would be higher or lower if not for unnamed actors who may or may not be affecting the markets.
But the President did make clear that if speculators were manipulating markets, that would be bad. "We can't afford a situation where speculators artificially manipulate markets by buying up oil, creating the perception of a shortage, and driving prices higher--only to flip the oil for a quick profit," he said. "And for anyone who thinks this cannot happen, just think back to how Enron traders manipulated the price of electricity to reap huge profits at everybody else's expense."
The Enron scandal happened more than a decade and two major financial-regulation laws ago. "So today, we're announcing new steps to strengthen oversight of energy markets," said Mr. Obama. "Things that we can do administratively, we are doing. And I call on Congress to pass a package of measures to crack down on illegal activity and hold accountable those who manipulate the market for private gain at the expense of millions of working families. And be specific."
That last line, delivered after a speech that contained not a sliver of evidence that even hinted at illegal activity, shows that at least Mr. Obama has a sense of humor.
But speaking of regulation, we doubt that MF Global customers are laughing. While $1.6 billion of their money remains missing and no federal charges have been brought against those who presided over the firm's 2011 collapse, the President is now directing the relevant federal agencies to search elsewhere for offenses that he imagines might exist.
The Commodity Futures Trading Commission (CFTC) will soon find out if federal judges share Mr. Obama's sense of humor. The CFTC, which was asleep on the MF Global watch, was nonetheless hailed by Mr. Obama Tuesday as deserving a bigger budget and more authority. But whether or not Congress chooses to reward the CFTC, the commission now must defend in court a rule it enacted last fall to curb speculation.
Like Mr. Obama in the Rose Garden, the regulator has to find a way to carry the argument without the evidence to support it. "No one has proven that the looming specter of excessive speculation in the futures markets we regulate even exists," said then-Commissioner Michael Dunn before the CFTC voted on the new rule last October.
And you should hear what the rule's opponents said. Mr. Dunn, a Democrat, provided the swing vote in favor of new limits on the size of trading positions only because he believed the Dodd-Frank law left him no choice.
But even though he voted for the rule, Mr. Dunn said that "position limits may actually lead to higher prices for the commodities we consume on a daily basis." Less liquidity makes it more difficult for market participants to hedge their risks, which could raise costs for everyone.
The CFTC is now using Mr. Dunn's "Dodd-Frank defense" in a federal lawsuit brought by market players who say the CFTC didn't demonstrate the need for its rule or perform an adequate cost-benefit analysis. In other words, the agency isn't trying to argue that speculation is a problem and must be reduced but is simply saying that the 2010 financial law forced the agency to act.
Bashing anonymous Wall Street "speculators" may be more effective as a political argument than as a legal strategy, but we suspect that even the demands of politics will eventually require Mr. Obama to provide some specifics.
At least with the Buffett Rule the President has a real live billionaire willing to serve as a prop. For now we'll have to call this latest Obama policy the Seinfeld Rule. Much like the TV show, it's a policy about nothing.
Subject: Prices
People: Obama, Barack
Company / organization: Name: Commodity Futures Trading Commission; NAICS: 926140, 926150
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: 7
Publication year: 2012
Publication date: Apr 20, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1002692154
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1002692154?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Market insight from WSJ.com; Little Plant Proves a Big Pest; Guar Shortage Vexes Oil Industry
Author: Dezember, Ryan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Apr 2012: n/a.
ProQuest document link
Abstract:
On Thursday, Basic Energy Services Inc. Chief Executive Kenneth Huseman said that while the Midland, Texas, company has commitments for enough guar to meet customer demand, rising costs reduced first-quarter margins. [...] last month Baker Hughes Inc. which is scheduled to report earnings Tuesday, warned investors that its profits would slide, in large part because of shortages of "critical raw materials" including guar.
Full text: An unusual topic has cropped up on the earnings calls of oil-field service companies this week: the soaring price of guar.
Guar is a legume used to make an emulsifier known to readers of ingredient labels as "guar gum." The product is found in toothpaste, bagels and dynamite.
Over the past few years, though, demand from companies servicing oil- and gas-producing fields has skyrocketed along with the drilling boom in shale formations. Guar gum is a key ingredient in the fluids used to crack open, or hydraulically fracture, shales. The amount of guar required for a single shale well can require the harvest from hundreds of acres.
Though a small guar crop is raised in west Texas, mMost of the world's guar is grown in India, where the oil industry's appetite for the plant has upended markets. Late last month India's Forward Markets Commission halted trading in guar gum futures after prices more than quadrupled since Dec. 1, trading at about $7.13 per pound. Last week India's second largest commodity exchange canceled the launch of the October futures contract for both guar gum, the refined product, and guar seed.
"The problem with guar is it's probably the fastest-moving commodity price that I've ever seen," said David Lesar, CEO of Halliburton Co. "Basically, we might get quote today that's 10% higher than a quote we would have gotten last week on it."
Though rising guar costs are thinning margins at the world's second largest oilfield services company, Halliburton "strongly" believes it has enough to meet demand, according to Mr. Lesar. "I do not believe that many of our competitors can make this statement," he said.
On Thursday, Basic Energy Services Inc. Chief Executive Kenneth Huseman said that while the Midland, Texas, company has commitments for enough guar to meet customer demand, rising costs reduced first-quarter margins. And last month Baker Hughes Inc. which is scheduled to report earnings Tuesday, warned investors that its profits would slide, in large part because of shortages of "critical raw materials" including guar.
Halliburton's Mr. Lesar said he wants to wait for prices to stabilizepossibly after India's fall harvest, before deciding on how much of the increased cost Halliburton will pass on to producers.
Low natural-gas prices also play a role in the guar shortage, said Michael Marino, an analyst with investment bank Stephens Inc. It takes more guar to coax oil out of shale formation than it does to coax gas. With gas prices low, companies have been shifting more of their operations to oil, further boosting guar consumption.
Write to Ryan Dezember at
Credit: By Ryan Dezember
Subject: Natural gas
People: Lesar, David
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 20, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1002732441
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1002732441?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Target on Oil-Price Manipulation Tough to Hit
Author: DiColo, Jerry A; Strumpf, Dan; Trindle, Jamila
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]20 Apr 2012: C.1.
ProQuest document link
Abstract:
The added penalties proposed this week would add to assistance the CFTC received from the Dodd-Frank financial-regulation bill. [...] last year, regulators also had to prove traders intended to manipulate prices.
Full text: President Barack Obama's announcement on Tuesday that he would pursue tougher penalties for oil manipulators shined a spotlight on commodities regulators, who have won relatively few cases in the murky world of energy trading.
Two days later, the Commodity Futures Trading Commission announced a $14 million penalty -- its largest ever in an oil manipulation case and its first in five years -- against Dutch company Optiver Holding BV, its U.S. subsidiary and three officers. The CFTC says Optiver was responsible for manipulating the market for crude oil, heating oil and gasoline.
"The CFTC will not tolerate traders who try to gain an unlawful advantage," said David Meister, director of the CFTC's Division of Enforcement.
The court-approved settlement was announced late Thursday, though Optiver agreed to the conditions in March.
And while the settlement is the largest ever and Optiver agreed to bans on trading, the company and its employees didn't admit or deny wrongdoing.
The case, announced in 2008, alleged Optiver and the traders engaged in a scheme known as "banging the close," the practice of taking big positions ahead of the close of futures trading in order to influence the day's settlement price.
Optiver said it was pleased to reach a settlement with the commodities watchdog, noting the court made no finding that the trading firm did anything wrong.
Settlements are the main way the CFTC has confronted manipulative activity in the energy markets. Taking cases through the courts has proved difficult.
In the past 35 years, the Commodity Futures Trading Commission has brought dozens of cases alleging manipulation in energy markets. It was successful in proving only one in court.
With average prices at the pump close to $4 a gallon and crude above $100 a barrel, political pressure is increasing for CFTC Chairman Gary Gensler to show his agency is protecting consumers from nefarious activity in futures markets.
Obama on Tuesday said he wants to increase fines tenfold to a maximum $10 million per violation, and beef up funding for the CFTC.
The added penalties proposed this week would add to assistance the CFTC received from the Dodd-Frank financial-regulation bill. Until last year, regulators also had to prove traders intended to manipulate prices.
The new rules reduced the standard to "recklessness," which could give the CFTC a better chance of proving manipulation for trading in the future, some lawyers said.
Even with the lesser burden, regulators must still overcome a series of hurdles. They must show traders had a position in the market that allowed them to manipulate prices and that traders created an "artificial price," lawyers say.
"It's just a mess to try to prove," said Jerry Markham, former counsel for the CFTC's enforcement division who is writing a book on the history of market manipulation.
The Optiver case captured attention when it was announced in July 2008 -- the same month that oil prices hit their highest level on record.
The spike in prices prompted calls for investigations into the role of speculators in the market, as well as any manipulative activity. Lawmakers from both parties applauded the move.
The Optiver settlement leaves one major case with the CFTC, that against Swiss commodities-trading firm Arcadia Petroleum Ltd. The complaint, announced in May, alleges Arcadia and two of its traders, James T. Dyer and Nicholas Wildgoose, manipulated the crude-oil market in 2008.
The most recent hearing on the case was a motion to dismiss in December.
The CFTC alleged Messrs. Dyer and Wildgoose used contracts for physical oil to make it appear that there was a supply shortage at an important U.S. trading hub. The CFTC alleged they profited by making bets in the futures market, which paid off when supply went back up.
In this case, the CFTC detailed the dates, volumes of crude bought and sold by the traders and the prices fluctuations of multiple oil contracts -- aiming to show that the price of oil on certain days was "artificial," as opposed to driven by supply and demand.
But proving a price is "artificial" can involve reams of data analysis and years of expert testimony, followed by rebuttals and other legal roadblocks.
"You are going to have one Nobel economist saying it is an artificial price and another that says it isn't," Mr. Markham says. "These things will last forever."
In its motion to dismiss, Arcadia said the CFTC failed to show that the firm had the ability to manipulate the massive, multibillion-dollar oil market.
The CFTC's sole victory in a manipulation case came when trader Anthony DiPlacido was found in 2008 to have manipulated electricity futures.
---
Andrew Fitzgerald contributed to this article.
Credit: By Jerry A. DiColo, Dan Strumpf and Jamila Trindle
Subject: Energy industry; Futures trading; Fines & penalties; Settlements & damages; Crude oil
Location: United States--US
People: Obama, Barack
Company / organization: Name: Commodity Futures Trading Commission; NAICS: 926140, 926150; Name: Optiver Holding BV; NAICS: 523130, 523140
Classification: 9190: United States; 8510: Petroleum industry; 8130: Investment services; 4310: Regulation
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.1
Publication year: 2012
Publication date: Apr 20, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1002796126
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1002796126?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Growing Fight Tests Oil-Dependent Sudans --- Bashir Calls on Northern Forces to Topple Government in South, as Battles Challenge Neighbors' Revenue-Sapped Economies
Author: Moore, Solomon; Bariyo, Nicholas
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]20 Apr 2012: A.14.
ProQuest document link
Abstract:
The country joined the World Bank and the International Monetary Fund this week, and is eager to attract international investors to finance infrastructure projects, including an oil pipeline to ports in Kenya or Djibouti that would wean the country from dependency on the north.
Full text: Sudan's President Omar al-Bashir threatened to invade the capital of South Sudan and topple its government, in a widening fight over an oil-rich border region that is turning into a test of economic survival for the east African neighbors.
Mr. Bashir made the comments in a rally of his troops, who are now engaged on at least three fronts with South Sudan, including the oil hub of Heglig, after launching two fresh assaults the day before. "Heglig isn't the end, it is the beginning, and we shall go all the way to Juba," the southern capital, he told the troops.
Mr. Bashir has moved to mobilize jihadist groups and other paramilitary forces to augment his army, which has more than 100,000 soldiers, hundreds of tanks and fleets of Russian helicopters and MiG fighter planes.
South Sudan's Col. Philip Aguer dismissed the threats, saying the former civil war rebels from the south were now a fully equipped fighting force capable of defending their nation's sovereignty. "If they didn't defeat us when we were a green army, how will they defeat us now?" said the army spokesman.
The 20-year Sudanese conflict has seen two civil wars believed to have claimed the lives of more than two million people. The south's secession in July left several issues unresolved, including how to share oil revenue and production between the reserve-rich south and the infrastructure-rich north, both of which depend on oil for survival.
After a series of air raids by the north escalated this year, South Sudan's army this month moved into Heglig, a major oil refinery and distribution point, claiming the town was inside their territory according to borders drawn by departing British colonialists in 1956.
But United Nations Secretary-General Ban Ki-moon on Thursday called the seizure of Heglig illegal and "an infringement on the sovereignty of Sudan." He urged a negotiated resolution.
Beijing, a big buyer of Sudanese oil, also voiced concern, calling "for the two sides to immediately cease the conflict and respect their mutual sovereignty," a Ministry of Foreign Affairs spokesman said.
Tens of thousands of Sudanese and South Sudanese have been fleeing the fighting, overburdening refugee camps near the border, aid workers said.
Continued fighting will increasingly drain the economies of the neighbors, both of which are struggling to reduce dependence on each other.
Khartoum relies on oil for more than 60% of its economy. The halt of oil production at Heglig halved Sudan's oil output.
But war could be especially difficult for South Sudan, a new country with virtually no industrial infrastructure and where 98% of the economy traditionally depends on petroleum revenues. The South Sudan pound has weakened against the dollar by as much as around 60% since the beginning of the month.
South Sudan already shut its entire 350,000 barrels a day of production -- most of which was bought by China -- in January because of a dispute with the north over transport fees.
The country joined the World Bank and the International Monetary Fund this week, and is eager to attract international investors to finance infrastructure projects, including an oil pipeline to ports in Kenya or Djibouti that would wean the country from dependency on the north.
A high-level delegation of South Sudan officials has been in Washington this week seeking financing and other help to create a self-sufficient oil industry.
Next week, President Salva Kiir will lead a similar delegation to Beijing.
"There is a move for the government of South Sudan to look for loans from international banks," said Deputy Minister of Petroleum Elizabeth Bol. "There is no continuous flow of hard currency in South Sudan."
The country, which has virtually no debt, is seeking as much as $2.5 billion in loans, according to government officials. Ms. Bol said the nation was offering future petroleum profits and mineral rights for collateral.
On Thursday, South Sudan oil ministry officials met with petroleum executives from China, the U.S. and other nations at a U.S. Agency for International Development conference in Juba exploring the feasibility of the multibillion-dollar pipeline.
Anne Itto Leonardo, a former agriculture minister and current secretary-general of the ruling party of the south, the Sudan People's Liberation Movement, said the government needed to invest in its own agriculture.
"Oil has been our curse," she said. "Even before independence, we were so dependent upon oil that we didn't think to diversify beyond oil."
---
Dinny McMahon in Beijing contributed to this article.
Credit: Solomon Moore; Nicholas Bariyo
Subject: Petroleum industry; Sovereignty; Invasions; Territorial issues
Location: Sudan South Sudan
People: Aguer, Philip Bashir, Omar Hassan Ahmed
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.14
Publication year: 2012
Publication date: Apr 20, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1002796685
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1002796685?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
South Sudan Pulls Back From Brink of War; New Nation Unaccustomed to International Censure Bows to Pressure to Withdraw Troops From a Disputed Oil Town
Author: Moore, Solomon; Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Apr 2012: n/a.
ProQuest document link
Abstract:
South Sudan announced Friday it will withdraw its troops from the disputed oil town its forces took over last week, pulling back from offensive military action that pushed the south closer to all-out war with its northern neighbor, Sudan, and threatened to pull other African nations into the conflict.
Full text: South Sudan, bowing to international pressure from even its staunchest allies, said it would withdraw its army from an oil town it occupied along a disputed border with Sudan.
The town, Heglig, has been a scene of deadly clashes in the past 10 days amid international appeals to the two countries to back away from full-blown war.
Sudan, which has said it would fight all the way to the south's capital Juba, and topple its government, declared victory after the announcement by the south on Friday.
The episode highlighted the new diplomatic hazards faced by the young South Sudan government, a former guerrilla movement that gained independence less than a year ago and is still unpracticed at managing a sovereign state among a community of nations.
Its military advance brought condemnation from the United Nations, foreign donors and customers of its oil, who sided on the issue with its bitter enemy.
The U.N., the African Union, the U.S., China and others called the south's action an infringement against Sudan--a country whose leader, President Omar al-Bashir, is wanted by the International Criminal Court on charges of war crimes and genocide.
Officials in South Sudan, long a recipient of aid and advocacy from the West, said they were stunned by the reaction to their advance into Heglig. On Friday, President Salva Kiir ordered the withdrawal of his army, even as his government maintained that the town is part of its territory based on 1956 borders.
The withdrawal "is response to some appeals by some world leaders," Information Minister Barnaba Marial Benjamin said at a news conference on Friday. "This is to create an environment for the resumption of dialogue with Sudan."
Representatives of several embassies in Juba, including the U.S., Britain, China and Japan attended the news conference.
Some diplomats praised the south's decision as a sign of a respect for international opinion. "I wish I could say the same about Khartoum, which doesn't always respond to the international community," said Christopher Datta, the U.S. Embassy's chargé d'affaires in Juba.
Sudan on Friday insisted it had forced the south to retreat. It was unclear whether Khartoum would cease military operations at the border.
Sudan also claims Heglig, with its 60,000-barrels-a-day oil field, a refinery and a processing facility. The territory is vital to both countries--to Sudan for its oil and to South Sudan for its infrastructure; it is now badly damaged by fighting.
Western officials and observers said the conflict could have been avoided by more mature statesmanship, particularly on the part of the south.
"Part of the problem with South Sudan is that there are really very few well-informed decision makers who have way, way too much on their plate," said E.J. Hogendoorn, Horn of Africa director for the International Crisis Group.
South Sudan's government has appointed 90 ambassadors, but none have taken their posts, a foreign ministry official said--prolonging the isolation that plagued the ruling party when it was still a guerrilla movement.
Decades of war claimed the lives of more than two million people and prevented South Sudan from establishing functioning infrastructure, schools, hospitals and other institutions, Mr. Hogendoorn said. It will take time for the country to establish a capable civil service with officials able to navigate the choppy diplomatic waters of a volatile region, he added.
The south miscalculated the international reaction, said Richard Downie, a fellow at the Africa Program at the Center for Strategic and International Studies in Washington. "Usually the boot is on the other foot and it is Khartoum getting flak," he said. "Now Juba is in the awkward position of being painted as the main troublemaker."
After the south's announcement on Friday, Sudan's government spokesman Rabie Abdelaty said Sudanese troops were on the outskirts of Heglig and would shell the southern army until they left the town. "It is too late for them to withdraw because Heglig is no longer under their control," he said. "They should just surrender."
Mr. Abdelaty said Sudanese troops now controlled most of Heglig. South Sudan's military spokesman Col. Philip Aguer dismissed those claims, and said that the north has continued to shell the border town.
South Sudan said it would begin pulling out immediately and would be gone within three days.
Sudan has traditionally had the stronger military, with a fleet of Russian fighter planes, helicopters, tanks and heavy artillery.
With tensions still high, the Juba government has refused to restart oil production it halted in January, depriving the Khartoum regime of 60% of its revenue. The move also deprived the south of 98% its income.
The flareup was the latest crack in a tenuous relationship between two neighbors that--when they formed a single country--fought on-and-off for more than two decades. Nearly one year after the south's secession from Sudan in July, deep disagreements remain. Those include differences over oil-revenue sharing, borders and the status of populations living near their disputed boundaries.
Some international officials expressed hopes that a troop withdrawal would avert a wider conflict, at least temporarily.
Chinese Foreign Ministry spokesman Liu Weimin said that China, a big buyer of Sudanese crude, saw a visit by President Kiir to Beijing and Shanghai next week as an opportunity to help cool tensions.
China has also been close to Mr. Bashir, but those ties frayed after a kidnapping in January of Chinese workers, who were later released.
Carlos Tejada and Yoli Zhang in Beijing contributed to this article.
Write to Nicholas Bariyo at
Credit: Solomon Moore; Nicholas Bariyo
Subject: Invasions
Location: South Sudan United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 20, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1004675640
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1004675640?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Wells Fargo, Exxon Mobil: Money Flow Leaders (WFC, XOM)
Author: MARKET DATA STAFF
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Apr 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Wells Fargo & Co. topped the list in late trading for, which tracks stocks that fell in price but had the largest inflow of money. See the.
Exxon Mobil Corp. topped the list for, which tracks stocks that rose in price but had the largest outflow of money. See the.
Go to () for complete coverage.
Credit: By MARKET DATA STAFF
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 20, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1005092964
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1005092964?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Chesapeake Valuation for Oil Services
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Apr 2012: n/a.
ProQuest document link
Abstract:
COS sustaining an Ebitda margin north of 30%, as the guidance implies, in this environment looks a stretch. Since November, the 2012 consensus earnings estimate for Halliburton has dropped 13%--and that is mitigated by its international exposure, which COS lacks.
Full text: You can say this for Chesapeake Energy's plan to sell its oil-field services business: It hired the best salesman. But even Goldman Sachs--jointly leading this initial public offering and the top U.S. IPO adviser last year--could have a hard job selling this one.
While its chief executive drew attention elsewhere this week, Chesapeake filed a registration statement for Chesapeake Oilfield Services, or COS. Chesapeake hopes to raise $862.5 million by selling a minority stake this year.
Assuming a 20% float at that price implies a $4.3 billion market capitalization and an enterprise value, including net debt, of about $5 billion. Meanwhile, the midpoint of Chesapeake's November guidance implied COS making $2.25 billion of net revenue and $700 million of earnings before interest, tax, depreciation and amortization in 2012.
This all looks ambitious. IPOs usually offer a discount, but on these numbers COS is priced at 7.1 times Ebitda. Major oil-services companies such as Halliburton, Baker Hughes, Weatherford International and Key Energy Services trade at between 4.5 and 5.5 times. COS does look set to grow faster, at least according to guidance: It shows Ebitda more than tripling between 2011 and 2013. Even then, the implied multiple of 4.7 times is still above the 4 times average for its peers.
Meanwhile, that guidance, which hardly looked conservative back in November, looks less so now. Pricing power in U.S. onshore services, in particular pressure pumping for hydraulic fracturing of shale fields, is declining due to capacity expansion outpacing demand growth (similar to what has happened in the natural-gas market itself).
First-quarter results from both Halliburton and Schlumberger confirmed the trend this week. COS sustaining an Ebitda margin north of 30%, as the guidance implies, in this environment looks a stretch. Since November, the 2012 consensus earnings estimate for Halliburton has dropped 13%--and that is mitigated by its international exposure, which COS lacks. Meanwhile, the price of COS's seven-year bonds has slipped by 9% so far this year.
COS's multiples look more reasonable if the same money were raised selling a 30% stake rather than 20%. However, that would effectively chop $1.4 billion, or 29%, off the implied enterprise value, leaving it well below the $5 billion expected last November.
COS is the preferred supplier for Chesapeake's drilling needs, thereby benefiting from the parent's growth plans. But equally, relying on your parent for more than 90% of your revenue is another risk factor warranting a discount. That is especially so when that parent's own funding deficit is a cause for investor concern--precisely the reason for the IPO in the first place.
Write to Liam Denning at
Credit: By Liam Denning
Subject: Initial public offerings; Investment policy
Company / organization: Name: Goldman Sachs Group Inc; NAICS: 523120, 523110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 20, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1005096691
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1005096691?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Notable & Quotable; William Tucker on oil speculator, Adam Smith and Barack Obama.
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Apr 2012: n/a.
ProQuest document link
Abstract:
For whatever reason, they expect supplies to get tighter. [...] they are willing to buy oil at a premium today in the anticipation that prices are going to go even higher tomorrow.
Full text: William Tucker writing in the American Spectator, April 20:
On Tuesday [President Obama] stood in the Rose Garden . . . and announced the solution to our energy problems will be hunting down and prosecuting evil "oil speculators" who are responsible for driving up the price of gas in the U.S. . . .
Before we go any further with this, perhaps we should ask, just what are "oil speculators" and why is it so important that they be hunted down? Here is the answer. Oil speculators are investors who think the price of oil is going to go even higher in the future. For whatever reason, they expect supplies to get tighter. Therefore they are willing to buy oil at a premium today in the anticipation that prices are going to go even higher tomorrow. It's a gamble. You don't automatically make money. Sometimes you lose a whole lot.
What speculators do, however, if they guess right, is smooth out the availability of supplies between the present and the future. By paying a higher price now, they assure that prices will be lower in the future. In effect, they hold supplies off the market today so that they will be available next week or next year when things become even more scarce. Adam Smith described this as preventing a "dearth" from becoming a "famine":
When the government, in order to remedy the inconveniences of a dearth, orders all the dealers to sell their corn at what it supposes a reasonable price, it either hinders them from bringing it to market, which may sometimes produce a famine even in the beginning of the season; or if they bring it thither, it enables the people, and thereby encourages them to consume it so fast as must necessarily produce a famine before the end of the season. . . . No trade deserves more the full protection of the law, and no trade requires it so much, because no trade is so much exposed to popular odium.
Unfortunately, there are always politicians around . . . who are willing to encourage that odium for political purposes.
Subject: Famine
Location: United States--US
Company / organization: Name: American Spectator; NAICS: 511120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 20, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1006117304
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1006117304?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Spain Retaliates Over Move by Kirchner to Grab Oil Firm
Author: Brat, Ilan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Apr 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: MADRID--Spain's first economic response to Argentina's seizure of Repsol YPF SA's local unit will be a reprisal affecting its biodiesel exports, the government said Friday.
The measure, which the Spanish government announced after a weekly cabinet meeting, mandates that all biodiesel mixed into fuel processed in Spain come from European Union countries.
The rule effectively cuts off the direct flow of Argentine biodiesel to Spain, which in 2011, at about [euro]750 million ($991 million), represented about 45% of Spain's biodiesel consumption, according to government statistics and Spain's Renewable Energy Producers Association, or APPA.
The move comes as Spain strives to marshal international pressure against Argentina after the former colony, under President Cristina Kirchner, issued plans this week to expropriate 51% of YPF SA, leaving Repsol with a 6.4% stake in the South American country's leading oil-and-gas company.
The pressure campaign is showing some signs of success. The U.S. expressed its concern about Argentina's decision this week, and political leaders from Mexico and other countries have condemned Argentina's nationalization effort. On Friday, the European Parliament approved a resolution seeking to partially suspend preferential trade treatment for Argentine exports.
Spain's move against Argentine biodiesel exports targets a key industry for Argentina, soybean production. Mrs. Kirchner told Argentines that they shouldn't worry about the measure, saying Argentina can increase domestic demand to compensate for a decline in exports.
"If Spain's government wants its own businesses to pay more for biodiesel, that's a sovereign decision," she said in a speech on Friday.
It also may relieve some economic strain from Spain's 51 biodiesel production plants. Spanish biodiesel producers have been demanding such a measure for about two years because of what they consider to be unfair competition from Argentina and Indonesia, whose exports to Spain have been growing rapidly in recent years.
About 74% of the 1.6 million metric tons of biodiesel consumed in Spain in 2011 originated outside the country, compared with 62% in 2010, according to APPA. Under Spanish law, biodiesel must account for about 7% of the petroleum-derived fuel consumed in the country.
Spain's deputy prime minister, Soraya Sáenz de Santamaria, said the government will continue to look for measures to take against the Argentina and ways to exert international pressure.
Repsol shares closed up 1.74% at [euro]14.92 on Friday, just below the 1.92% gain seen on Madrid's blue-chip index.
Taos Turner in Buenos Aires contributed to this article.
Write to Ilan Brat at
Credit: By Ilan Brat
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 20, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1006120562
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1006120562?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Growing Fight Tests Oil-Dependent Sudans
Author: Moore, Solomon; Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Apr 2012: n/a.
ProQuest document link
Abstract:
The country joined the World Bank and the International Monetary Fund this week, and is eager to attract international investors to finance infrastructure projects, including an oil pipeline to ports in Kenya or Djibouti that would wean the country from dependency on the north.
Full text: Sudan's President Omar al-Bashir threatened to invade the capital of South Sudan and topple its government, in a widening fight over an oil-rich border region that is turning into a test of economic survival for the east African neighbors.
Mr. Bashir made the comments in a rally of his troops, who are now engaged on at least three fronts with South Sudan, including the oil hub of Heglig, after launching two fresh assaults the day before. "Heglig isn't the end, it is the beginning, and we shall go all the way to Juba," the southern capital, he told the troops.
Mr. Bashir has moved to mobilize jihadist groups and other paramilitary forces to augment his army, which has more than 100,000 soldiers, hundreds of tanks and fleets of Russian helicopters and MiG fighter planes.
South Sudan's Col. Philip Aguer dismissed the threats, saying the former civil war rebels from the south were now a fully equipped fighting force capable of defending their nation's sovereignty. "If they didn't defeat us when we were a green army, how will they defeat us now?" said the army spokesman.
The 20-year Sudanese conflict has seen two civil wars believed to have claimed the lives of more than two million people. The south's secession in July left several issues unresolved, including how to share oil revenue and production between the reserve-rich south and the infrastructure-rich north, both of which depend on oil for survival.
After a series of air raids by the north escalated this year, South Sudan's army this month moved into Heglig, a major oil refinery and distribution point, claiming the town was inside their territory according to borders drawn by departing British colonialists in 1956.
But United Nations Secretary-General Ban Ki-moon on Thursday called the seizure of Heglig illegal and "an infringement on the sovereignty of Sudan." He urged a negotiated resolution between the two sides.
The Arab League has scheduled an emergency meeting of foreign ministers in Cairo next week to discuss the violence, after a request by Sudan, according to the Associated Press.
Beijing, a big buyer of Sudanese oil, also voiced concern, calling "for the two sides to immediately cease the conflict and respect their mutual sovereignty," a Ministry of Foreign Affairs spokesman said.
Tens of thousands of Sudanese and South Sudanese have been fleeing the fighting, overburdening refugee camps near the border, aid workers said.
"We're trying to provide as many basic services as possible before the rainy season," said Luca Pupulin, program director in South Sudan for the French aid group ACTED. "Many of the families have been split up."
Continued fighting will increasingly drain the economies of the neighbors, both of which are struggling to reduce dependence on each other.
Khartoum relies on oil for more than 60% of its economy. The halt of oil production at Heglig halved Sudan's oil output.
But war could be especially difficult for South Sudan, a new country with virtually no industrial infrastructure and where 98% of the economy traditionally depends on petroleum revenues. The South Sudan pound has weakened against the dollar by as much as around 60% since the beginning of the month.
South Sudan already shut its entire 350,000 barrels a day of production--most of which was bought by China--in January because of a dispute with the north over transport fees. Officials in Juba say that while the shutoff hurts their economy, Khartoum's demand for as much as $36 a barrel in fees deprived them of oil proceeds anyway.
The country joined the World Bank and the International Monetary Fund this week, and is eager to attract international investors to finance infrastructure projects, including an oil pipeline to ports in Kenya or Djibouti that would wean the country from dependency on the north.
A high-level delegation of South Sudan officials has been in Washington this week seeking financing and other help to create a self-sufficient oil industry.
Next week, President Salva Kiir will lead a similar delegation to Beijing, one of the largest investors in both Sudans.
In January, before fighting broke out, China indicated its willingness to provide $1 billion in infrastructure loans.
"There is a move for the government of South Sudan to look for loans from international banks," said Deputy Minister of Petroleum Elizabeth Bol. "There is no continuous flow of hard currency in South Sudan."
The country, which has virtually no debt, is seeking as much as $2.5 billion in loans, according to government officials. Ms. Bol said the nation was offering future petroleum profits and mineral rights for collateral.
On Thursday, South Sudan oil ministry officials met with petroleum executives from China, the U.S. and other nations at a U.S. Agency for International Development conference in Juba exploring the feasibility of the multibillion-dollar pipeline project.
American advisers and South Sudanese officials discussed the complexity of the proposal, with challenges including the removal of populations in the path of the pipeline, skittish investors and myriad technical issues including elevated terrain, marshes, temperature fluctuations and billions of dollars in maintenance, not to mention the possibility of air raids by Sudan.
Anne Itto Leonardo, a former agriculture minister and current secretary-general of the ruling party of the south, the Sudan People's Liberation Movement, said the government needed to diversify its economy. Traditionally, the south has relied on oil revenues to fund food imports. Now, Ms. Leonardo said, the country, which she said faces annual grain production deficits of 400,000 metric tons a year, must invest in its own agriculture.
"Oil has been our curse," she said. "Even before independence, we were so dependent upon oil that we didn't think to diversify beyond oil."
The intensifying fighting around oil-rich Heglig has underscored that dependency for both nations.
South Sudan Deputy Defense Minister Majak D'Agoot described a five-hour battle on Wednesday during which his forces, the Sudan People's Liberation Army, killed 300 soldiers of the Sudan Armed Forces, the army of the north. The SPLA suffered 18 deaths, he said.
Mr. D'Agoot claimed the SPLA also repelled a northern assault Wednesday on a town in Western Bahar Ghazal, killing 46 northern soldiers while losing six SPLA soldiers. Those reports couldn't be independently verified.
Mr. D'Agoot said that the south's army SPLA has improved since the Sudans' last peace accord in 2005, through training, the integration of 40,000 irregular fighting forces and the acquisition of new weapons.
South Sudan acquired 10 Russian transport helicopters and 33 T-72 tanks in 2010 and 2011, according to a report this month by the Human Security Baseline Assessment, an arms-monitoring program funded by Denmark, the Netherlands and the U.S.
Dinny McMahon in Beijing contributed to this article.
Write to Nicholas Bariyo at
Credit: Solomon Moore; Nicholas Bariyo
Subject: Infrastructure; Sovereignty
Location: South Sudan
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 20, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1008903247
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1008903247?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Notable & Quotable; William Tucker on oil speculators, Adam Smith and Barack Obama.
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Apr 2012: n/a.
ProQuest document link
Abstract:
For whatever reason, they expect supplies to get tighter. [...] they are willing to buy oil at a premium today in the anticipation that prices are going to go even higher tomorrow.
Full text: William Tucker writing in the American Spectator, April 20:
On Tuesday [President Obama] stood in the Rose Garden . . . and announced the solution to our energy problems will be hunting down and prosecuting evil "oil speculators" who are responsible for driving up the price of gas in the U.S. . . .
Before we go any further with this, perhaps we should ask, just what are "oil speculators" and why is it so important that they be hunted down? Here is the answer. Oil speculators are investors who think the price of oil is going to go even higher in the future. For whatever reason, they expect supplies to get tighter. Therefore they are willing to buy oil at a premium today in the anticipation that prices are going to go even higher tomorrow. It's a gamble. You don't automatically make money. Sometimes you lose a whole lot.
What speculators do, however, if they guess right, is smooth out the availability of supplies between the present and the future. By paying a higher price now, they assure that prices will be lower in the future. In effect, they hold supplies off the market today so that they will be available next week or next year when things become even more scarce. Adam Smith described this as preventing a "dearth" from becoming a "famine":
When the government, in order to remedy the inconveniences of a dearth, orders all the dealers to sell their corn at what it supposes a reasonable price, it either hinders them from bringing it to market, which may sometimes produce a famine even in the beginning of the season; or if they bring it thither, it enables the people, and thereby encourages them to consume it so fast as must necessarily produce a famine before the end of the season. . . . No trade deserves more the full protection of the law, and no trade requires it so much, because no trade is so much exposed to popular odium.
Unfortunately, there are always politicians around . . . who are willing to encourage that odium for political purposes.
Subject: Famine
Location: United States--US
Company / organization: Name: American Spectator; NAICS: 511120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 21, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1006146178
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1006146178?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Russia to Embrace Energy Partners --- Fuel Czar Says More Foreign-Investment Pacts May Follow Exxon Deal to Help Tap Resources
Author: Gonzalez, Angel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]21 Apr 2012: B.4.
ProQuest document link
Abstract:
Russia's latest bid for foreign participation is an indication the country, which jostles with Saudi Arabia for the rank of top global oil producer, is aware of the challenges it faces maintaining production as conventional energy sources decline.
Full text: Igor Sechin, Russia's deputy prime minister and a close ally of President-elect Vladimir Putin, estimated that by 2030, up to 40% of Russia's oil output would stem from untapped sources in the Arctic waters and the Black Sea -- which it needs foreign assistance to unlock.
A joint venture between state-run Russian giant OAO Rosneft and Exxon could eventually recover about 90 billion barrels of oil equivalent in oil and gas in those areas, the partners estimate. But first they will have to find oil in hostile climates and then set up airports, pipelines and dozens of iceberg-resistant offshore platforms. The deal, finalized earlier this week, gives Exxon a one-third stake in production companies in the Black Sea and the Arctic offshore. It also gives Rosneft a stake in three of Exxon's North American projects.
"It's a long-term collaboration, which would be extended for decades -- 30, 40 or 50 years," Mr. Sechin, 52 years old, said in an interview Wednesday during his first visit to the U.S. "We'll give jobs to hundreds of thousands of people," both in the U.S. and Russia, he said.
Mr. Sechin said he expects similar deals with other firms will occur in the near future. The Exxon deal was "quite special, but there will be others," he said.
Russia's latest bid for foreign participation is an indication the country, which jostles with Saudi Arabia for the rank of top global oil producer, is aware of the challenges it faces maintaining production as conventional energy sources decline.
Exxon's landmark deal with Russia is a boon for the world's largest publicly traded oil company, which needs to replace the vast amounts of crude it extracts from the ground every year with new reserves.
The "flagship" Exxon-Rosneft effort could generate investments of $200 billion to $300 billion by the partners over several decades, Mr. Sechin said.
To reduce risk, the Russian government is softening the taxes that will be imposed on such projects. Exxon CEO Rex Tillerson personally asked Mr. Putin for more favorable terms, Mr. Sechin added.
Mr. Sechin's visit, which included a presentation to U.S. analysts on Wednesday in New York and a visit to Exxon facilities in Houston, comes after a decade of difficulties for foreign investors seeking a piece of Russia's massive oil wealth.
Last year an Arctic oil alliance between Rosneft and BP PLC collapsed amid a conflict with BP's other local partners. Last month, a final decision on the giant Shtokman liquefied-natural-gas project, in which France's Total SA, Statoil ASA of Norway and Russia's state-run OAO Gazprom are participating, was delayed.
Amy Myers Jaffe, an energy specialist at Rice University's Baker Institute, said Russia's latest overture is an attempt to compete for scarce global capital that might otherwise go to energy projects in Canada, Australia or Africa.
But because Russia's nationalistic streak remains unchanged, she said, "ultimately there are a lot of unknowns" for companies following Exxon's lead there.
The multilingual Mr. Sechinsaid he didn't know what his role would be in Mr. Putin's new government, set to take office in May. "Man proposes, and God disposes," he said in Spanish.
Credit: By Angel Gonzalez
Subject: Petroleum industry; Joint ventures; Offshore oil exploration & development
Location: Black Sea United States--US Russia
People: Putin, Vladimir
Company / organization: Name: OAO Rosneft; NAICS: 324110; Name: Exxon Mobil Corp; NAICS: 211111, 447110
Classification: 8510: Petroleum industry; 9180: International
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.4
Publication year: 2012
Publication date: Apr 21, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1008552752
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1008552752?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Spain Retaliates Over Move By Kirchner to Grab Oil Firm
Author: Brat, Ilan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]21 Apr 2012: A.11.
ProQuest document link
Abstract:
The rule effectively cuts off the direct flow of Argentine biodiesel to Spain, which in 2011, at about 750 million euros ($991 million), represented about 45% of Spain's biodiesel consumption, according to government statistics and Spain's Renewable Energy Producers Association, or APPA.
Full text: MADRID -- Spain's first economic response to Argentina's seizure of Repsol YPF SA's local unit will be a reprisal affecting its biodiesel exports, the government said Friday.
The measure, which the Spanish government announced after a weekly cabinet meeting, mandates that all biodiesel mixed into fuel processed in Spain come from European Union countries.
The rule effectively cuts off the direct flow of Argentine biodiesel to Spain, which in 2011, at about 750 million euros ($991 million), represented about 45% of Spain's biodiesel consumption, according to government statistics and Spain's Renewable Energy Producers Association, or APPA.
The move comes as Spain strives to marshal international pressure against Argentina after the former colony, under President Cristina Kirchner, issued plans this week to expropriate 51% of YPF SA, leaving Repsol with a 6.4% stake in the South American country's leading oil-and-gas company.
The pressure campaign is showing some signs of success. The U.S. expressed its concern about Argentina's decision this week, and political leaders from Mexico and other countries have condemned Argentina's nationalization effort. On Friday, the European Parliament approved a resolution seeking to partially suspend preferential trade treatment for Argentine exports.
Spain's move against Argentine biodiesel exports targets a key industry for Argentina, soybean production. Mrs. Kirchner told Argentines that they shouldn't worry about the measure, saying Argentina can increase domestic demand to compensate for a decline in exports.
"If Spain's government wants its own businesses to pay more for biodiesel, that's a sovereign decision," she said in a speech.
It also may relieve some economic strain from Spain's 51 biodiesel production plants. Spanish biodiesel producers have been demanding such a measure for about two years because of what they consider to be unfair competition from Argentina and Indonesia, whose exports to Spain have been growing rapidly in recent years.
Under Spanish law, biodiesel must account for about 7% of the petroleum-derived fuel consumed in the country.
---
Taos Turner in Buenos Aires contributed to this article
Credit: By Ilan Brat
Subject: Biodiesel fuels; International relations; Nationalization
Location: Spain Argentina
Company / organization: Name: YPF SA; NAICS: 211111; Name: European Union; NAICS: 926110, 928120; Name: RepsolYPF SA; NAICS: 213111, 213112, 324110
Classification: 1300: International trade & foreign investment; 9180: International
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.11
Publication year: 2012
Publication date: Apr 21, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1008552777
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1008552777?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Russia to Embrace Energy Partners; Fuel Czar Says More Foreign-Investment Pacts May Follow Exxon Deal to Help Tap Resources
Author: González, Ángel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Apr 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: NEW YORK--Russia is counting on foreign investment spearheaded by U.S. oil behemoth Exxon Mobil Corp. to defend its status as an oil superpower, the nation's energy czar said in an interview with The Wall Street Journal.
Igor Sechin, Russia's deputy prime minister and a close ally of President-elect Vladimir Putin, estimated that by 2030, up to 40% of Russia's oil output would stem from untapped sources in the Arctic waters and the Black Sea--which it needs foreign assistance to unlock.
A joint venture between state-run Russian giant OAO Rosneft and Exxon could eventually recover about 90 billion barrels of oil equivalent in oil and gas in those areas, the partners estimate. But first they will have to find oil in hostile climates and then set up massive airports, pipelines and dozens of iceberg-resistant offshore platforms. The deal, finalized earlier this week, gives Exxon a one-third stake in production companies in the Black Sea and the Arctic offshore. It also gives Rosneft a stake in three of Exxon's North American projects.
"It's a long-term collaboration, which would be extended for decades--30, 40 or 50 years," Mr. Sechin, 52 years old, said in an interview Wednesday during his first visit to the U.S. "We'll give jobs to hundreds of thousands of people," both in the U.S. and Russia, he said.
Mr. Sechin said he expects similar deals with other firms will occur in the near future. The Exxon deal was "quite special, but there will be others," he said.
Russia's latest bid for foreign participation is an indication the country, which jostles with Saudi Arabia for the rank of top global oil producer, is aware of the challenges it faces maintaining production as conventional energy sources decline.
Exxon's landmark deal with Russia is a boon for the world's largest publicly traded oil company, which needs to replace the vast amounts of crude it extracts from the ground every year with new reserves.
The "flagship" Exxon-Rosneft effort could generate investments of $200 billion to $300 billion by the partners over several decades, Mr. Sechin said.
To reduce risk, the Russian government is softening the taxes that will be imposed on such projects. Exxon CEO Rex Tillerson, who was based in Russia earlier in his career, personally asked Mr. Putin for more favorable terms, Mr. Sechin added.
Mr. Sechin's visit, which included a presentation to U.S. analysts on Wednesday in New York and a visit to Exxon facilities in Houston, comes after a decade of difficulties for foreign investors seeking a piece of Russia's massive oil wealth.
Last year an Arctic oil alliance between Rosneft and BP PLC collapsed amid a conflict with BP's other local partners. Last month, a final decision on the giant Shtokman liquefied-natural-gas project, in which France's Total SA, Statoil ASA of Norway and Russia's state-run OAO Gazprom are participating, was delayed.
Amy Myers Jaffe, an energy specialist at Rice University's Baker Institute, said Russia's latest overture is an attempt to compete for scarce global capital that might otherwise go to energy projects in Canada, Australia or Africa.
But because Russia's nationalistic streak remains unchanged, she said, "ultimately there are a lot of unknowns" for oil companies following Exxon's lead there.
The multilingual Mr. Sechinsaid he didn't know what his role would be in Mr. Putin's new government, set to take office in May. "Man proposes, and God disposes," he said in Spanish.
Write to Ángel González at
Credit: By Ángel González
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 21, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 10086515 71
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1008651571?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: South Sudan Pulls Back From Brink of War --- New Nation Unaccustomed to International Censure Bows to Pressure to Withdraw Troops From a Disputed Oil Town
Author: Moore, Solomon; Bariyo, Nicholas
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]21 Apr 2012: A.9.
ProQuest document link
Abstract:
The episode highlighted the new diplomatic hazards faced by the young South Sudan government, a former guerrilla movement that gained independence less than a year ago and is still unpracticed at managing a sovereign state among a community of nations. The U.N., the African Union, the U.S., China and others called the south's action an infringement against Sudan -- a country whose leader, President Omar al-Bashir, is wanted by the International Criminal Court on charges of war crimes and genocide.
Full text: South Sudan, bowing to international pressure from even its staunchest allies, said it would withdraw its army from an oil town it occupied along a disputed border with Sudan.
The town, Heglig, has been a scene of deadly clashes in the past 10 days amid international appeals to the two countries to back away from full-blown war.
Sudan, which has said it would fight all the way to the south's capital Juba, and topple its government, declared victory after the announcement by the south on Friday.
The episode highlighted the new diplomatic hazards faced by the young South Sudan government, a former guerrilla movement that gained independence less than a year ago and is still unpracticed at managing a sovereign state among a community of nations.
Its military advance brought condemnation from the United Nations, foreign donors and customers of its oil, who sided on the issue with its bitter enemy.
The U.N., the African Union, the U.S., China and others called the south's action an infringement against Sudan -- a country whose leader, President Omar al-Bashir, is wanted by the International Criminal Court on charges of war crimes and genocide.
Officials in South Sudan, long a recipient of aid and advocacy from the West, said they were stunned by the reaction to their advance into Heglig. On Friday, President Salva Kiir ordered the withdrawal of his army, even as his government maintained that the town is part of its territory based on 1956 borders.
The withdrawal "is response to some appeals by some world leaders," Information Minister Barnaba Marial Benjamin said at a news conference on Friday. "This is to create an environment for the resumption of dialogue with Sudan."
Some diplomats praised the south's decision as a sign of a respect for international opinion. "I wish I could say the same about Khartoum, which doesn't always respond to the international community," said Christopher Datta, the U.S. Embassy's charge d'affaires in Juba.
Sudan on Friday insisted it had forced the south to retreat. It was unclear whether Khartoum would cease military operations at the border.
Sudan also claims Heglig, with its 60,000-barrels-a-day oil field, a refinery and a processing facility. The territory is vital to both countries -- to Sudan for its oil and to South Sudan for its infrastructure; it is now badly damaged by fighting.
Western officials and observers said the conflict could have been avoided by more mature statesmanship, particularly on the part of the south.
"Part of the problem with South Sudan is that there are really very few well-informed decision makers who have way, way too much on their plate," said E.J. Hogendoorn, Horn of Africa director for the International Crisis Group.
South Sudan's government has appointed 90 ambassadors, but none have taken their posts, a foreign ministry official said -- prolonging the isolation that plagued the ruling party when it was still a guerrilla movement.
Decades of war claimed the lives of more than two million people and prevented South Sudan from establishing functioning infrastructure, schools, hospitals and other institutions, Mr. Hogendoorn said. It will take time for the country to establish a capable civil service with officials able to navigate the choppy diplomatic waters of a volatile region, he added.
The south miscalculated the international reaction, said Richard Downie, a fellow at the Africa Program at the Center for Strategic and International Studies in Washington. "Usually the boot is on the other foot and it is Khartoum getting flak," he said. "Now Juba is in the awkward position of being painted as the main troublemaker."
After the south's announcement on Friday, Sudan's government spokesman Rabie Abdelaty said Sudanese troops were on the outskirts of Heglig and would shell the southern army until they left the town. "It is too late for them to withdraw because Heglig is no longer under their control," he said. "They should just surrender."
South Sudan said it would begin pulling out immediately and would be gone within three days.
Some international officials expressed hopes that a troop withdrawal would avert a wider conflict, at least temporarily.
Chinese Foreign Ministry spokesman Liu Weimin said that China, a big buyer of Sudanese crude, saw a visit by President Kiir to Beijing and Shanghai next week as an opportunity to help cool tensions.
---
Carlos Tejada in Beijing contributed to this article.
---
Uneasy Neighbors
The progression of recent tensions between Sudan and South Sudan
July 2011: After South Sudan's independence on July 9, disputes remain over oil-revenue sharing, borders and other matters. Sudan demands $36 per barrel for oil transit; the South offers $1
January 2012: South Sudan accuses Sudan of stealing $815 million of crude in transit. The south shuts down oil production
March 12: A draft deal is reached to demarcate the 1,100-mile border between the two Sudans, among other issues, and is set to be approved at a presidential summit in April
March 21: South Sudan accuses Sudan of bombing its oil-rich Unity State ahead of summit
April 1: Sudan formally calls off the summit as clashes escalate
April 10: South Sudan troops capture the oil town of Heglig
April 19: Sudanese President Bashir threatens to topple south's government. U.N. and others tell south to withdraw from Heglig
April 20: South Sudan says it will begin withdrawal from Heglig immediately and be out within three days
Credit: Solomon Moore; Nicholas Bariyo
Subject: Oil fields; Military withdrawals; International relations
Location: Heglig Sudan South Sudan
People: Kiir Mayardit, Salva
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.9
Publication year: 2012
Publication date: Apr 21, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1008848930
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1008848930?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Crude to Give Oil Firms a Lift
Author: Ordóñez, Isabel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 Apr 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Once again, soaring crude is lifting the oil industry's boats--and will likely buoy the earnings of Chevron Corp. and ConocoPhillips.
But Texas behemoth Exxon Mobil Corp., which has bet heavily on North American natural-gas production in recent years, is expected to see its profit drop a bit because prices for the commodity have hit decade-low levels. Exxon, however, is expected to post a larger-than-usual dividend increase this week, responding to pressure from shareholders.
Analysts estimate the world's largest publicly traded oil company is likely to report earnings per share of $2.07, a 3.3% decline from a year ago, as natural-gas prices tumbled 41% to an average $2.50 per million British thermal units in the first quarter, compared with a year earlier. A flood of natural-gas supply, unlocked by hydraulic fracturing, coincided with an unusually warm winter, which depressed demand for the product.
Meanwhile, earnings per share for Exxon's rivals, Chevron and ConocoPhillips, are expected to increase to $3.21 and $2.08, up 3.9% and 14%, respectively, mainly because concerns about oil supplies from the Persian Gulf drove the price of crude higher. The European crude benchmark Brent, which is used by major oil companies to price their massive international production, traded at an average of more than $118 a barrel during the quarter, or about 12% higher than the same period a year earlier.
ConocoPhillips is scheduled to report earnings Monday, while Exxon and Chevron are slated for Thursday and Friday, respectively.
Exxon, which became the largest U.S. natural-gas producer when it bought XTO Energy Inc. in 2010, has received criticism from analysts who say its profitability has decreased due to its big bet on natural gas.
"Exxon's unwavering focus on natural gas is going to hold it back," said Alan Good, an analyst with Morningstar.
But the company says it remains confident natural-gas prices will rebound in the long term, and that sustained drilling is needed to better understand the geology of the shale properties it has recently acquired throughout the U.S. While other companies, such as Chesapeake Energy Corp., have pulled back on natural-gas drilling, Exxon keeps forging ahead in productive shale areas such as Pennsylvania's Marcellus Shale.
Some analysts expect Exxon to lift its quarterly dividend, currently at 47 cents a share, by about 15%, a jump from the average 6.5% increase over the last decade. The move is likely to please investors who have long urged the company to bring its cash distribution closer to its oil-industry competitors. The company has hinted the increase would be unveiled this week, when it typically announces its annual dividend.
First-quarter results also will serve as a reminder that major U.S. oil companies continue to struggle to increase their output as the reserves in their fields deplete quickly and access to new sources remains a challenge, said Phil Weiss, an analyst at Argus Research.
Barclays Capital estimates first-quarter production for Exxon, Chevron and ConocoPhillips will drop an average of 3.6% from the same quarter in 2011.
Chevron and Conoco warned investors in interim updates released earlier this month that their world-wide output is likely to be lower than a year ago.
Chevron, based in San Ramon, Calf., said its first-quarter production will be affected by the previously announced sale of Cook Inlet, Alaska, assets at the end of last year and by the March shut-in of its Frade field offshore Brazil due to an oil spill.
Conoco's quarterly output is expected be lower than in 2011 as the company continued to sell assets amid a three-year restructuring plan it started in 2009. Conoco will be posting its last quarterly results as an integrated oil company with both exploration and production and refining segments. The spinoff of its refining business, Phillips 66, will be completed by the end of this month.
U.S. oil majors' quarterly results are expected to benefit from a rebound in refining and marketing profits. Their large refining arms were boosted by a wider price gulf between domestically produced crude oil, which they buy to produce gasoline and diesel, versus more expensive Brent crude, which sets the price for refined products.
The domestically produced crude, West Texas Intermediate, was $15 cheaper than Brent the first quarter of 2012, compared with a discount of $11 in the same period of 2011.
Ben Lefebvre contributed to this article
The Week Ahead looks at coming corporate events.
Write to Isabel Ordóñez at
Credit: By Isabel Ordóñez
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 22, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1008769064
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1008769064?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Nymex Oil Gets Boost From Pipeline Reversal
Author: Gross, Jenny
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 Apr 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Oil prices in the U.S. have regained some of their footing against Brent crude.
Prices for crude on the New York Mercantile Exchange have risen 1.6% since April 4, while Brent, considered to be the global benchmark, has fallen 2.9% over the same period, narrowing the price gap.
Driving the rise in the Nymex price are traders anticipating the reversal of the Seaway pipeline, which had been bringing oil north to the Midwest from the Gulf Coast. When oil begins flowing in the opposite direction next month, that will serve as a drain on the key storage hub of Cushing, Okla., relieving somewhat the glut of crude there that has kept U.S. oil prices depressed relative to Brent since the beginning of 2011.
The crude will begin flowing to the U.S. Gulf Coast on May 17, two weeks earlier than originally planned. Crude-oil prices on the Gulf Coast track Brent because seaborne cargoes feed refineries there.
That could be enough to reconnect Nymex futures to the world oil market, said Torbjørn Kjus, an Oslo-based oil-market analyst at DNB NOR. "That should happen to a large extent in the next two years," he said.
The price of Brent has declined because Iran agreed to continue talks with the West over its nuclear program, easing fears of an immediate supply disruption. Brent last week lost 2% to settle at $118.76 a barrel on Friday. Nymex crude, also called West Texas Intermediate, or WTI, rose 0.2% to $103.05 a barrel. The gap, or spread, between them was $15.71, a reduction of 21% from $20.87 on April 4.
An increase in oil shipments from Canada to Cushing and a rise in oil output from shale formations in North Dakota created the glut and caused the spread to blow out in early 2011. Before that, Brent and WTI historically traded within a couple of dollars of each other. At its widest, the spread topped $28 in October last year.
Because of the abundance of supplies in and around Cushing--the delivery point for the Nymex futures contract--U.S. oil prices haven't reacted as sharply as Brent to supply disruptions, or worries about them, in other parts of the world. With the reversal of Seaway, that is set to change, said John Kilduff, founding partner of hedge fund Again Capital.
Nymex crude will be a more global player as opposed to the parochial commodity that it is at the moment, Mr. Kilduff said.
Co-owned by Enterprise Products Partners LP and Enbridge Inc., Seaway initially is slated to transport 150,000 barrels of oil a day by June. That is planned to ramp up to 400,000 barrels a day by early 2013.
Some traders, though, are reluctant to bet on an immediate sharp narrowing of the gap between Brent and WTI.
Louis-Cyprien Doucet, an independent trader, said Brent likely would hold between a $10 and $16 premium to WTI in coming weeks. He predicts the real narrowing of the gap will happen when the capacity of the Seaway pipeline ramps up to 400,000 barrels a day by the beginning of next year.
Write to Jenny Gross at
Credit: By Jenny Gross
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 22, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1008769362
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1008769362?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Development in 0.01% of ANWR
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 Apr 2012: n/a.
ProQuest document link
Abstract:
Ray Evans Eastport, N.Y. In Sen. Murkowski's admirable op-ed on our failure to open part of ANWR to oil production 10 years ago and the results of that failure today, she leaves out one inevitable result.
Full text: I read by Sen. Lisa Murkowski (op-ed, April 18) with the realization that many Americans have a lack of understanding of the size of land areas. The senator is discussing the Arctic National Wildlife Refuge and the development of a 2,000-acre tract in the mammoth 19,286,722-acre reserve. Many Americans think of this as a large area, and it isn't.
As the ANWR debate was being waged 10 years ago, I was landing at Islip Airport on Long Island, N.Y., flying over Connetquot River State Park, which is 3,473 acres in area and took less than 30 seconds to fly over. It should be clear to all of us that 2,000-acre plot in ANWR is a postage-stamp-sized area when one considers that Alaska is 425,000,000 acres in size. It takes hours to fly across Alaska but seconds to fly over the proposed development area in ANWR. JFK airport is 4,930 acres. How can we be foolish enough to worry unnecessarily about 2,000 acres in Alaska's vast space, especially when we have the technology and determination to safely develop this resource?
It's time for Americans to think logically and not be held back in developing sound domestic energy policies by the environmental lobby and the politicians who answer to them.
Ray Evans
Eastport, N.Y.
In Sen. Murkowski's admirable op-ed on our failure to open part of ANWR to oil production 10 years ago and the results of that failure today, she leaves out one inevitable result.
Even though he would have opposed it at the time (or voted present), President Obama would now be taking credit for the petroleum production from ANWR.
Bill Brockman
Atlanta
Subject: Energy policy; Petroleum production
People: Murkowski, Lisa
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 22, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1008773543
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1008773543?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News -- The Week Ahead: Oil, Natural-Gas Prices Drive Results
Author: Ordonez, Isabel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]23 Apr 2012: B.2.
ProQuest document link
Abstract:
Analysts forecast the world's largest publicly traded oil company is likely to report first-quarter earnings per share of $2.07, a 3.3% decline from a year earlier, as natural-gas prices tumbled 41% to an average $2.50 per million British thermal units. First-quarter results also will serve as a reminder that major U.S. oil companies continue to struggle to increase their output as the reserves in their fields deplete quickly and access to new sources remains a challenge, said Phil Weiss, an analyst at Argus Research.
Full text: Once again, soaring crude is lifting the oil industry's boats -- and will likely buoy the earnings of Chevron Corp. and ConocoPhillips.
But Texas behemoth Exxon Mobil Corp., which has bet heavily on North American natural-gas production in recent years, is expected to see its profit drop a bit because prices for the commodity have hit decade-low levels. Exxon, however, is expected to post a larger-than-usual dividend increase this week, responding to pressure from shareholders.
Analysts forecast the world's largest publicly traded oil company is likely to report first-quarter earnings per share of $2.07, a 3.3% decline from a year earlier, as natural-gas prices tumbled 41% to an average $2.50 per million British thermal units. A flood of natural-gas supply, unlocked by hydraulic fracturing, coincided with an unusually warm winter, which depressed demand for the product.
Meanwhile, earnings per share for Exxon's rivals, Chevron and ConocoPhillips, are expected to increase to $3.21 and $2.08, up 3.9% and 14%, respectively, mainly because concerns about oil supplies from the Persian Gulf drove the price of crude higher. The European crude benchmark Brent, which is used by major oil companies to price their massive international production, traded at an average of more than $118 a barrel during the quarter, or about 12% higher than a year earlier.
ConocoPhillips is scheduled to report earnings Monday, while Exxon and Chevron are slated for Thursday and Friday, respectively.
Exxon, which became the largest U.S. natural-gas producer when it bought XTO Energy Inc. in 2010, has received criticism from analysts who say its profitability has decreased due to its big bet on natural gas.
"Exxon's unwavering focus on natural gas is going to hold it back," said Alan Good, an analyst with Morningstar.
But the company says it remains confident natural-gas prices will rebound in the long term, and that sustained drilling is needed to better understand the geology of the shale properties it has recently acquired throughout the U.S. While other companies, such as Chesapeake Energy Corp., have pulled back on natural-gas drilling, Exxon keeps forging ahead in productive shale areas such as Pennsylvania's Marcellus Shale.
Some analysts expect Exxon to lift its quarterly dividend, currently at 47 cents a share, by about 15%, a jump from the average 6.5% increase over the past decade. The move is likely to please investors who have long urged the company to bring its cash distribution closer to its oil-industry competitors. The company has hinted the increase would be unveiled this week, when it typically announces its annual dividend.
First-quarter results also will serve as a reminder that major U.S. oil companies continue to struggle to increase their output as the reserves in their fields deplete quickly and access to new sources remains a challenge, said Phil Weiss, an analyst at Argus Research.
Barclays Capital estimates first-quarter production for Exxon, Chevron and ConocoPhillips will drop by an average of 3.6% from a year earlier.
Chevron and Conoco warned investors in interim updates released earlier this month that their world-wide output is likely to be lower than a year ago.
Chevron, based in San Ramon, Calf., said its first-quarter production will be affected by the previously announced sale of Cook Inlet, Alaska, assets at the end of last year and by the March shut-in of its Frade field off Brazil's coast due to an oil spill.
Conoco's quarterly output is expected be lower than in 2011 as the company continued to sell assets amid a three-year restructuring plan it started in 2009. Conoco will be posting its last quarterly results as an integrated oil company with both its exploration-and-production and refining segments. The spinoff of its refining business, Phillips 66, will be completed by the end of this month.
U.S. oil majors' quarterly results are expected to benefit from a rebound in refining and marketing profits. Their large refining arms were boosted by a wider price gulf between domestically produced crude oil -- which they buy to produce gasoline and diesel -- and more expensive Brent crude, which sets the price for refined products.
The domestically produced crude, West Texas Intermediate, was $15 cheaper than Brent the first quarter of 2012, compared with a discount of $11 in the same period of 2011.
---
Ben Lefebvre contributed to this article.
---
The Week Ahead looks at coming corporate events.
---
Happening This Week
MONDAY
Hannover Messe trade show begins in Germany.
Paris Europlace International Financial Forum starts in New York.
RailsConf gets under way in Austin, Texas.
SPIE Defense, Security and Sensing conferences start in Baltimore.
Earnings: ConocoPhillips, Hasbro, Netflix
TUESDAY
Infosecurity Europe conference starts in London.
Bio-IT World Conference & Expo begins in Boston.
Internet World starts in London.
Kitchen & Bath Industry Show gets under way in Chicago.
Earnings: Apple
WEDNESDAY
BIOtech exhibition and conference starts in Tokyo.
Gartner Business Process Management Summit gets under way in Baltimore.
Earnings: AutoNation, Avery Dennison, Boeing, Caterpillar, Cheesecake Factory, Corning, Delta Air, Hess, Lorillard, Motorola Solutions, Zipcar
THURSDAY
Earnings: Aetna, Ally Financial, Amazon.com, American Greetings, AmerisourceBergen, Angie's List, Bristol-Myers Squibb, Celgene, Dow Chemical, Expedia, Exxon Mobil, JetBlue Airways, Kellogg, Liz Claiborne, Lockheed Martin, Mack-Cali, MetLife, Noble Energy, Raytheon, Zynga
FRIDAY
Beijing International Automotive Exhibition opens and runs through May 2.
Earnings: American Axle, Barnes, Calpine, Chevron, Coventry Health, Ford, Goodyear Tire, International Paper, Magellan Health, Merck, Newell Rubbermaid, Pilgrim's Pride, Procter & Gamble
Credit: By Isabel Ordonez
Subject: Earnings per share; Dividends; Corporate profits; Stock prices; Petroleum industry; Crude oil prices
Location: United States--US
Classification: 9190: United States; 3400: Investment analysis & personal finance; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.2
Publication year: 2012
Publication date: Apr 23, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1008808865
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1008808865?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Oil Development in 0.01% of ANWR
Author: Anonymous
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]23 Apr 2012: A.14.
ProQuest document link
Abstract:
Ray Evans Eastport, N.Y. --- In Sen. Murkowski's admirable op-ed on our failure to open part of ANWR to oil production 10 years ago and the results of that failure today, she leaves out one inevitable result.
Full text: I read "America's Lost Energy Decade" by Sen. Lisa Murkowski (op-ed, April 18) with the realization that many Americans have a lack of understanding of the size of land areas. The senator is discussing the Arctic National Wildlife Refuge and the development of a 2,000-acre tract in the mammoth 19,286,722-acre reserve. Many Americans think of this as a large area, and it isn't.
As the ANWR debate was being waged 10 years ago, I was landing at Islip Airport on Long Island, N.Y., flying over Connetquot River State Park, which is 3,473 acres in area and took less than 30 seconds to fly over. It should be clear to all of us that 2,000-acre plot in ANWR is a postage-stamp-sized area when one considers that Alaska is 425,000,000 acres in size. It takes hours to fly across Alaska but seconds to fly over the proposed development area in ANWR. JFK airport is 4,930 acres. How can we be foolish enough to worry unnecessarily about 2,000 acres in Alaska's vast space, especially when we have the technology and determination to safely develop this resource?
It's time for Americans to think logically and not be held back in developing sound domestic energy policies by the environmental lobby and the politicians who answer to them.
Ray Evans
Eastport, N.Y.
---
In Sen. Murkowski's admirable op-ed on our failure to open part of ANWR to oil production 10 years ago and the results of that failure today, she leaves out one inevitable result.
Even though he would have opposed it at the time (or voted present), President Obama would now be taking credit for the petroleum production from ANWR.
Bill Brockman
Atlanta
Subject: Energy policy; Petroleum production
People: Murkowski, Lisa
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.14
Publication year: 2012
Publication date: Apr 23, 2012
Section: Letters to the Editor
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1008809291
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1008809291?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Fighting Flares Anew in Sudanese Oil Patch; Khartoum, Accused of Bombing South, Says It Won't Return to Negotiations
Author: Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Apr 2012: n/a.
ProQuest document link
Abstract:
According to South Sudan, Sudanese planes dropped bombs on Bentiu, the capital of Unity state, early Monday, killing at least three civilians, and on the oil town of Rubkona in the same state, leaving several civilians injured.
Full text: KAMPALA, Uganda--South Sudan accused Sudan of attacking an oil-rich border state with fighter jets and ground forces days after troops from the south began withdrawing from a disputed oil town to avoid full-blown war.
The reports suggested Sudan was trying to weaken the south's vital oil industry, after accusing the south of deliberately damaging oil facilities in the disputed border town, Heglig.
South Sudan's army spokesman said Monday's attacks showed Sudan has declared war, and he asserted the south's right of self-defense, threatening further conflict. Sudan called the accusations "a fabrication" to attract international attention.
The U.S., an ally of South Sudan, called on Sudan to immediately halt "the aerial and artillery bombardment in South Sudan" and for both sides to "end all military support for rebel groups within the other country," State Department spokeswoman Victoria Nuland said in a statement.
Washington, while urging South Sudan to exercise restraint, said it recognized the country's right to self-defense.
United Nations Secretary-General Ban Ki-moon condemned the Sudanese bombings and called on the government in Khartoum "to cease all hostilities immediately," U.N. deputy spokesman Eduardo del Buey said, according to the Associated Press. Mr. Ban called on the presidents of the two nations to resume dialogue.
But Sudanese Presiden Omar al-Bashir, addressing cheering troops in Heglig, vowed not to negotiate with South Sudan, saying their leaders only understood "the language of the gun," Reuters reported.
According to South Sudan, Sudanese planes dropped bombs on Bentiu, the capital of Unity state, early Monday, killing at least three civilians, and on the oil town of Rubkona in the same state, leaving several civilians injured.
Sudan "continues to violate our air space," said Martin Jada, a spokesman at South Sudan's information ministry, in an interview. "It seems their only interest is war."
Mr. Jada also said Sudanese ground troops attacked civilian settlements in Unity state on Monday. He gave no details on causalities.
A South Sudan military officer in the capital, Juba, said the Sudanese ground attack took place at a settlement six miles from the border. He said South Sudanese troops pushed back, forcing combatants to retreat across the border, but their poor air defenses failed to engage the Sudanese jets.
The fighting comes after South Sudan said on Friday it was withdrawing troops from Heglig after a ten-day occupation. South Sudan was under pressure to pull out from the U.S., China, the U.N. and others who feared the hostilities were leading to a full-scale war. South Sudan views Heglig as its own, based on 1956 borders, but the U.N. and others view the town, with its oil infrastructure, as Sudan's territory.
Clashes in recent weeks have been the most deadly since South Sudan became an independent state in July. After secession, disputes remained over oil-revenue sharing, borders and other matters. The two neighbors have yet to agree on how much the south should pay to use northern infrastructure such as pipelines and seaports needed to transport its oil. In January, South Sudan shut down its 350,000-barrel-a-day oil production, accusing Sudan of stealing its oil in transit. Sudan said it confiscated the oil to recover unpaid transit fees.
South Sudan's suspension of oil production has starved both countries of foreign currency.
Sudan is demanding compensation from South Sudan for damage to facilities in Heglig. The main pumping station at the 60,000-barrel-a-day Heglig refinery was destroyed during the fighting. The refinery's operating-system software, the central processing facility, a power station and the main control plants were also destroyed, according to Sudan's oil ministry.
Sudan is also battling insurgents in at least three border states along its 1,100-mile border with South Sudan. As it attempts to quell the insurgencies, it faces allegations of targeting civilians.
Human Rights Watch said in a report on Monday that civilians in Sudan's Blue Nile state endure "indiscriminate bombing and other abuses even as a new conflict between Sudan and South Sudan threatens to engulf the wider border area." A Sudan government spokesman declined to comment on the report.
Write to Nicholas Bariyo at
Credit: By Nicholas Bariyo
Subject: Petroleum production
Location: South Sudan United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 23, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1008903253
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1008903253?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iran Says Virus Has Hit Oil Sector
Author: Faucon, Benoît; Fassihi, Farnaz
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Apr 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Iran's oil sector wrestled on Monday with alleged cyberattacks that began at the Oil Ministry and have spread to other industries, Iranian officials and media said.
The apparent sabotage forced Iran's Oil Ministry to cut off Internet access to all employees, including refinery workers, to avoid further spread, a new blow to an industry that is already a target of sanctions intended to deprive Tehran of oil revenue.
A virus called "Wiper" was plaguing the server and websites of the ministry and National Oil Company, Iran's Student News Agency, ISNA, reported Monday. Oil data haven't been compromised, ministry spokesman Alireza Nikzad said.
Oil shipments haven't been affected, Iranian officials said on Monday, though personnel at the Kharg oil terminal, through which at least 80% of Iran's exports are shipped abroad, haven't been able to send or receive email since Sunday, an oil official at the terminal said.
"We are using telephone, fax, SMS," the official said.
An Iranian security official told ISNA that Iran wasn't familiar with the virus, which he said steals information and erases data. The attack on computers of the oil ministry was first identified in March, but its effects reached a critical force on Sunday, when information was erased from several computers in the Oil Ministry and servers were disrupted, ISNA said.
Iran's oil news agency, SHANA, was also disrupted by the virus, ISNA reported.
The ministry said on Monday that it had created an emergency committee to battle the virus. The committee is investigating to determine whether it originated abroad or inside Iran, said Hamdollah Mohamadnejad, the ministry's defense strategist, according to news media.
Iran's nuclear industry was hit by a virus in 2010 known as Stuxnet, which targeted centrifuges, in what was widely believed to be an act of foreign sabotage aimed at slowing Tehran's progress toward building a nuclear weapon--though Iran denies it has such a goal.
Iran recently resumed talks with the five permanent members of the United Nations Security Council and Germany, but Western governments have said they would continue to oppose Iran's nuclear program, which they suspect has military aims. Iran has said its nuclear program is only for peaceful uses.
Iran's Supreme Leader Ayatollah Ali Khamenei has called the Internet a threat to national security and instructed security forces to train and form units to battle cyberattacks as well as the influence of social-media websites.
Iran announced in 2011 that it was working to launch the world's first "national Internet," a secure network that could effectively isolate Iranian users from the World Wide Web and shield government servers and websites from cyberattacks.
Minister of Communication Reza Taghipour said Monday that his ministry had accelerated its efforts to complete the project and free Iran from the West.
Write to Farnaz Fassihi at
Credit: By Benoît Faucon And Farnaz Fassihi
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 23, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1008905663
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1008905663?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Unilever Takes Palm Oil in Hand
Author: Sonne, Paul
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Apr 2012: n/a.
ProQuest document link
Abstract:
The harvesting of palm oil has become a hot-button environmental issue for the role it plays in deforestation in countries such as Indonesia and Malaysia, where rain forests have been cleared to make way for palm-oil plantations.
Full text: LONDON--Unilever PLC is negotiating to build a $100 million palm-oil processing plant in Indonesia, an attempt to accelerate its commitment to sourcing the oil in ways that don't destroy the environment.
Unilever is trying to more closely trace the source of the palm oil it uses at a time when the industry is falling short of goals to make extraction of the key ingredient less insidious. The harvesting of palm oil has become a hot-button environmental issue for the role it plays in deforestation in countries such as Indonesia and Malaysia, where rain forests have been cleared to make way for palm-oil plantations. In the process, orangutan, tiger and rhino habitats have been destroyed.
Unilever is in advanced discussions with the Indonesian government to build the plant, which would make sustainable palm-kernel oil in Sumatra and turn out about 10% of Unilever's annual consumption. The company hopes to break ground on the plant later this year.
The Anglo-Dutch company is the world's biggest consumer of palm oil, using 1.36 million tons of the ingredient a year to make products such as Dove soap, Magnum ice cream and Vaseline lotion.
The company's new goal, which will be formally announced on Tuesday, is that within eight years all of the palm oil it buys will come from traceable sources that are certified as sustainable. Last year, only 27,000 tons, or about 2%, of the palm oil Unilever bought came from such sources.
"I am not aware of anyone else who has made that commitment, particularly on our scale," says Marc Engel, Unilever's chief procurement officer.
The thirst for palm oil is rapidly expanding, thanks to the widespread application of it and its derivatives in products ranging from cakes to lipsticks. Last year, the world consumed about 50 million tons of the oil, according to the World Wildlife Foundation. About five million to six million tons came from plantations certified as sustainable by the Roundtable on Sustainable Palm Oil, or RSPO, an organization comprising producers, buyers and environmental groups.
It isn't easy for consumer-goods companies to figure out whether palm oil comes from an audited sustainable plantation. Processing plants often combine oil from sustainable plantations with nonsustainable oil in a vat, making the source of a final ingredient difficult to pinpoint. Unilever also employs palm oil in lots of different ways--often using derivatives of the oil rather than oil itself--making the supply chain even more complex.
Mr. Engel compared it to crude oil. "When you actually want to know where the petrol in your car is coming from--from which oil well--it's very hard to see," he said.
For that reason, the RSPO developed a system of GreenPalm certificates that companies such as Unilever can buy. The RSPO certifies plantations as sustainable and awards them one certificate per ton of palm oil they produce.
Unilever considered about two-thirds of the palm oil it used last year sustainable, not because it actually came from traceable sources, but because it bought 803,000 GreenPalm certificates, plus the 27,000 tons of oil it bought from traceable plantations.
This year, the company says it will match all the palm oil it doesn't buy from traceable plantations with certificates so it reaches a target of 100% certified sustainable palm oil, three years ahead of the 2015 deadline the company set in 2010.
That, however, doesn't mean the palm-oil derivative in a bar of Dove soap or Magnum ice cream actually came from a sustainable palm-oil plantation.
"In theory, all of the palm oil could be sustainable, or none of it could be," Mr. Engel says.
He says that although the sustainable oil attached to the certificates may not have ended up in Unilever products, the company bought a certificate for a ton of palm oil "out there" that came from a sustainable plantation, helping shift the balance toward sustainable production.
The certificate system has its critics, who say it allows companies to claim they are buying sustainable palm oil when they aren't.
"A lot of people are hiding behind green certificates as if that's going to change the industry," says Alan Chaytor, executive director of New Britain Palm Oil Ltd., a Papua New Guinea-based producer that makes about 600,000 tons of sustainable palm oil a year.
Unilever agrees that it would be better to use only sustainable palm oil that can be traced back to a certified plantation, rather than to rely on the certificates, but the company says it is a complicated transition, requiring enough such palm oil to exist.
Mr. Engel said that when Unilever initially made its commitment to sustainable palm oil a few years ago, oil from sustainable plantations travelling through a "segregated" supply chain didn't exist. "A lot of people are realizing the future is traceable sources," he says, but notes that a huge infrastructure investment is required to make it happen.
Write to Paul Sonne at
Credit: By Paul Sonne
Subject: Plantations
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 23, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1008917755
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1008917755?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
World News: Fighting Flares Anew in Sudanese Oil Patch --- Khartoum, Accused of Bombing South, Says It Won't Return to Negotiations
Author: Bariyo, Nicholas
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]24 Apr 2012: A.11.
ProQuest document link
Abstract:
According to South Sudan, Sudanese planes dropped bombs on Bentiu, the capital of Unity state, early Monday, killing at least three civilians, and on the oil town of Rubkona in the same state, leaving several civilians injured.
Full text: KAMPALA, Uganda -- South Sudan accused Sudan of attacking an oil-rich border state with fighter jets and ground forces days after troops from the south began withdrawing from a disputed oil town to avoid full-blown war.
The reports suggested Sudan was trying to weaken the south's vital oil industry, after accusing the south of deliberately damaging oil facilities in the disputed border town, Heglig.
South Sudan's army spokesman said Monday's attacks showed Sudan has declared war, and he asserted the south's right of self-defense, threatening further conflict. Sudan called the accusations "a fabrication" to attract international attention.
The U.S., an ally of South Sudan, called on Sudan to immediately halt "the aerial and artillery bombardment in South Sudan" and for both sides to "end all military support for rebel groups within the other country," State Department spokeswoman Victoria Nuland said.
Washington, while urging South Sudan to exercise restraint, said it recognized the country's right to self-defense.
United Nations Secretary-General Ban Ki-moon condemned the Sudanese bombings and called on the government in Khartoum "to cease all hostilities immediately," U.N. deputy spokesman Eduardo del Buey said, according to the Associated Press. Mr. Ban called on the presidents of the two nations to resume dialogue.
But Sudanese Presiden Omar al-Bashir, addressing cheering troops in Heglig, vowed not to negotiate with South Sudan, saying their leaders only understood "the language of the gun," Reuters reported.
According to South Sudan, Sudanese planes dropped bombs on Bentiu, the capital of Unity state, early Monday, killing at least three civilians, and on the oil town of Rubkona in the same state, leaving several civilians injured.
Sudan "continues to violate our air space," said Martin Jada, a spokesman at South Sudan's information ministry. "It seems their only interest is war."
Mr. Jada also said Sudanese ground troops attacked civilian settlements in Unity state on Monday. He gave no details on causalities.
A South Sudan military officer in the capital, Juba, said the Sudanese ground attack took place at a settlement six miles from the border. He said South Sudanese troops pushed back, forcing combatants to retreat across the border, but their poor air defenses failed to engage the Sudanese jets.
The fighting comes after South Sudan said on Friday it was withdrawing troops from Heglig after a ten-day occupation. South Sudan was under pressure to pull out from the U.S., China, the U.N. and others who feared the hostilities were leading to a full-scale war. South Sudan views Heglig as its own, based on 1956 borders, but the U.N. and others view the town, with its oil infrastructure, as Sudan's territory.
Clashes in recent weeks have been the most deadly since South Sudan became an independent state in July. After secession, disputes remained over oil-revenue sharing, borders and other matters. The two neighbors have yet to agree how much the south should pay to use northern infrastructure such as pipelines needed to transport its oil. In January, South Sudan shut down its 350,000-barrel-a-day oil production, accusing Sudan of stealing its oil in transit. Sudan said it confiscated the oil to recover unpaid transit fees.
South Sudan's suspension of oil production has starved both countries of foreign currency.
Sudan is demanding compensation from South Sudan for damage to facilities in Heglig. The main pumping station at the 60,000-barrel-a-day Heglig refinery was destroyed during the fighting.
Sudan is also battling insurgents in at least three border states along its 1,100-mile border with South Sudan. As it attempts to quell the insurgencies, it faces allegations of targeting civilians.
Human Rights Watch said in a report on Monday that civilians in Sudan's Blue Nile state endure "indiscriminate bombing and other abuses even as a new conflict between Sudan and South Sudan threatens to engulf the wider border area." A Sudan government spokesman declined to comment on the report.
Credit: By Nicholas Bariyo
Subject: Petroleum production; War; Military engagements
Location: South Sudan United States--US Sudan
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.11
Publication year: 2012
Publication date: Apr 24, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1008968969
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1008968969?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Unilever Takes Palm Oil in Hand
Author: Sonne, Paul
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]24 Apr 2012: B.3.
ProQuest document link
Abstract:
The harvesting of palm oil has become a hot-button environmental issue for the role it plays in deforestation in countries such as Indonesia and Malaysia, where rain forests have been cleared to make way for palm-oil plantations.
Full text: LONDON -- Unilever PLC is negotiating to build a $100 million palm-oil processing plant in Indonesia, an attempt to accelerate its commitment to sourcing the oil in ways that don't destroy the environment.
Unilever is trying to more closely trace the source of the palm oil it uses at a time when the industry is falling short of goals to make extraction of the key ingredient less insidious. The harvesting of palm oil has become a hot-button environmental issue for the role it plays in deforestation in countries such as Indonesia and Malaysia, where rain forests have been cleared to make way for palm-oil plantations. In the process, orangutan, tiger and rhino habitats have been destroyed.
Unilever is in advanced discussions with the Indonesian government to build the plant, which would make sustainable palm-kernel oil in Sumatra and turn out about 10% of Unilever's annual consumption. The company hopes to break ground on the plant later this year.
The Anglo-Dutch company is the world's biggest consumer of palm oil, using 1.36 million tons of the ingredient a year to make products such as Dove soap, Magnum ice cream and Vaseline lotion.
The company's new goal, which will be formally announced on Tuesday, is that within eight years all of the palm oil it buys will come from traceable sources that are certified as sustainable. Last year, only 27,000 tons, or about 2%, of the palm oil Unilever bought came from such sources.
"I am not aware of anyone else who has made that commitment, particularly on our scale," says Marc Engel, Unilever's chief procurement officer.
The thirst for palm oil is rapidly expanding, thanks to the widespread application of it and its derivatives in products ranging from cakes to lipsticks. Last year, the world consumed about 50 million tons of the oil, according to the World Wildlife Foundation. About five million to six million tons came from plantations certified as sustainable by the Roundtable on Sustainable Palm Oil, or RSPO, an organization comprising producers, buyers and environmental groups.
It isn't easy for consumer-goods companies to figure out whether palm oil comes from an audited sustainable plantation. Processing plants often combine oil from sustainable plantations with nonsustainable oil in a vat, making the source of a final ingredient difficult to pinpoint.
Mr. Engel compared it to crude oil. "When you actually want to know where the petrol in your car is coming from -- from which oil well -- it's very hard to see," he said.
For that reason, the RSPO developed a system of GreenPalm certificates that companies such as Unilever can buy. The RSPO certifies plantations as sustainable and awards them one certificate per ton of palm oil they produce.
Unilever considered about two-thirds of the palm oil it used last year sustainable, not because it actually came from traceable sources, but because it bought 803,000 GreenPalm certificates, plus the 27,000 tons of oil it bought from traceable plantations.
Credit: By Paul Sonne
Subject: Oils & fats; International markets; Supply & demand; Plantations
Location: Malaysia Indonesia Indonesia
Company / organization: Name: Unilever PLC; NAICS: 311421, 311512, 311520, 311941, 325611, 325620; Name: Roundtable on Sustainable Palm Oil; NAICS: 813910
Classification: 9180: International; 8600: Manufacturing industries not elsewhere classified
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.3
Publication year: 2012
Publication date: Apr 24, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1008969526
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1008969526?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Iran Says Oil Sector Hit by Cyberattack
Author: Faucon, Benoit; Fassihi, Farnaz
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]24 Apr 2012: A.9.
ProQuest document link
Abstract:
Iran's nuclear industry was hit by a virus in 2010 known as Stuxnet, which targeted centrifuges, in what was widely believed to be an act of foreign sabotage aimed at slowing Tehran's progress toward building a nuclear weapon -- though Iran denies it has such a goal.
Full text: Iran's oil sector wrestled on Monday with alleged cyberattacks that began at the Oil Ministry and have spread to other industries, Iranian officials and media said.
The apparent sabotage forced Iran's Oil Ministry to cut off Internet access to all employees, including refinery workers, to avoid further spread, a new blow to an industry that is already a target of sanctions intended to deprive Tehran of oil revenue.
A virus called "Wiper" was plaguing the server and websites of the ministry and National Oil Company, Iran's Student News Agency, ISNA, reported Monday. Oil data haven't been compromised, ministry spokesman Alireza Nikzad said.
Oil shipments haven't been affected, Iranian officials said on Monday, though personnel at the Kharg oil terminal, through which at least 80% of Iran's exports are shipped abroad, haven't been able to send or receive email since Sunday, an oil official at the terminal said.
"We are using telephone, fax, SMS," the official said.
An Iranian security official told ISNA that Iran wasn't familiar with the virus, which he said steals information and erases data. The attack on computers of the oil ministry was first identified in March, but its effects reached a critical force on Sunday, when information was erased from several computers in the Oil Ministry and servers were disrupted, ISNA said.
The ministry said on Monday that it had created an emergency committee to battle the virus and determine whether it originated abroad or inside Iran.
Iran's nuclear industry was hit by a virus in 2010 known as Stuxnet, which targeted centrifuges, in what was widely believed to be an act of foreign sabotage aimed at slowing Tehran's progress toward building a nuclear weapon -- though Iran denies it has such a goal.
Iran recently resumed talks with the five permanent members of the United Nations Security Council and Germany, but Western governments have said they would continue to oppose Iran's nuclear program, which they suspect has military aims.
Iran's Supreme Leader Ayatollah Ali Khamenei has called the Internet a threat to national security and instructed security forces to train and form units to battle cyberattacks and the influence of social-media websites.
Iran announced in 2011 that it was working to launch the world's first "national Internet," a secure network that could effectively isolate Iranian users from the World Wide Web and shield government servers and websites from cyberattacks.
Minister of Communication Reza Taghipour said Monday that his ministry had accelerated its efforts to complete the project and free Iran from the West.
Credit: By Benoit Faucon and Farnaz Fassihi
Subject: Web sites; Nuclear weapons; Internet access; Internet; Petroleum industry; Computer security
Location: Iran
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.9
Publication year: 2012
Publication date: Apr 24, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1008969942
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1008969942?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Unilever Takes Palm Oil in Hand
Author: Sonne, Paul
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 Apr 2012: n/a.
ProQuest document link
Abstract:
The harvesting of palm oil has become a hot-button environmental issue for the role it plays in deforestation in countries such as Indonesia and Malaysia, where rain forests have been cleared to make way for palm-oil plantations.
Full text: LONDON--Unilever PLC is negotiating to build a $100 million palm-oil processing plant in Indonesia, an attempt to accelerate its commitment to sourcing the oil in ways that don't destroy the environment.
Unilever is trying to more closely trace the source of the palm oil it uses at a time when the industry is falling short of goals to make extraction of the key ingredient less insidious. The harvesting of palm oil has become a hot-button environmental issue for the role it plays in deforestation in countries such as Indonesia and Malaysia, where rain forests have been cleared to make way for palm-oil plantations. In the process, orangutan, tiger and rhino habitats have been destroyed.
Unilever is in advanced discussions with the Indonesian government to build the plant, which would make sustainable palm-kernel oil in Sumatra and turn out about 10% of Unilever's annual consumption. The company hopes to break ground on the plant later this year.
The Anglo-Dutch company is the world's biggest consumer of palm oil, using 1.36 million tons of the ingredient a year to make products such as Dove soap, Magnum ice cream and Vaseline lotion.
The company's new goal, which will be formally announced on Tuesday, is that within eight years all of the palm oil it buys will come from traceable sources that are certified as sustainable. Last year, only 27,000 tons, or about 2%, of the palm oil Unilever bought came from such sources.
"I am not aware of anyone else who has made that commitment, particularly on our scale," says Marc Engel, Unilever's chief procurement officer.
The thirst for palm oil is rapidly expanding, thanks to the widespread application of it and its derivatives in products ranging from cakes to lipsticks. Last year, the world consumed about 50 million tons of the oil, according to the World Wildlife Foundation. About five million to six million tons came from plantations certified as sustainable by the Roundtable on Sustainable Palm Oil, or RSPO, an organization comprising producers, buyers and environmental groups.
It isn't easy for consumer-goods companies to figure out whether palm oil comes from an audited sustainable plantation. Processing plants often combine oil from sustainable plantations with nonsustainable oil in a vat, making the source of a final ingredient difficult to pinpoint. Unilever also employs palm oil in lots of different ways--often using derivatives of the oil rather than oil itself--making the supply chain even more complex.
Mr. Engel compared it to crude oil. "When you actually want to know where the petrol in your car is coming from--from which oil well--it's very hard to see," he said.
For that reason, the RSPO developed a system of GreenPalm certificates that companies such as Unilever can buy. The RSPO certifies plantations as sustainable and awards them one certificate per ton of palm oil they produce.
Unilever considered about two-thirds of the palm oil it used last year sustainable, not because it actually came from traceable sources, but because it bought 803,000 GreenPalm certificates, plus the 27,000 tons of oil it bought from traceable plantations.
This year, the company says it will match all the palm oil it doesn't buy from traceable plantations with certificates so it reaches a target of 100% certified sustainable palm oil, three years ahead of the 2015 deadline the company set in 2010.
That, however, doesn't mean the palm-oil derivative in a bar of Dove soap or Magnum ice cream actually came from a sustainable palm-oil plantation.
"In theory, all of the palm oil could be sustainable, or none of it could be," Mr. Engel says.
He says that although the sustainable oil attached to the certificates may not have ended up in Unilever products, the company bought a certificate for a ton of palm oil "out there" that came from a sustainable plantation, helping shift the balance toward sustainable production.
The certificate system has its critics, who say it allows companies to claim they are buying sustainable palm oil when they aren't.
"A lot of people are hiding behind green certificates as if that's going to change the industry," says Alan Chaytor, executive director of New Britain Palm Oil Ltd., a Papua New Guinea-based producer that makes about 600,000 tons of sustainable palm oil a year.
Unilever agrees that it would be better to use only sustainable palm oil that can be traced back to a certified plantation, rather than to rely on the certificates, but the company says it is a complicated transition, requiring enough such palm oil to exist.
Mr. Engel said that when Unilever initially made its commitment to sustainable palm oil a few years ago, oil from sustainable plantations travelling through a "segregated" supply chain didn't exist. "A lot of people are realizing the future is traceable sources," he says, but notes that a huge infrastructure investment is required to make it happen.
Write to Paul Sonne at
Credit: By Paul Sonne
Subject: Plantations
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 24, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009017519
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1009017519?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Ticks Up Ahead of Supply Report
Author: DiColo, Jerry A
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 Apr 2012: n/a.
ProQuest document link
Abstract:
Analysts surveyed by Dow Jones Newswires expect U.S. crude-oil inventories rose by 1.9 million barrels in the week ended April 20, while refiners boosted operations by 0.5 percentage point.
Full text: NEW YORK--U.S. crude-oil futures rose Tuesday as investors positioned ahead of weekly inventory data that are expected to show increasing oil stockpiles.
Light, sweet crude oil for June delivery on the New York Mercantile Exchange rose 44 cents, or 0.4%, to settle at $103.55 a barrel after trading as high as $104.10 earlier in the session. Brent crude on the ICE futures exchange fell 55 cents to $118.16 a barrel.
Analysts surveyed by Dow Jones Newswires expect U.S. crude-oil inventories rose by 1.9 million barrels in the week ended April 20, while refiners boosted operations by 0.5 percentage point. If correct, U.S. stockpiles would rise above 370 million barrels for the first time since last May.
With traders' attention shifting from tensions with Iran back to issues of oil supply and demand, rising U.S. stockpiles may offer a signal that plenty of oil is available to meet slumping fuel usage.
The data, issued by the U.S. Energy Information Administration, is due 10:30 a.m. Eastern time Wednesday.
Oil prices have held in a tight range just above $100 for several weeks, and many investors have turned their attention to the narrowing price difference between U.S.-traded West Texas Intermediate oil and its European counterpart, Brent crude. On Tuesday, the premium for Brent over WTI dropped below $15 after trading above $20 at the beginning of April.
"We've been in a range for a few days, and it's been all the Brent-WTI spread," driving prices, said Tariq Zahir of Tyche Capital Management.
The Seaway pipeline, which connects the oil hub of Cushing, Okla., to the U.S. Gulf Coast, is expected to start bringing crude to the Gulf Coast on May 17. Owners of the pipeline expect 100,000 barrels a day will start flowing to refineries in the region, helping to relieve the glut in the middle of the U.S. that has depressed the price of WTI. More than 400,000 barrels a day of transportation capacity will be available early next year.
Reformulated gasoline blendstock futures for May delivery settled 2.8 cents lower at $3.1593 a gallon, while May heating oil futures settled 1.03 cents lower at $3.1295 a gallon.
Write to Jerry A. DiColo at
Credit: By Jerry A. DiColo
Subject: Petroleum industry; Crude oil; Pipelines
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 24, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009069507
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1009069507?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Gasoline Futures Tumble As Oil-Supply Fears Ebb
Author: Bird, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 Apr 2012: n/a.
ProQuest document link
Abstract:
[...]ConocoPhillips said it is talking with Delta Air Lines about restarting its Philadelphia-area refinery,which was closed last year, and Sunoco Inc. said it is in talks with Carylye Group about a possible joint venture to keep open the 330,000-barrels-a-day Philadelphia refinery it planned to shut this summer if it couldn't sell it.
Full text: U.S. gasoline-futures prices have dropped 16 cents a gallon over the past eight trading days, as more U.S. crude becomes available for refining into gasoline and fears about a shortage of refining capacity fade.
Helping to spur the downturn is the reversal of a pipeline's flow that will give refiners in the Gulf Coast region greater access to crude, the basic feedstock for gasoline. North Sea Brent crude, the European benchmark which holds sway over gasoline prices, already has fallen by more than $7 a barrel this month, partly on this development.
Reformulated gasoline blendstock futures fell 2.8 cents Tuesday to settle at $3.1593 a gallon, and have repeatedly traded near seven-week lows in recent days. Many traders said futures prices may have hit their summer peak in late March, at near $3.42 a gallon, and see futures falling further in coming weeks, easing retail prices at the pump.
The decline in gasoline futures comes at a time when the U.S. oil benchmark, West Texas Intermediate, has climbed 0.51% this month. But gasoline is priced off Brent crude.
Friday, Brent crude lost 0.5%, to settle at $118.16 a barrel for June delivery on the InterContinental Exchange. West Texas Intermediate settled 0.4% higher at $103.55 a barrel on the New York Mercantile Exchange.
The move by Enbridge Inc. and Enterprise Products Partners LP to reverse the Seaway Pipeline will free up crude oil bottled up in landlocked storage in Cushing, Okla., keeping pressure on Brent prices, analysts said. The companies accentuated the reversal's effect by moving up the date when the pipeline will begin carrying crude to the Gulf Coast, to mid May from June 1.
Meanwhile, the recent reduction of refining capacity might not have the impact on prices many had expected, said Kyle Cooper, managing partner at IAF Energy Advisors. "Overall inventories are in good shape and certainly demand has been lackluster," said Mr. Cooper.
The federal Energy Information Administration warned in February that the closure of several refineries in the Northeast U.S. and offshore facilities that export to the region threatened to significantly tighten supplies and could case price increases.
But ConocoPhillips said it is talking with Delta Air Lines about restarting its Philadelphia-area refinery,which was closed last year, and Sunoco Inc. said it is in talks with Carylye Group about a possible joint venture to keep open the 330,000-barrels-a-day Philadelphia refinery it planned to shut this summer if it couldn't sell it.
Write to David Bird at
Credit: By David Bird
Subject: Petroleum industry; Pipelines; Crude oil; Gasoline prices; Petroleum refineries
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 24, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009081621
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1009081621?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
South Sudan Seeks Oil-Sector Help From China
Author: Ma, Wayne
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 Apr 2012: n/a.
ProQuest document link
Abstract:
BEIJING--China has signaled an interest in a long-term role in South Sudan's oil sector, and has offered to help build an export pipeline and provide technical help once the crisis with neighboring Sudan eases, a South Sudanese official said Tuesday.
Full text: BEIJING--China has signaled an interest in a long-term role in South Sudan's oil sector, and has offered to help build an export pipeline and provide technical help once the crisis with neighboring Sudan eases, a South Sudanese official said Tuesday.
China, which for years has taken the bulk of oil exported from Sudan and its former breakaway province, is hosting the new country's president and a strong ministerial team for talks this week on energy and infrastructure projects. The meetings come at a time when fighting between the two African countries appears to be escalating.
The official, speaking on the sidelines of a meeting between Chinese President Hu Jintao and his South Sudanese counterpart Salva Kiir, said that if an agreement can't be reached to use Sudan's oil infrastructure to export crude, it would build its own pipeline, which could cross neighboring Kenya to either the port of Mombassa or Lamu.
"CNPC has a lot of experience on how to build a pipeline and refinery, and has promised it will support us technically," said deputy chief of protocol Gum Bol Noah. However, he added that China National Petroleum Corp., the country's largest oil producer, wanted to wait until the conflict cooled before proceeding with further talks.
Between 40% and 60% of South Sudan's oil wells have been damaged after four days of aerial bombardment and fighting, Mr. Noah said. Sudanese warplanes have been bombing South Sudan's oil-rich border regions.
China and South Sudan signed a variety of agreements Tuesday, including a "framework for integrated financial cooperation" with the Export-Import Bank of China acting as a lender. Energy deals weren't mentioned. South Sudan also opened its embassy in Beijing.
The visit "comes at a very critical moment for the Republic of South Sudan, because our neighbor Khartoum has declared war against the Republic of South Sudan," South Sudan President Kiir said.
China is by far the largest buyer of crude produced in South Sudan and imported about 260,000 barrels a day of Sudanese crude last year. Sudan was China's seventh-largest supplier, but shipments have fallen sharply since South Sudan halted production of about 350,000 barrels a day in January after accusing Sudan of stealing its oil meant for export.
Credit: By Wayne Ma
Subject: Petroleum industry; Pipelines
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 24, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009191889
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1009191889?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
China Presses Oil-Rich Sudans to Cooperate
Author: Bariyo, Nicholas; Ma, Wayne
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 Apr 2012: n/a.
ProQuest document link
Abstract:
South Sudan, under international pressure, last week withdrew its troops from the disputed oil town of Heglig, but Sudan's oil ministry said the fight left oil facilities there in rubble.\n
Full text: China, hosting the president of South Sudan, pressed the East African nation and neighboring Sudan to restrain from war, as fighting on their disputed oil-rich border continued.
South Sudan on Tuesday accused Sudan of attacking villages, oil wells and troops on its side of the border, while Khartoum said it was only attacking rebels on its own territory.
The violence has frustrated foreign powers who hoped peace between the two nations and smoothly functioning oil production would help alleviate pressure on global crude prices.
China, in particular, has invested in Sudan's oil industry, but conflict has complicated its efforts to ramp up imports. South Sudan's President Salva Kiir is in China this week to build an alliance with Beijing, an investor whose support could help keep both nations afloat.
Allies of both nations have voiced concern that a widening war would further destabilize the region. Ugandan officials threatened last week to enter the conflict if Khartoum follows through on its threat to attack the South Sudan capital of Juba.
"China sincerely hopes that South Sudan and Sudan can become good neighbors who coexist in amity and become good partners who can develop together," said Chinese President Hu Jintao, meeting in Beijing with Mr. Kiir.
United Nations Secretary-General Ban Ki-moon said on Tuesday that there could be no military solution to the conflict, a spokesman said. Recent fighting has displaced 35,000 people in border areas, he said.
Susan Rice, the U.S. ambassador to the U.N., said the Security Council would consider a proposal by the African Union made on Tuesday to give both sides three months to reach a peace agreement or face "appropriate measures." The Security Council has already begun considering imposing sanctions on both Sudans if the violence does not stop, Ms. Rice said.
The fighting is the latest chapter in a decades-old conflict that has simmered since South Sudan's secession in July left many issues unsettled, including the demarcation of the border.
South Sudan said Sudan's war planes bombed army and civilian positions overnight Monday and into Tuesday, and targeted, but missed, oil installations. Over a dozen people were injured, said Col. Philip Aguer, army spokesman for South Sudan.
"It's a declaration of war, but we have the capabilities to defend our territory," he said.
Sudan's government spokesman Rabie Abdelaty said its ground troops and air force were purging border areas of South Sudan-backed rebels. He denied Sudan's troops had crossed into its neighbor's territory, although both sides differ on the precise location of a shared border.
The rebels, from Sudan People's Liberation Movement-North, fought with the south in the civil war that ended in 2005. After secession, the rebels maintained bases in Sudan's oil-rich South Kordofan border state and continued to fight for the territory, which they believe should have seceded with South Sudan.
South Kordofan is the only state with vast oil fields that remained in Sudan after the split, which left the south dependent on Sudan's pipelines and ports to export its oil.
Sudan says the rebels are backed by South Sudan and Uganda, which say they have severed ties with the group.
Analysts say the governments in Khartoum and Juba are avoiding all-out war, and could be using the conflict with a hostile neighbor to unify shaky domestic support, tamp down on insurgencies and divert attention from economic challenges.
"There have been plenty of red lines that haven't been crossed," said E.J. Hogendoorn, the Horn of Africa project director for the International Crisis Group. "If this had escalated, one of the first things you'd expect to see is Khartoum to hit the airport in Juba, for example, or to bomb other strategic facilities in South Sudan. I think so far the conflict has been quite contained."
China, which for years has taken the bulk of oil exported from Sudan and its former breakaway province, is hosting Mr. Kiir for talks on energy and infrastructure projects.
Beijing has offered to help build an export pipeline and provide technical help once the crisis with Sudan eases, according to South Sudan's deputy chief of protocol Gum Bol Noah, who accompanied Mr. Kiir to Beijing. The pipeline could cross neighboring Kenya to either the port of Mombasa or Lamu, Mr. Noah said.
China is by far the largest buyer of Sudanese crude, importing about 260,000 barrels a day last year, making Sudan its seventh-largest supplier. Shipments fell sharply after landlocked South Sudan suspended its 350,000 barrels-a-day production in January because of a disagreement over how much it should pay Sudan for transporting oil to its seaport.
South Sudan, under international pressure, last week withdrew its troops from the disputed oil town of Heglig, but Sudan's oil ministry said the fight left oil facilities there in rubble. In the south, 40% to 60% of oil wells have since been damaged by bombings and fighting, Mr. Noah said.
Solomon Moore, Liyan Qi and Joe Lauria contributed to this article.
Write to Nicholas Bariyo at and Wayne Ma at
Credit: Nicholas Bariyo; Wayne Ma
Subject: Petroleum industry; Petroleum production
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 24, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009191909
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1009191909?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Gasoline Futures Tumble As Oil-Supply Fears Ebb
Author: Bird, David
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]25 Apr 2012: C.4.
ProQuest document link
Abstract:
The move by Enbridge Inc. and Enterprise Products Partners LP to reverse the Seaway Pipeline will free up crude oil bottled up in landlocked storage in Cushing, Okla., keeping pressure on Brent prices, analysts said.
Full text: Corrections & Amplifications
U.S. gasoline-futures prices fell nearly 20 cents a gallon over the eight sessions between April 13 and April 24. In some editions Wednesday, a Commodities article incorrectly said the amount of the decline was 16 cents.
(WSJ April 26, 2012)
U.S. gasoline-futures prices have dropped 16 cents a gallon over the past eight trading days, as more U.S. crude becomes available for refining into gasoline and fears about a shortage of refining capacity fade.
Helping to spur the downturn is the reversal of a pipeline's flow that will give refiners in the Gulf Coast region greater access to crude, the basic feedstock for gasoline. North Sea Brent crude, the European benchmark which holds sway over gasoline prices, already has fallen by more than $7 a barrel this month, partly on this development.
Reformulated gasoline blendstock futures fell 2.8 cents Tuesday to settle at $3.1593 a gallon, and have repeatedly traded near seven-week lows in recent days. Many traders said futures prices may have hit their summer peak in late March, at near $3.42 a gallon, and see futures falling further in coming weeks, easing retail prices at the pump.
The decline in gasoline futures comes at a time when the U.S. oil benchmark, West Texas Intermediate, has climbed 0.51% this month. But gasoline is priced off Brent crude.
The move by Enbridge Inc. and Enterprise Products Partners LP to reverse the Seaway Pipeline will free up crude oil bottled up in landlocked storage in Cushing, Okla., keeping pressure on Brent prices, analysts said. The companies accentuated the reversal's effect by moving up the date when the pipeline will begin carrying crude to the Gulf Coast, to mid May from June 1.
Meanwhile, the recent reduction of refining capacity might not have the impact on prices many had expected, said Kyle Cooper, managing partner at IAF Energy Advisors.
The federal Energy Information Administration warned in February that the closure of several refineries in the Northeast U.S. and offshore facilities that export to the region threatened to significantly tighten supplies and could case price increases.
But ConocoPhillips said it is talking with Delta Air Lines about restarting its Philadelphia-area refinery, and Sunoco Inc. said it is in talks with Carylye Group about a possible joint venture to keep open the Philadelphia refinery it planned to shut if it couldn't sell it.
Credit: By David Bird
Subject: Gasoline; Commodity prices
Location: United States--US
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Apr 25, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009115505
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1009115505?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: China Presses Oil-Rich Sudans to Cooperate
Author: Bariyo, Nicholas; Ma, Wayne
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]25 Apr 2012: A.10.
ProQuest document link
Abstract:
Susan Rice, the U.S. ambassador to the U.N., said the Security Council would consider a proposal by the African Union made on Tuesday to give both sides three months to reach a peace agreement or face "appropriate measures."
Full text: China, hosting the president of South Sudan, pressed the East African nation and neighboring Sudan to exercise restraint, as fighting on their disputed oil-rich border continued.
South Sudan on Tuesday accused Sudan of attacking villages, oil wells and troops on its side of the border, while Khartoum said it was only attacking rebels on its own territory.
The violence has frustrated foreign powers who hoped peace between the two nations and smoothly functioning oil production would help alleviate pressure on global crude prices.
China, in particular, has invested in Sudan's oil industry, but conflict has complicated its efforts to ramp up imports. South Sudan's President Salva Kiir is in China this week to build an alliance with Beijing, an investor whose support could help keep both nations afloat.
Allies of both nations have voiced concern that a widening war would further destabilize the region. Ugandan officials threatened last week to enter the conflict if Khartoum follows through on its threat to attack the South Sudan capital of Juba.
"China sincerely hopes that South Sudan and Sudan can become good neighbors who coexist in amity and become good partners who can develop together," said Chinese President Hu Jintao, meeting in Beijing with Mr. Kiir.
United Nations Secretary-General Ban Ki-moon said on Tuesday that there could be no military solution to the conflict, a spokesman said. Recent fighting has displaced 35,000 people in border areas, he said.
Susan Rice, the U.S. ambassador to the U.N., said the Security Council would consider a proposal by the African Union made on Tuesday to give both sides three months to reach a peace agreement or face "appropriate measures." The Security Council has already begun considering imposing sanctions on both Sudans, Ms. Rice said.
The fighting is the latest chapter in a decades-old conflict that has simmered since South Sudan's secession in July left many issues unsettled, including the demarcation of the border.
South Sudan said Sudan's war planes bombed army and civilian positions overnight Monday and into Tuesday, and targeted, but missed, oil installations. Over a dozen people were injured, said Col. Philip Aguer, army spokesman for South Sudan.
"It's a declaration of war, but we have the capabilities to defend our territory," he said.
Sudan's government spokesman Rabie Abdelaty said its ground troops and air force were purging border areas of South Sudan-backed rebels. He denied Sudan's troops had crossed into its neighbor's territory.
The rebels, from Sudan People's Liberation Movement-North, fought with the south in the civil war that ended in 2005. After secession, the rebels maintained bases in Sudan's oil-rich South Kordofan border state and continued to fight for the territory, which they believe should have seceded with South Sudan.
South Kordofan is the only state with vast oil fields that remained in Sudan after the split, which left the south dependent on Sudan's pipelines and ports to export its oil.
Sudan says the rebels are backed by South Sudan and Uganda, which say they have severed ties with the group.
Analysts say the governments in Khartoum and Juba are avoiding all-out war, and could be using the conflict with a hostile neighbor to unify shaky domestic support, tamp down on insurgencies and divert attention from economic challenges.
"There have been plenty of red lines that haven't been crossed," said E.J. Hogendoorn, the Horn of Africa project director for the International Crisis Group. "If this had escalated, one of the first things you'd expect to see is Khartoum to hit the airport in Juba, for example, or to bomb other strategic facilities in South Sudan."
China, which for years has taken the bulk of oil exported from Sudan and its former breakaway province, is hosting Mr. Kiir for talks on energy and infrastructure projects.
Beijing has offered to help build an export pipeline and provide technical help once the crisis with Sudan eases, according to South Sudan's deputy chief of protocol Gum Bol Noah, who accompanied Mr. Kiir to Beijing. The pipeline could cross neighboring Kenya, Mr. Noah said.
China is by far the largest buyer of Sudanese crude, importing about 260,000 barrels a day last year, making Sudan its seventh-largest supplier. Shipments fell sharply after landlocked South Sudan suspended its 350,000 barrels-a-day production in January because of a disagreement over how much it should pay Sudan for transporting oil to its seaport.
---
Solomon Moore, Liyan Qi and Joe Lauria contributed to this article.
Credit: Nicholas Bariyo; Wayne Ma
Subject: Petroleum industry; Territorial issues; International relations
Location: China South Sudan Sudan
Classification: 9179: Asia & the Pacific; 9177: Africa; 1210: Politics & political behavior; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.10
Publication year: 2012
Publication date: Apr 25, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--B anking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009187876
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1009187876?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Gasoline Futures Tumble As Oil-Supply Fears Ebb
Author: Bird, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 Apr 2012: n/a.
ProQuest document link
Abstract:
[...]ConocoPhillips said it is talking with Delta Air Lines about restarting its Philadelphia-area refinery,which was closed last year, and Sunoco Inc. said it is in talks with Carylye Group about a possible joint venture to keep open the 330,000-barrels-a-day Philadelphia refinery it planned to shut this summer if it couldn't sell it.
Full text: U.S. gasoline-futures prices have dropped nearly 20 cents a gallon over the past eight trading days, as more U.S. crude becomes available for refining into gasoline and fears about a shortage of refining capacity fade.
Helping to spur the downturn is the reversal of a pipeline's flow that will give refiners in the Gulf Coast region greater access to crude, the basic feedstock for gasoline. North Sea Brent crude, the European benchmark which holds sway over gasoline prices, already has fallen by more than $7 a barrel this month, partly on this development.
Reformulated gasoline blendstock futures fell 2.8 cents Tuesday to settle at $3.1593 a gallon, and have repeatedly traded near seven-week lows in recent days. Many traders said futures prices may have hit their summer peak in late March, at near $3.42 a gallon, and see futures falling further in coming weeks, easing retail prices at the pump.
The decline in gasoline futures comes at a time when the U.S. oil benchmark, West Texas Intermediate, has climbed 0.51% this month. But gasoline is priced off Brent crude.
Friday, Brent crude lost 0.5%, to settle at $118.16 a barrel for June delivery on the InterContinental Exchange. West Texas Intermediate settled 0.4% higher at $103.55 a barrel on the New York Mercantile Exchange.
The move by Enbridge Inc. and Enterprise Products Partners LP to reverse the Seaway Pipeline will free up crude oil bottled up in landlocked storage in Cushing, Okla., keeping pressure on Brent prices, analysts said. The companies accentuated the reversal's effect by moving up the date when the pipeline will begin carrying crude to the Gulf Coast, to mid May from June 1.
Meanwhile, the recent reduction of refining capacity might not have the impact on prices many had expected, said Kyle Cooper, managing partner at IAF Energy Advisors. "Overall inventories are in good shape and certainly demand has been lackluster," said Mr. Cooper.
The federal Energy Information Administration warned in February that the closure of several refineries in the Northeast U.S. and offshore facilities that export to the region threatened to significantly tighten supplies and could case price increases.
But ConocoPhillips said it is talking with Delta Air Lines about restarting its Philadelphia-area refinery,which was closed last year, and Sunoco Inc. said it is in talks with Carylye Group about a possible joint venture to keep open the 330,000-barrels-a-day Philadelphia refinery it planned to shut this summer if it couldn't sell it.
Write to David Bird at
Corrections & Amplifications
U.S. gasoline futures fell nearly 20 cents over the eight sessions from April 13 to April 24. An earlier version of this article incorrectly said the amount of the decline was 16 cents.
Credit: By David Bird
Subject: Pipelines; Petroleum industry; Crude oil; Gasoline prices; Petroleum refineries
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 25, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009217406
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1009217406?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
South Sudan Expels Sudan Oil Workers
Author: Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 Apr 2012: n/a.
ProQuest document link
Abstract:
"The pipeline would take years to build, harm CNPC's interests and undermine Khartoum's incentives to find a compromise at the negotiating table. [...]Beijing will be cautious about committing more funding and personnel to unstable Sudan."
Full text: KAMPALA, Uganda--Sudan said Wednesday that South Sudan had expelled more than 100 of its nationals who were working for oil companies, as a dispute over the two nations' poorly defined oil-rich border deepens.
Most were working for Petrodar, which is majority-owned by China National Petroleum Corp., Sudanese spokesman Rabie Abdelaty said.
A South Sudanese government official confirmed the development but declined to give details.
The Petrodar consortium is composed of CNPC, Malaysia's Petroliam Nasional Bhd., Sudan's Sudapet, China Petroleum Corp., known as Sinopec, and the U. A.E.'s Al Thani Corp.
The move is likely to put the newly independent nation on a collision course as it continues attempts to shore up more allies, amid a worsening conflict with former civil-war foe, Sudan, analysts said.
South Sudan's President Salva Kiir is on a visit to China this week, seeking support for a southern alternative pipeline, as the spat with the north continues to hamper its oil shipments. But he cut his trip short Wednesday, canceling a visit to Shanghai, amid the clashes.
"Beijing may express willingness to study the pipeline proposal but there is unlikely to be strong support for it in China," said Philippe de Pontet, Director for Africa at Eurasia Group. "The pipeline would take years to build, harm CNPC's interests and undermine Khartoum's incentives to find a compromise at the negotiating table. Moreover, Beijing will be cautious about committing more funding and personnel to unstable Sudan."
Over a dozen people, mainly civilians, have been killed in South Sudan's Unity state by Sudan's war planes.
Earlier in the week, the Chinese government urged both sides to exercise restraint, amid continued border fighting. Until South Sudan halted oil output in January, China was the largest buyer of its oil.
The Sudanese government said it would send a passenger plane to evacuate the workers from South Sudan, Mr. Abdelaty said.
"Government will find jobs for the affected workers in our own oil sector," he said.
Company officials couldn't be reached for an immediate comment.
Write to Nicholas Bariyo at
Credit: By Nicholas Bariyo
Subject: Pipelines; Petroleum industry
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 25, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009294585
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1009294585?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Russia, Italy's Eni Set Arctic-Oil Pact
Author: Kolyandr, Alexander; Moloney, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 Apr 2012: n/a.
ProQuest document link
Abstract:
MOSCOW--Russian state oil company OAO Rosneft Wednesday signed a major offshore exploration deal with Italy's Eni SpA in the latest sign that the Kremlin's efforts to woo foreign companies to its next-generation oil fields, mostly in the Arctic, are paying off.
Full text: MOSCOW--Russian state oil company OAO Rosneft Wednesday signed a major offshore exploration deal with Italy's Eni SpA in the latest sign that the Kremlin's efforts to woo foreign companies to its next-generation oil fields, mostly in the Arctic, are paying off.
The deal--which the companies said could be worth as much as $100 billion over many years--is similar to the one Rosneft signed last week with Exxon Mobil Corp. and follows Russia's approval of long-awaited tax breaks for the potentially rich offshore fields.
Under the deal, Eni is offering Rosneft stakes in projects and assets in Africa, the Americas and Europe, something the Russian company has long sought. The projects and the size of Rosneft's stakes in them are still to be determined.
For Eni, the deal provides access to potentially huge reserves of oil and natural gas as international oil majors facing increasing competition for the vital resources. The Kremlin had sharply restricted opportunities for foreign companies in the strategic oil-and-gas sector. But facing declining production at its existing fields, Moscow in the last few years has begun opening undeveloped tracts to major international players who can provide the capital and technology needed to bring them into production.
Wednesday's agreement, signed by Rosneft President Eduard Khudainatov and Eni Chief Executive Paolo Scaroni, calls for setting up joint ventures to explore the Fedynsky and Central Barents fields in the Barents Sea in the Arctic and the Western Chernomorsky field in the deep water of the Black Sea.
Eni will hold 33% stakes in the joint projects to develop the fields, which together are estimated to have total recoverable reserves of 36 billion barrels of oil equivalent.
The Italian company will finance the entire $1 billion to $1.2 billion of initial exploration expenses of the fields, Mr. Scaroni said.
Over the life of the project, the companies are expected to invest as much as $50 billion to $55 billion in the Black Sea project and $50 billion to $70 billion in the Arctic. Rosneft expects to tap Eni's technological experience, obtained at projects in the waters of Norway and other countries.
The Russian fields could see their first oil and gas production toward the end of the decade, Mr. Scaroni said.
"The agreement proves the capability of Rosneft to work with the biggest world-class companies, with a rich experience of working on the shelf, advanced technologies and readiness to invest in high technology, long term projects in Russia," said Rosneft's Mr. Khudainatov.
Eni also has a long-standing relationship with Russian gas giant OAO Gazprom--it is Gazprom's largest buyer of gas and is a partner with the state-run company in two pipeline projects.
"If you add Eni's strong ties to Gazprom to today's deal with Rosneft, it makes us the biggest international operator in Russia, which is the world's biggest producer of hydrocarbons," Mr. Scaroni said in a conference call.
Russian President-elect Vladimir Putin, who was present at the signing, said the government "will do everything possible to support such projects."
Moving to harness Russia's vast Arctic oil and gas reserves, Mr. Putin promised earlier this month to scrap taxes on exports from new offshore fields and to consider letting private companies secure licenses to develop them.
Rosneft and Eni said the tax incentives for offshore production were the key factor that prompted the deal.
By teaming with Rosneft, Eni would follow Exxon, which last week completed a landmark exploration deal with the Russian oil giant. Under that deal, Rosneft will get a 30% stake in projects in the U.S. Gulf of Mexico, West Texas and in Canada. Texas-based Exxon will get access to Russia's offshore deposits in the Arctic and the Black Sea. Exxon and Rosneft are expected to spend about $3.2 billion on exploration in their Russian venture.
Russia is willing to give a prominent role to foreign companies willing to develop the shelf, Russian energy czar and Deputy Prime Minister Igor Sechin said then.
Mr. Scaroni said if the companies decide to proceed with the development of the fields, the costs will then be split according to the stakes each of the companies holds, as will the production share.
Rome-based Eni is particularly attracted to the licenses in the Russian part of the Barents Sea, as it is confident its experience on the Norwegian side of the sea gives it an edge. The Black Sea is a "high-risk, high-reward" environment as there haven't been large discoveries made there, Mr. Scaroni said.
Mr. Scaroni said Eni is offering Rosneft stakes in exploration, production and downstream assets, which include refinery and gas-station networks, in North Africa, the U.S., Latin America and Europe.
Ira Iosebashvili contributed to this article.
Write to Alexander Kolyandr at and Liam Moloney at
Credit: By Alexander Kolyandr And Liam Moloney
Subject: Oil reserves; Petroleum industry; Natural gas reserves; Tax incentives
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 25, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009294607
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1009294607?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Russia, Italy's Eni Set Arctic-Oil Pact
Author: Kolyandr, Alexander; Moloney, Liam
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]26 Apr 2012: B.3.
ProQuest document link
Abstract:
Russian state oil company OAO Rosneft on Wednesday signed a major offshore exploration deal with Italy's Eni SpA in the latest sign the Kremlin's efforts to woo foreign companies to its next-generation oil fields, mostly in the Arctic, are paying off.
Full text: MOSCOW -- Russian state oil company OAO Rosneft on Wednesday signed a major offshore exploration deal with Italy's Eni SpA in the latest sign the Kremlin's efforts to woo foreign companies to its next-generation oil fields, mostly in the Arctic, are paying off.
The deal -- which the companies said could be worth as much as $100 billion over many years -- is similar to the one Rosneft signed last week with Exxon Mobil Corp. and follows Russia's approval of long-awaited tax breaks for the potentially rich offshore fields.
Under the deal, Eni is offering Rosneft stakes in projects and assets in Africa, the Americas and Europe, something the Russian company has long sought. The projects and the size of Rosneft's stakes in them are still to be determined.
For Eni, the deal provides access to potentially huge reserves of oil and natural gas as international oil majors facing increasing competition for the resources. The Kremlin had sharply restricted opportunities for foreign companies in the strategic oil-and-gas sector. But facing declining production at its existing fields, Moscow in the last few years has begun opening undeveloped tracts to major international players who can provide the capital and technology needed to bring them into production.
Wednesday's agreement, signed by Rosneft President Eduard Khudainatov and Eni CEO Paolo Scaroni, calls for setting up joint ventures to explore the Fedynsky and Central Barents fields in the Barents Sea in the Arctic and the Western Chernomorsky field in the Black Sea.
Eni will hold 33% stakes in the joint projects to develop the fields, which are estimated to have recoverable reserves of 36 billion barrels of oil equivalent.
The Italian energy company will finance the entire $1 billion to $1.2 billion of initial exploration expenses of the fields, Mr. Scaroni said.
Over the life of the project, the companies are expected to invest as much as $50 billion to $55 billion in the Black Sea project and $50 billion to $70 billion in the Arctic. Rosneft expects to tap Eni's technological experience, obtained at projects in the waters of Norway and other countries.
The Russian fields could see their first oil and gas production toward the end of the decade, Mr. Scaroni said.
Eni also has a long-standing relationship with Russian gas giant OAO Gazprom -- it is Gazprom's largest buyer of gas and is a partner with the state-run company in two pipeline projects.
"If you add Eni's strong ties to Gazprom to today's deal with Rosneft, it makes us the biggest international operator in Russia, which is the world's biggest producer of hydrocarbons," Mr. Scaroni said on a conference call.
Russian President-elect Vladimir Putin, who was present at the signing, said the government "will do everything possible to support such projects."
Moving to harness Russia's vast Arctic oil and gas reserves, Mr. Putin promised earlier this month to scrap taxes on exports from new offshore fields and to consider letting private companies secure licenses to develop them.
Rosneft and Eni said the tax incentives for offshore production were the key factor that prompted the deal.
By teaming with Rosneft, Eni follows Exxon, which last week completed a landmark exploration deal with the Russian oil giant. Under that deal, Rosneft will get a 30% stake in projects in the U.S. Gulf of Mexico, West Texas and in Canada. Exxon will get access to Russia's offshore deposits in the Arctic and the Black Sea. Exxon and Rosneft are expected to spend about $3.2 billion on exploration in their Russian venture.
Russia is willing to give a prominent role to foreign companies willing to develop the shelf, Russian energy czar and Deputy Prime Minister Igor Sechin said last week.
Mr. Scaroni said if the companies decide to proceed with the development of the fields, the costs and share of production will then be split according to the stakes each holds.
Rome-based Eni is particularly attracted to the licenses in the Russian part of the Barents Sea, as it is confident its experience on the Norwegian side of the sea gives it an edge.
---
Ira Iosebashvili contributed to this article.
Credit: By Alexander Kolyandr and Liam Moloney
Subject: Offshore oil exploration & development; Agreements
Location: Russia Italy Arctic region
Company / organization: Name: OAO Rosneft; NAICS: 324110; Name: Eni SpA; NAICS: 211111, 324110
Classification: 9176: Eastern Europe; 9175: Western Europe; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.3
Publication year: 2012
Publication date: Apr 26, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009492415
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1009492415?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
India Says U.S. Hasn't Threatened Sanctions Over Iran Oil
Author: Sharma, Rakesh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 Apr 2012: n/a.
ProQuest document link
Abstract:
India's position is that it is bound by U.N. sanctions, but "unilateral sanctions imposed by countries or [a] group of countries shouldn't impact legitimate trade relations with Iran," Mr. Krishna told lawmakers in a written reply in the upper house of Parliament.
Full text: NEW DELHI - The U.S. hasn't threatened to impose sanctions against India for its economic relations with Iran, Indian Foreign Minister S.M. Krishna said Thursday.
India's position is that it is bound by U.N. sanctions, but "unilateral sanctions imposed by countries or [a] group of countries shouldn't impact legitimate trade relations with Iran," Mr. Krishna told lawmakers in a written reply in the upper house of Parliament.
India's crude oil imports from Iran are guided by its energy security needs, he said.
The U.S. has given countries until June 28 to significantly reduce purchases of Iranian crude oil. Otherwise they will face sanctions.
The Obama administration last month said it wouldn't impose sanctions against Japan and 10 European Union nations that moved quickly to cut -- although not significantly yet -- Iranian imports.
But 12 countries, including South Korea, India and China, remain at risk of sanctions due to continued purchases of Iranian oil, the U.S. State Department said.
Write to Rakesh Sharma at
Credit: By Rakesh Sharma
Subject: Sanctions; International relations-US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 26, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009493843
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1009493843?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Struggles as Shell Thrives
Author: Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 Apr 2012: n/a.
ProQuest document link
Abstract:
Speaking to analysts in a conference call, Exxon Vice President of Investor Relations David Rosenthal said the company is reducing the number of rigs drilling for natural gas in the U.S. and switching some of them to oil-rich areas such as the North Dakota Bakken Shale, West Texas's Permian Basin and Oklahoma's Woodford Ardmore.
Full text: Exxon Mobil Corp. reported an 11% decline in first-quarter earnings due to lower oil and gas production and a drop in chemical-business profits, offsetting high global crude prices and improved refining results.
The world's largest oil company by market value reported net income of $9.45 billion, or $2 a share, down from $10.65 billion, or $2.14 a share, a year earlier. Revenue increased 8.8% to $124.05 billion.
Exploration-and-production income was $7.8 billion, a 10% drop from a year earlier, as total production fell 5.5% to 4.55 million barrels of oil equivalent per day.
Exxon's chemicals business saw profit drop 54% to $701 million, but refining-and-marketing earnings climbed 44% to $1.5 billion.
The performance was far below analyst expectations for earnings of $2.09 per share, while production also missed projections.
While Exxon struggled, rival Royal Dutch/Shell PLC appeared to thrive, with first-quarter adjusted profit climbing 16% to $7.3 billion, thanks in part to sales of natural gas in non-U.S. markets, where prices are tied to oil prices.
Shell's exploration-and-production income was up 35% to $6.3 billion while oil-and-gas production was 3.6 million barrels of oil equivalent per day, an increase of 1.4%.
Shares of Exxon slipped 0.9% to $86.07. Class B shares of Shell closed 3.5% higher at £22.66 ($36.58) in London.
Philip Weiss, an analyst with Argus Research, said some of Exxon's earnings miss this quarter is due to timing issues on some projects where it partners with other companies. In many of those deals they are only allowed to sell a certain amount of oil and gas per quarter, even if the projects produce more. That means the Irving, Texas, oil giant can't report income for that production until later quarters.
"But what I found more troubling this quarter was that their production mix ended up a bit more gassy than I expected," Mr. Weiss said, with nearly 51% of production coming from natural gas.
Exxon's U.S. natural-gas production, which has been watched closely because of the company's past insistence if didn't need to ease up on output as prices declined, slipped 1.8% from the fourth quarter and was up less than 1% from a year earlier. The company said it was continuing to shift its focus from dry natural-gas production to fields that produced oil and so-called wet gas, a mix of natural gas and liquid fuels such as ethane, propane and butane that fetch higher prices than dry gas.
Exxon's onshore U.S. rig count is also dropping, from an average of 72 rigs last year to 64 rigs this week, said David Rosenthal, vice president of investor relations.
Exxon's financial strength, including some $19.1 billion in cash at the end of the first quarter, means it doesn't feel pressured to slash U.S. gas production, said Mr. Rosenthal, but during Thursday's call with analysts he gave greater emphasis to future production from oil and other nondry-gas projects than in past earnings calls.
"If you look at the projects we have scheduled to come on line between now and 2016, 80% of them will be liquids production," Mr. Rosenthal said.
The change in drilling focus follows similar moves by other energy producers that have seen cash flows and earnings hit by depressed natural-gas prices, which have been trading at their lowest point in a decade at around $2 per million British thermal units.
The average price at which Exxon sold its natural-gas production in the first quarter was $2.74 per thousand cubic feet, down 20% from the same period a year earlier. The company's realized price for crude oil was $105.68 a barrel, 3% higher than a year earlier.
Despite the different quarterly results Exxon and Shell both said Thursday they are considering new U.S. projects that would take advantage of the 10- year low in natural-gas prices.
Mr. Rosenthal said the company is "studying and assessing the opportunities," including exporting U.S. natural gas as a liquid and expanding its U.S. chemical plants that use natural gas as a raw material. The company is a partner in the recently opened Golden Pass liquefied-natural-gas import terminal near Port Arthur, Texas, which could be expanded to include export capacity, according to analysts.
Shell Chief Financial Officer Simon Henry said on a conference call Thursday his company is looking at sites in Texas and Louisiana for a possible natural-gas-to-liquids plant that would turn natural gas into a fuel like diesel. The Wall Street Journal reported on the project plans earlier this month.
Meanwhile, Shell raised the amount of asset sales it plans for this year as it posted consensus-beating adjusted profit.
"Asset sales for 2012 are likely to be over $4 billion, compared with our earlier guidance of $2 billion to $3 billion," CEO Peter Voser said. He didn't specify where or what assets would be sold.
The Anglo-Dutch company said its clean current cost of supplies earnings, a keenly watched figure that strips out gains or losses from inventories and other nonoperating items, was $7.28 billion in the three months ended March 31, up 16% from $6.29 billion a year earlier. That was above analysts' expectations of $6.75 billion. The adjusted figure is broadly comparable with net income under U.S. accounting rules.
Total oil-and-gas production was 3.552 million barrels of oil equivalent per day, an increase of about 1.4% on the year.
However, net profit for the quarter slipped 0.7% to $8.72 billion from $8.78 billion a year earlier. Higher purchasing costs, which rose nearly 11%, took some of the shine off the bottom line. Group revenue was $123.77 billion, up 7.8%.
Isabel Ordonez and Alexis Flynn contributed to this story.
Write to Isabel Ordonez at
Corrections & Amplifications
Shell's oil-and-gas production increased 1.4%. An earlier version of this story incorrectly stated it was 4%.
Credit: By Tom Fowler
Subject: Natural gas; Petroleum industry; Oil prices; Petroleum production; Stock prices; Corporate profits
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 26, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009646416
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1009646416?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Arab Countries Spend Oil Cash at Home
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 Apr 2012: n/a.
ProQuest document link
Abstract:
Here, people visit the Masdar Institute campus, part of Masdar City, a renewable energy complex near the Abu Dhabi airport in the United Arab Emirates.
Full text: Booming oil prices are flooding Arab countries with money, and much of it is now being spent at home. Here, people visit the Masdar Institute campus, part of Masdar City, a renewable energy complex near the Abu Dhabi airport in the United Arab Emirates.
Gulf states are embarking on their biggest spending spree on record as they lavish funds on domestic projects--from new housing and hospitals to mosque restoration and job creation. Here, new high-rise buildings under construction in the King Abdullah financial district of Riyadh, Saudi Arabia.
The new spending builds on a long-standing shift toward domestic spending as Gulf countries try to diversify their economies away from oil. Here, Yas Island, seen from the balcony of a newly built apartment at the Al Bandar marina development in Abu Dhabi.
A subsidiary of Mubadala Development Co., an investment company owned by the Abu Dhabi government, is planning to build a microchip plant in Abu Dhabi and started training and education programs for U.A.E. citizens in Dresden, Germany. Here, workers with chip wafers at a Globalfoundries plant in Dresden.
Britain's Queen Elizabeth II, center, and Prince Philip, right, arrived in Abu Dhabi on Nov. 25, 2010, for the unveiling of the design for the new Sheikh Zayed Museum. The museum is being built on Saadiyat Island, off the Abu Dhabi coast, in partnership with the British Museum. Saadiyat Island is set to be home to Abu Dhabi versions of the Louvre and Guggenheim museums, among many other projects.
All told, Gulf countries have an estimated $1.8 trillion of capital investments planned or under way over the next 15 years. Here, Al Maryah Island, a new financial district under construction near Abu Dhabi's central business district, in March 2011.
Qatar is working on many infrastructure projects ahead of the 2022 World Cup. Here, a worker took down part of a billboard, which was used as a countdown clock to the announcement of the 2022 World Cup, in Doha, Qatar, on Jan. 7, 2011.
Subject: Project finance; Museums; Petroleum industry
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 26, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009736065
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1009736065?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Gulf States Keep Oil Dollars Home
Author: Fitch, Asa; Pleven, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 Apr 2012: n/a.
ProQuest document link
Abstract:
Since 2009, net oil export revenues for members of the Organization of Petroleum Exporting Countries nearly doubled in nominal terms to $1.03 trillion last year, and the Energy Information Administration expects the figure to grow again to $1.17 trillion in 2012 before tailing off slightly in 2013.
Full text: Booming oil prices are flooding Arab countries with money, but where the lion's share of that wealth would once have been pumped into the world's financial markets, much of it is now being spent at home.
Gulf states are embarking on their biggest spending spree on record as they lavish funds on domestic projects--from new housing and hospitals to mosque restoration and job creation--largely as a defensive response to the Arab Spring uprisings that toppled other Middle East governments last year. Government outlays in the region are set to reach $488.6 billion this year, according to recent Institute of International Finance estimates, up 35% from 2009's figure.
The domestic focus hasn't yet eaten away at the region's external investments--net foreign assets in the Gulf region are expected to rise by around $300 billion this year alone--but the domestic focus has meant less oil money is being funneled into global capital markets than otherwise might have been. New patterns of spending are also pushing government budgets through the roof and sending money once set aside for things like increases to oil production capacity and military upgrades to social projects instead.
"When the Arab Spring happened, many governments discovered that the enemy was within and not without," said Mustafa Alani, a senior adviser at the Geneva-based Gulf Research Center and an expert on regional security issues.
In all, governments in the Gulf--including Saudi Arabia, the United Arab Emirates and Kuwait--have pledged $157 billion in additional spending directly linked to the Arab Spring uprisings, according to a Bank of AmericaMerrill Lynch report from last year. That amounts to about 13.4% of the region's 2011 GDP. To stave off any potential unrest, Gulf monarchies splurged on population-pleasing projects such as spending on higher salaries, bonuses for government employees and new houses.
They've been enabled by a 93% rise in the average price of OPEC crude in the past three years. Since 2009, net oil export revenues for members of the Organization of Petroleum Exporting Countries nearly doubled in nominal terms to $1.03 trillion last year, and the Energy Information Administration expects the figure to grow again to $1.17 trillion in 2012 before tailing off slightly in 2013.
The jump in domestic outlays is an acceleration of what had been a decadelong shift toward rebuilding the region's infrastructure. All told, Gulf countries have an estimated $1.8 trillion of capital investments planned or under way over the next 15 years.
"The Arab Spring kicked it into high gear as all countries stepped up spending," said Rachel Ziemba, an economist at Roubini Global Economics.
The shift is especially notable in Saudi Arabia, the world's biggest oil producer and the region's most populous country. Attempting to head off perceived threats to the political and social order, Saudi's King Abdullah last March announced about $70.9 billion of outlays on housing and health in the kingdom, as well as setting a minimum wage and giving bonuses to government employees.
To be sure, Gulf oil producers continue to invest in international markets, but there has been a notable shift in the types of assets they pursue.
The United States was one of the top three foreign targets for sovereign wealth funds in Saudi Arabia, the U.A.E. and Kuwait from 2006 to 2009, according to data provider Dealogic, but it fell to seventh place in 2010 and 2011, as Australia--a major supplier of raw materials to China--and Spain became main focuses of interest in those years. So far this year, Brazil--a rapidly developing market--is the top destination, according to Dealogic.
"More of the investments are going to emerging markets, especially Asia, but Latin America is a new focus too," Ms. Ziemba said.
A development company owned by the Abu Dhabi government earlier this year invested $2 billion in Brazil's EBX Group. But bankers who deal with the wealthy emirate say it is taking longer to get deals done of late.
On the domestic front, the Arab Spring-related spending is accelerating a longer-term shift toward economic diversification through domestic projects that include aluminum smelters in Saudi Arabia and the U.A.E. to an aerospace composites plant in Abu Dhabi.
Mubadala Development Co., an investment company owned by the Abu Dhabi government, holds big stakes in foreign firms such as General Electric Co. and Advanced Micro Devices Inc. But it is also trying to use those investments to boost employment at home.
A Mubadala subsidiary that invested in AMD's former semiconductor manufacturing business three years ago is planning to build a microchip plant in Abu Dhabi and started training and education programs for U.A.E. citizens.
"It's a really good opportunity for us as young engineers to be prepared early for such a project," said Ahmed Madi, 26, an engineer from Abu Dhabi who's in a training program at a semiconductor manufacturing facility in Dresden.
Ma'aden, a mining company formed by the Saudi government, in 2009 formed a partnership with Alcoa Inc., the U.S. aluminum giant, on an $11 billion smelter project in Saudi Arabia.
At the same time, increased domestic spending is already straining government budgets.
Saudi Arabia, whose net exports rose 40% last year, exceeded its budget targets last year and spent around $220 billion, or more than two-thirds of its net oil export revenues. In 2008, the country's spending was less than half of its net oil export revenues.
Now Gulf countries like Saudi Arabia and the U.A.E. need ever-higher oil prices to help balance their budgets.
Saudi needs crude oil to trade at about $80 a barrel or more, and the U.A.E. needs it to be at around $90 in order to balance their budgets at current spending levels, said George Abed, the Africa and Middle East director of the Institute of International Finance. In 2003, the figure was more like $30 a barrel.
"It shows that we are raising the floor of the oil price constantly because these countries are spending so much of their revenue on infrastructure, social services, expanding the civil service, investing in education and everything else," said Mr. Abed of the IIF.
As spending spiked, IMF analysts last year projected Saudi's break-even would rise to $98 by 2016.
Credit: By Asa Fitch and Liam Pleven
Subject: Petroleum industry; Economic development; Government employees; Rebellions
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 26, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009736066
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1009736066?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Clear Difference Between Shell and Exxon
Author: Denning, Liam; Peaple, Andrew
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 Apr 2012: n/a.
ProQuest document link
Abstract:
Natural gas figures large in these two oil majors' long-term strategies and it also loomed over their first-quarter results released Thursday.
Full text: Both Exxon Mobil and Royal Dutch Shell want investors to embrace the invisible.
Natural gas figures large in these two oil majors' long-term strategies and it also loomed over their first-quarter results released Thursday. The similarities ended there however.
Shell expects 2012 to be the first year its gas output consistently exceeds that of oil. Earnings from its gas business more than doubled in the first quarter, helping the company beat the consensus forecast overall. Contrast that with Exxon, which missed expectations mainly because of weaker upstream numbers that include profits from gas output.
In the global gas game, location is critical. With U.S. gas prices moribund, Exxon's big bet on the fuel via 2010's purchase of XTO Energy still drags on profits. Gas sold in Europe and Asia fetches much higher prices. In the first quarter, only 5% of Shell's output was U.S. gas compared with 14% for Exxon.
In an industry with long and lengthening project lead-times, oil majors on any given day are a product of spending decisions made years before. Having spent much of the past decade reinvesting after its reserves debacle, Shell is now enjoying the payoff from major gas projects, primarily in Qatar. Indeed, shareholders would be justified in griping as to why Shell just raised its dividend a measly 2.4%.
Exxon, meanwhile, must now deal with the legacy of its XTO deal, with higher exposure to U.S. gas and a bigger asset base hurting return on capital. The resulting need to keep investors onside explains the 21% hike in its dividend to make it the world's biggest aggregate shareholder payout. Even if the future really is invisible, shareholders usually want something tangible upfront.
Write to Liam Denning at and Andrew Peaple at
Credit: By Liam Denning And Andrew Peaple
Subject: Petroleum industry; Oil sands
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 26, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009736072
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1009736072?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Kirchner Aide Pushed Her to Take Over Oil Firm
Author: Moffett, Matt
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 Apr 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: BUENOS AIRES--Argentina's contested plan to nationalize the country's largest energy company owes much to a telegenic 40-year-old with Elvis sideburns who has risen rapidly from relative obscurity to become one of President Cristina Kirchner's most influential advisers.
Axel Kicillof, the deputy economy minister, belongs to a class of Argentine politicians known for their interventionist ideas that owe a lot to John Maynard Keynes's theories on the government role in priming the economic pump.
As Mr. Kicillof and his adherents point to other examples of successful state-controlled energy companies, critics fear that the nationalization, and other moves to tighten the government's economic grip, will scare investors and curtail growth.
While being grilled for several hours last week by Argentina's Senate about the government's proposal this month to seize YPF SA, Mr. Kicillof tried to turn the heat on the oil company's majority owner, Repsol YPF of Spain, accusing it of checking production to force Argentina's government to lift price caps for the company's benefit.
"It's a common practice of the producer [or] exporter that he holds back production, the treasure, because they have a chance to obtain a higher price," Mr. Kicillof told Senate members.
At another point in his testimony, he added: "When there's a crisis, the worst thing that can be done is to say the state is the problem. The state is the solution. When there is recession and economic crisis, the state becomes a key actor to revitalize demand and investment."
Many Kicillof critics say the state already plays too big of a role in Argentina's economy. As the country was bouncing back from an economic collapse, overall government spending rose to a record 38% of gross domestic product by 2011, according to Goldman Sachs, from 22% in 2002, the year before Mrs. Kirchner's late husband and predecessor Nestor Kirchner took office.
Since Mrs. Kirchner's re-election in October, she has imposed new restrictions on foreign-currency transactions and tightened import controls. In her prior term, she nationalized private pension funds and the flagship airline.
But as Argentina's economy slowed, the government has come under pressure to conserve currency reserves and reduce consumption of imported energy.
Enter Mr. Kicillof. The economist is seen by some as brilliant, but his youth and good looks have won him as much attention. The Argentine newsweekly Noticias dubbed him "The Charming Mr. Expropriator." Vanity Fair's Spanish edition featured him under the headline: "Attractive, good dad, geek and brain behind the expropriation of YPF."
Mrs. Kirchner has cited Mr. Kicillof in speeches and upbraided a columnist for an article about him that she said had a "whiff" of anti-Semitism.
Mr. Kicillof was active in student politics at the University of Buenos Aires, where he got his economics doctorate. He won a faculty prize in 2006 for his thesis on Keynes's famous work, "The General Theory of Employment, Interest and Money," and later turned it into a book.
Mr. Kicillof went on to teach at the University of Buenos Aires, publishing in Argentine and foreign journals, including Capital & Class, which is dedicated to Marxist theory.
He eventually caught the eye of Mrs. Kirchner's 35-year-old son Máximo, who has organized many youthful Kirchner supporters into a political group called La Cámpora, named for a famous leftist Perónist politician. La Cámpora helped to stage a mass rally set for Friday in support of Mrs. Kirchner's YPF takeover.
On Thursday, Argentina's Senate overwhelmingly approved Mrs. Kirchner's bill to expropriate YPF. The legislation now moves to Congress's lower house, where it is expected to pass next week.
The YPF debate began after Mrs. Kirchner's second term started in December, and Argentina was confronted with a rising energy import bill and a scarcity of dollars to pay for it.
Some longtime Kirchner advisers, among them Planning Minister Julio de Vido, expressed support for trimming massive energy subsidies to consumers. But tentative efforts this year to do so made little headway due to the measure's political unpopularity.
Mr. Kicillof favored a more dramatic measure to address the energy crisis: taking over YPF and pumping up production. Mr. Kicillof sold Mrs. Kirchner on the nationalization through frequent visits over a period of weeks, and pointing to the successful mixed-ownership model of Petroleo Brasileiro SA, people involved in the dispute say.
Repsol, while contesting the YPF nationalization, says it wants $10 billion in compensation for the 51% the government plans to take. Mr. Kicillof scoffed at that figure, saying compensation determines on what a federal tribunal decides after it evaluates YPF, including possible environmental damage. "Let's see what we will find when we open the black box," he said.
Though YPF will still need plenty of outside capital and expertise to develop reserves, including large shale resources, Mr. Kicillof said he didn't think investors would be put off by the nationalization. "What greater investment security and business climate can there be than a government committed to sustaining growth and internal demand?" he asked.
Many analysts say that the strong-arm tactics against Repsol could have a chilling effect on private energy investors, who may fear they could suffer a similar fate. "They could have accomplished a lot of what they wanted to do without doing it in such a confrontational manner," says Gabriel Torres, an economist at Moody's Investors Service. "There is no clear plan of where they want to go."
Omar de Marchi, a center-right Congressman, pointed out that Mr. Kicillof was part of the group of youthful officials who presided over Aerolineas Argentinas's nationalization in 2008--only to see the airline become a drain on the treasury. "We're giving YPF to the same kids who bankrupted Aerolineas," he said, at a news conference.
Taos Turner contributed to this article.
Write to Matt Moffett at
Credit: By Matt Moffett
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 27, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009771844
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1009771844?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Gulf States Keep Oil Dollars Home
Author: Fitch, Asa; Pleven, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 Apr 2012: n/a.
ProQuest document link
Abstract:
Since 2009, net oil export revenues for members of the Organization of Petroleum Exporting Countries nearly doubled to $1.03 trillion last year, without adjusting for inflation, and the Energy Information Administration expects the figure to grow again to $1.17 trillion in 2012 before tailing off slightly in 2013.
Full text: Booming oil prices are flooding Arab countries with money, but where the lion's share of that wealth would once have been pumped into the world's financial markets, much of it is now being spent at home.
Gulf states are embarking on their biggest spending spree on record as they lavish funds on domestic projects--from new housing and hospitals to mosque restoration and job creation--largely as a defensive response to the Arab Spring uprisings that toppled other Middle East governments last year. Government outlays in the region are set to reach $488.6 billion this year, according to recent Institute of International Finance estimates, up 35% from 2009's figure.
The domestic focus hasn't yet eaten away at the region's external investments--net foreign assets in the Gulf region are expected to rise by around $300 billion this year alone--but the domestic focus has meant less oil money is being funneled into global capital markets than otherwise might have been. New patterns of spending are also pushing government budgets through the roof and sending money once set aside for things like increases to oil production capacity and military upgrades to social projects instead.
"When the Arab Spring happened, many governments discovered that the enemy was within and not without," said Mustafa Alani, a senior adviser at the Geneva-based Gulf Research Center and an expert on regional security issues.
In all, governments in the Gulf--including Saudi Arabia, the United Arab Emirates and Kuwait--have pledged $157 billion in additional spending directly following the Arab Spring uprisings, according to a Bank of AmericaMerrill Lynch report from last year. That amounts to about 13.4% of the region's 2011 GDP. To stave off any potential unrest, Gulf monarchies splurged on population-pleasing projects such as spending on higher salaries, bonuses for government employees and new houses.
They've been enabled by a 93% rise in the average price of OPEC crude in the past three years. Since 2009, net oil export revenues for members of the Organization of Petroleum Exporting Countries nearly doubled to $1.03 trillion last year, without adjusting for inflation, and the Energy Information Administration expects the figure to grow again to $1.17 trillion in 2012 before tailing off slightly in 2013.
The jump in domestic outlays is an acceleration of what had been a decade-long shift toward rebuilding the region's infrastructure. All told, Gulf countries have an estimated $1.8 trillion of capital investments planned or under way over the next 15 years. "The Arab Spring kicked it into high gear as all countries stepped up spending," said Rachel Ziemba, an economist at Roubini Global Economics.
The shift is especially notable in Saudi Arabia, the world's biggest oil producer and the region's most populous country. Attempting to head off perceived threats to the political and social order, Saudi's King Abdullah last March announced about $70.9 billion of outlays on housing and health in the kingdom, as well as setting a minimum wage and giving bonuses to government employees.
To be sure, Gulf oil producers continue to invest in international markets--and some trophy assets, like Qatar's recent deal to buy a 5% stake in Tiffany & Co.--but there has been a shift in the types of assets they pursue.
The United States was one of the top three foreign targets for sovereign-wealth funds in Saudi Arabia, the U.A.E. and Kuwait from 2006 to 2009, according to data provider Dealogic, but it fell to seventh place in 2010 and 2011, as Australia--a major supplier of raw materials to China--and Spain became main focuses of interest in those years. So far this year, Brazil--a rapidly developing market--is the top destination, according to Dealogic.
"More of the investments are going to emerging markets, especially Asia, but Latin America is a new focus too," Ms. Ziemba said.
A development company owned by the Abu Dhabi government earlier this year invested $2 billion in Brazil's EBX Group. But bankers who deal with the wealthy emirate say it is taking longer to get deals done of late.
On the domestic front, the Arab Spring-related spending is accelerating a longer-term shift toward economic diversification through domestic projects that include aluminum smelters in Saudi Arabia and the U.A.E., and an aerospace composites plant in Abu Dhabi.
Mubadala Development Co., an investment company owned by the Abu Dhabi government, holds big stakes in foreign firms such as General Electric Co. and Advanced Micro Devices Inc. But it is also trying to use those investments to boost employment at home.
A Mubadala subsidiary that invested in AMD's former semiconductor manufacturing business three years ago is planning to build a microchip plant in Abu Dhabi and started training and education programs for U.A.E. citizens. "It's a really good opportunity for us as young engineers to be prepared early for such a project," said Ahmed Madi, 26, an engineer from Abu Dhabi who is in a training program at a semiconductor manufacturing facility in Dresden.
Ma'aden, a mining company formed by the Saudi government, in 2009 formed a partnership with Alcoa Inc., the U.S. aluminum giant, on an $11 billion smelter project in Saudi Arabia.
At the same time, increased domestic spending is already straining government budgets.
Saudi Arabia, whose net exports rose 40% last year, exceeded its budget targets last year and spent around $220 billion, or more than two-thirds of its net oil export revenue. In 2008, the country's spending was less than half of its net oil export revenue.
Now Gulf countries like Saudi Arabia and the U.A.E. need ever-higher oil prices to help balance their budgets. Saudi needs crude oil to trade at about $80 a barrel or more, and the U.A.E. needs it to be at around $90 in order to balance their budgets at current spending levels, said George Abed, the Africa and Middle East director of the Institute of International Finance. In 2003, the figure was more like $30.
"It shows that we are raising the floor of the oil price constantly because these countries are spending so much of their revenue on infrastructure, social services, expanding the civil service, investing in education and everything else," said Mr. Abed of the IIF.
As spending spiked, IMF analysts last year projected Saudi's break-even would rise to $98 a barrel by 2016.
Write to Liam Pleven at
Credit: By Asa Fitch And Liam Pleven
Subject: Petroleum industry; Economic development; Government employees; Rebellions
Location: Arab countries Middle East Saudi Arabia
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: Institute of International Finance Inc; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 27, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009773464
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Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Struggles As Shell Thrives
Author: Fowler, Tom
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]27 Apr 2012: B.6.
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Abstract:
Exxon Mobil Corp. reported an 11% decline in first-quarter earnings due to lower oil and gas production and a drop in chemical-business profit, offsetting high global crude prices and improved refining results.
Full text: Exxon Mobil Corp. reported an 11% decline in first-quarter earnings due to lower oil and gas production and a drop in chemical-business profit, offsetting high global crude prices and improved refining results.
The world's largest oil company by market value reported net income of $9.45 billion, or $2 a share, down from $10.65 billion, or $2.14 a share, a year earlier. Revenue increased 8.8% to $124.05 billion.
Exploration-and-production income was $7.8 billion, a 10% drop from a year ago, as production fell 5.5% to 4.55 million barrels of oil equivalent a day.
Exxon's chemicals business profit fell 54% to $701 million, but refining-and-marketing earnings climbed 44% to $1.5 billion.
The performance was below analyst expectations for earnings of $2.09 a share; its production also missed projections.
While Exxon struggled, rival Royal Dutch/Shell PLC appeared to thrive, reporting first-quarter adjusted profit up 16% to $7.3 billion, due in part to sales of natural gas in non-U.S. markets.
Shell's exploration-and-production income was up 35% to $6.3 billion while oil-and-gas production was 3.6 million barrels of oil equivalent per day, an increase of 1.4%.
Philip Weiss, an analyst with Argus Research, said some of Exxon's earnings miss was due to timing issues on some projects where it partners with other companies. In many of those deals, it is only allowed to sell a certain amount of oil and gas a quarter, even if the projects produce more. That means the Irving, Texas, company can't report income for that production until later quarters.
Exxon's U.S. natural-gas production, which has been watched closely because of the company's past insistence it didn't need to ease up on output as prices declined, slipped 1.8% from the fourth quarter and was up less than 1% from a year earlier. The company said it is continuing to shift its focus from dry natural-gas production to fields that produced oil and so-called wet gas, a mix of natural gas and liquid fuels such as propane that fetch higher prices than dry gas.
Exxon's onshore U.S. rig count also dropped, from an average of 72 rigs in the first quarter of 2011 to an average of 64 rigs in the same quarter of 2012, said David Rosenthal, vice president of investor relations.
Exxon's financial strength, including some $19.1 billion in cash at the end of the first quarter, means it doesn't feel pressured to slash U.S. gas production, said Mr. Rosenthal, but during Thursday's call with analysts he gave greater emphasis to future production from oil and other wet gas projects than in past earnings calls.
The average price at which Exxon sold its natural-gas production in the first quarter was $2.74 per thousand cubic feet, down 20% from the same period a year earlier. Its realized price for crude was $105.68 a barrel, 3% higher than a year earlier.
Despite the different quarterly results Exxon and Shell both said Thursday they are considering new U.S. projects that would take advantage of the 10- year low in natural-gas prices.
Mr. Rosenthal indicated Exxon is studying and assessing exporting U.S. natural gas as a liquid and expanding its U.S. chemical plants that use natural gas as a raw material. The company is a partner in the recently opened Golden Pass liquefied-natural-gas import terminal near Port Arthur, Texas.
Shell CFO Simon Henry said his company is looking at Texas and Louisiana for a possible natural-gas-to-liquids plant.
---
Isabel Ordonez contributed to this article.
Credit: By Tom Fowler
Subject: Petroleum industry; Corporate profits; Financial performance
Location: United States--US
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: Royal Dutch Shell PLC; NAICS: 213112, 221210, 324110
Classification: 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.6
Publication year: 2012
Publication date: Apr 27, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009794208
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Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon to Relinquish Block in Brazil's Santos Basin
Author: Gonzalez, Angel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 Apr 2012: n/a.
ProQuest document link
Abstract:
HOUSTON--Exxon Mobil Corp. said Friday it is abandoning its only exploration effort in the Santos Basin, epicenter of Brazil's offshore oil boom, an area where it has obtained mixed results amid tough drilling conditions.
Full text: HOUSTON--Exxon Mobil Corp. said Friday it is abandoning its only exploration effort in the Santos Basin, epicenter of Brazil's offshore oil boom, an area where it has obtained mixed results amid tough drilling conditions.
The block is the Texas behemoth's sole exploration lease in Brazil, which forecasters say is destined to be one of the world's top petroleum producers by the end of the decade thanks to its vast trove of offshore oil and gas.
Exxon and its partners Hess Corp. and Petroleo Brasileiro SA "have agreed to relinquish" the BS-M-22 block in the Santos Basin, spokesman Pat McGinn said. The block is located in the thick of Brazil's burgeoning offshore-oil industry, near some of the largest oil discoveries in recent memory, and was leased under terms that are more favorable to foreign investors than those spelled out in recent regulation.
Exxon, which is celebrating 100 years in the South American country this year, "will continue to look for new business opportunities in Brazil," Mr. McGinn said. He said the local regulator, Agencia Nacional do Petroleo, or ANP, was notified in the first week of April.
The BS-M-22 block, located in the thick of Brazil's burgeoning offshore oil activity, proved a hard nut to crack for Exxon and its partners, underscoring the difficulty of developing Brazil's massive offshore reserves, most of which lie beneath deeply buried, thick layers of salt.
Two wells drilled there, Azulao-1 and Sabia-1, struck oil, but another well, dubbed Guarani, turned out to be dry. A typical deep-water well in the area can cost tens of millions of dollars, and Deutsche Bank AG once estimated that the Guarani well cost about $150 million.
Phil Weiss, an analyst with Argus Research, said the block "has been kind of disappointing so far." While the recognition that the block's resources are out of reach is an "incremental negative" for the companies, at least they won't keep engaging in risky, expensive exploration there, Mr. Weiss said.
Last October, Exxon and its partners had sought to bring in a new partner into the block to share the risk of drilling a new well there, offering a 25% stake. A brochure for the stake said that the prospect was estimated to contain up to 1.5 billion barrels of recoverable oil.
Block BM-S-22 is located about 350 kilometers south of Rio de Janeiro.
Exxon, the world's largest publicly traded oil company, has a 40% interest in the block. Hess has 40% and Petrobras 20%. Exxon is the block's operator.
Write to Angel Gonzalez at
Credit: By Angel Gonzalez
Subject: Petroleum industry; Oil reserves
Location: Texas Brazil
Company / organization: Name: Petroleos Brasileiro SA; NAICS: 211111; Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: Deutsche Bank AG; NAICS: 522110, 551111; Name: Hess Corp; NAICS: 211111, 324110, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 27, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009899716
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1009899716?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
America Can Go Far By Using Less Oil
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 Apr 2012: n/a.
ProQuest document link
Abstract:
[...]U.S. domestic oil production is the highest it's been in years.
Full text: In (op-ed, April 18), Sen. Lisa Murkowski overlooks a vital point: Higher gas prices aren't being caused by a lack of oil. In fact, U.S. domestic oil production is the highest it's been in years. And since oil prices are set on the world stage, more drilling would do nothing to ease our pain at the pump. It would, however, cause permanent damage to some of our nation's last wild places, such as the Arctic National Wildlife Refuge that Sen. Murkowski wants to sacrifice for oil-industry profits.
The only way for Americans to escape being gouged at the pump is simply for our nation to use less oil. In fact, we've already begun doing this by shifting to higher-efficiency vehicles. We should focus on making our cars go farther on a gallon of gas (or no gas at all, in the case of EVs) and on improving transit, biking and other alternatives, rather than open nationally treasured wild places to risky drilling. Big Oil doesn't need any more handouts.
Michael Brune
Executive Director
The Sierra Club
San Francisco
Subject: Petroleum industry; Energy policy; Oil prices
Location: United States--US
People: Murkowski, Lisa
Company: Sierra Club San Francisco California
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 27, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1009906814
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1009906814?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
America Can Go Far By Using Less Oil
Author: Anonymous
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]28 Apr 2012: A.14.
ProQuest document link
Abstract:
[...]U.S. domestic oil production is the highest it's been in years.
Full text: In "America's Lost Energy Decade" (op-ed, April 18), Sen. Lisa Murkowski overlooks a vital point: Higher gas prices aren't being caused by a lack of oil. In fact, U.S. domestic oil production is the highest it's been in years. And since oil prices are set on the world stage, more drilling would do nothing to ease our pain at the pump. It would, however, cause permanent damage to some of our nation's last wild places, such as the Arctic National Wildlife Refuge that Sen. Murkowski wants to sacrifice for oil-industry profits.
The only way for Americans to escape being gouged at the pump is simply for our nation to use less oil. In fact, we've already begun doing this by shifting to higher-efficiency vehicles. We should focus on making our cars go farther on a gallon of gas (or no gas at all, in the case of EVs) and on improving transit, biking and other alternatives, rather than open nationally treasured wild places to risky drilling. Big Oil doesn't need any more handouts.
Michael Brune
Executive Director
The Sierra Club
San Francisco
(See related letter: "Letters to the Editor: Nature Is Not A Fragile Basket Case" -- WSJ May 4, 2012)
Subject: Petroleum industry; Energy policy; Oil prices
Location: United States--US
People: Murkowski, Lisa
Company: Sierra Club San Francisco California
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.14
Publication year: 2012
Publication date: Apr 28, 2012
Section: Letters to the Editor
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1010013221
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Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Stockpiles Likely to Remain Untapped for Now
Author: Herron, James
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Apr 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Prospects have dimmed that major oil consumers in Europe, the U.S. and Asia will drive down prices this summer by collectively making a large injection into the market from emergency oil stockpiles.
Such action, coordinated by the International Energy Agency, looked to be gathering momentum just a month ago following comments from the U.S., U.K. and French government officials. But it has lost some of its political traction and much of its justification, given that supply is up and prices are down without any moves by western governments.
Analysts at the IEA are more confident of adequate oil supply later this year after months of high crude production from Saudi Arabia that will offset any cut in Iranian exports because of the sanctions.
Politically, the odds of IEA action are likely to shrink if, as polls predict, Socialist François Hollande wins the French presidential election on May 6.
"Hollande will withdraw support from the U.S.-British plan to release strategic oil stocks if he beats President Nicolas Sarkozy," a vocal supporter of IEA action, and that would essentially end the prospect of a coordinated plan, consultancy KBC Energy Economics said in a report. However, U.S. election-year politics means unilateral action by the world's biggest energy user can't be ruled out.
Front-month Brent crude futures have fallen 5.1% from their 2012 high of $126.22 a barrel in March, settling Friday at $119.83 on a mix of concerns that global economic growth is slowing as well as some conciliatory signs from Iran.
A release of emergency oil stocks held by members of the International Energy Agency has been rumored since the start of the year, when the European Union and the U.S. agreed on new sanctions to restrict Iran's ability to sell and export oil as a way to curtail its nuclear program. The sanctions could reduce Iranian oil exports by as much as one million barrels a day come July.
With oil prices still above $100 a barrel, there have been fears that such a large withdrawal of crude from world markets could send prices above the 2012 highs.
There is precedent for using oil from stockpiles to temper gains in oil prices. IEA members, which include the U.S., Canada, Western Europe, Turkey, South Korea, Japan, Australia and New Zealand, released 60 million barrels last summer from emergency stockpiles to help offset the loss of more than one million barrels a day of Libyan oil production.
However, the most recent market analysis from the IEA suggests such action this year won't be necessary.
It concluded earlier this month that the world could easily forgo as much as a million barrels a day of Iranian crude this summer without needing to withdraw from oil stocks, although it wouldn't rule out the need for an emergency release.
Much of the IEA's conclusion is based on action by Saudi Arabia, the world's largest oil exporter. The Saudis raised oil production to a 30-year high of 10 million barrels a day in November and have since been stockpiling large quantities of oil at home and abroad.
Analysts at Goldman Sachs say this is being done in preparation for the usual 500,000-barrel-a-day summer surge in domestic oil demand from power stations, which have to feed air conditioners as temperature soar. In the past, Audi Arabia has cut back on exports to meet the demand. This year, it could do it without cutting exports, effectively releasing its own stockpiles to meet world demand.
If the Saudis were to meet all of the extra domestic demand for oil from storage, it would amount to adding 45 million barrels to the world's oil supply, equivalent to 75% of the amount of oil released from IEA stockpiles last year, Goldman analysts said in a note.
Nevertheless, it would be foolish to rule out a release altogether this year, given U.S. electoral politics. If Republicans are still using gasoline prices as a stick to beat President Barack Obama, "there will be a lot of pressure in an election year to do something about it," said Ehsan Ul-Haq, KBC's senior market consultant.
Credit: By James Herron
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 29, 2012
column: Market Focus
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1010145819
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1010145819?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
South Sudan Expels Sudan Oil Workers
Author: Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 Apr 2012: n/a.
ProQuest document link
Abstract:
"The pipeline would take years to build, harm CNPC's interests and undermine Khartoum's incentives to find a compromise at the negotiating table. [...]Beijing will be cautious about committing more funding and personnel to unstable Sudan."
Full text: KAMPALA, Uganda--Sudan said Wednesday that South Sudan had expelled more than 100 of its nationals who were working for oil companies, as a dispute over the two nations' poorly defined oil-rich border deepens.
Most were working for Petrodar, which is majority-owned by China Petroleum & Chemical Corp., Sudan spokesman Rabie Abdelaty said.
A South Sudanese government official confirmed the development but declined to give details. The Petrodar consortium is composed of CNPC, Malaysia's Petroliam Nasional Bhd., Sudan's Sudapet, China Petroleum & Chemical Corp., known as Sinopec Corp., and the U.A.E.'s Al Thani Corp.
The move is likely to put the newly independent nation on a collision course as it continues attempts to shore up more allies, amid a worsening conflict with its former civil-war foe, Sudan, analysts said.
South Sudan's President Salva Kiir is on a visit to China this week, seeking support for a southern alternative pipeline, as the spat with the north continues to hamper its oil shipments. But he cut his trip short Wednesday, canceling a visit to Shanghai, amid the clashes.
"Beijing may express willingness to study the pipeline proposal but there is unlikely to be strong support for it in China," said Philippe de Pontet, director for Africa at Eurasia Group. "The pipeline would take years to build, harm CNPC's interests and undermine Khartoum's incentives to find a compromise at the negotiating table. Moreover, Beijing will be cautious about committing more funding and personnel to unstable Sudan."
Over a dozen people, mainly civilians, have been killed in South Sudan's Unity state by Sudan's war planes.
Earlier in the week, the Chinese government urged both sides to exercise restraint, amid continued border fighting. Until South Sudan halted oil output in January, China was the largest buyer of its oil.
The Sudanese government said it would send a passenger plane to evacuate the workers from South Sudan, Mr. Abdelaty said. Company officials couldn't be reached for an immediate comment.
"Government will find jobs for the affected workers in our own oil sector," he said.
Write to Nicholas Bariyo at
Corrections & Amplifications
China Petroleum & Chemical Corp., known as Sinopec Corp., is one of the Petrodar consortium members. An earlier version of this article misidentified the corporation.
Credit: By Nicholas Bariyo
Subject: Petroleum industry; Pipelines
Location: Sudan Malaysia Beijing China Uganda China South Sudan
Company / organization: Name: Petronas; NAICS: 211111; Name: China Petroleum & Chemical Corp; NAICS: 211111; Name: Eurasia Group; NAICS: 523930
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 30, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1010213278
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Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
India Oil Imports Cloud Economic Picture
Author: Sharma, Rakesh; Choudhury, Santanu
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 Apr 2012: n/a.
ProQuest document link
Abstract:
NEW DELHI--India said its crude imports in the 2012 fiscal year rose 5.2% to 172.11 million metric tons amid high global oil costs and increased local demand, clouding the country's economic outlook.
Full text: NEW DELHI--India said its crude imports in the 2012 fiscal year rose 5.2% to 172.11 million metric tons amid high global oil costs and increased local demand, clouding the country's economic outlook.
India's growing demand for fuel for automobiles and to power diesel generators helped push the nation's trade deficit up 56% to a record $185 billion in the fiscal year to March 31, 2012.
Concern over the mounting deficit has spooked investors, pushing the Indian rupee to record lows last year. Last week, Standard & Poor's - citing the widening trade deficit - cut its outlook on India's long-term debt to negative and warned of a possible downgrade to junk status.
New Delhi had already reported its overall trade deficit number but, on Monday, authorities detailed the oil component that is avidly watched by investors.
The pace of increase in demand for crude far outstripped the 2.7% rise in volume terms in the year to March 31, 2011, according to data issued Monday by the Petroleum Planning and Analysis Cell, the data wing of the federal oil ministry.
Crude imports in volume terms in the 2012 fiscal year climbed to 172.11 million metric tons, or 3.45 million barrels a day, from 163.59 million tons, or 3.29 million barrels a day a year earlier, the data showed. In value terms, crude imports rose 41% to $141 billion. The government didn't provide the breakdown of oil imported from individual countries.
India imports three-quarters of its crude oil needs from countries such as Saudi Arabia, Iran, Iraq, Nigeria and the United Arab Emirates, making it vulnerable to recent price rises.
Consumption of refined fuel products rose 4.9% last year to 147.99 million tons - its fastest increase since 2007-08 on the back of a growth in vehicle sales and with power shortages boosting demand for diesel to run private generators. Automobile sales in India grew 12% in the last fiscal year to over 17 million vehicles.
A 32% increase in average benchmark Brent crude prices to $114.66 a barrel during the period also led to a surge in the oil import bill, the data showed.
Higher crude import costs also widened the government's fiscal deficit in the period because of huge subsidies the state pays out to keep fuel prices low. The government's budget deficit touched 5.9% of gross domestic product in the year to March 31, above a 4.6% target, an overshoot that S&P said last week was a matter of concern.
The rupee fell 12.3% against the U.S. dollar in the 2012 fiscal year due to fears about the gaping trade and budget deficits.
How India can control its oil import costs remain unclear. The country is aiming to boost production of domestic oil and gas. But existing fields are ageing and recent exploration has been disappointing.
The government also appears to be betting crude prices will come down. Prime Minister Manmohan Singh said at the weekend that spiraling prices of crude in the international market have put a severe strain on India's import bill.
Last week, Commerce Secretary Rahul Khullar said in an interview that he hoped India could reduce its trade deficit to $150 billion in the year that began on April 1 if global oil prices stabilize.
Meanwhile, demand for crude shows no signs of letting up. Earlier this month Oil Secretary G.C. Chaturvedi said India's crude oil imports are expected to surge as fuel consumption grows by more than 4% annually over the next 10 to 15 years.
This growth in local demand for fuel has led refiners to boost capacity, which rose 10% in the last fiscal year to 4.3 million barrels per day.
Private refiner Essar Oil Ltd. and state-run Mangalore Refinery & Petrochemicals Ltd. expanded refining capacities last year. Over the weekend, Hindustan Petroleum Corp., another state-run refiner, and Indian billionaire Lakshmi Mittal formally inaugurated a new 180,000-barrels-a-day joint-venture refinery in the northern state of Punjab.
The refinery capacity expansions meant fuel product imports fell 14% to 14.92 million tons in the year to March 31, while product exports rose 2.4% to 60.52 million tons, the data showed. But those exports were small compared to the massive amount of crude imports needed to fuel the refineries.
Write to Rakesh Sharma at and Santanu Choudhury at
Corrections & Amplifications
The volume of India's oil imports increased 5.2% in 2011, while the value increased 41%. An earlier version of this article incorrectly said the value increased 5.2%.
Credit: By Rakesh Sharma And Santanu Choudhury
Subject: Petroleum industry; Fiscal years; Oil prices; Budget deficits
Location: India
Company / organization: Name: Standard & Poors Corp; NAICS: 511120, 523999, 541519, 561450
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publicationyear: 2012
Publication date: Apr 30, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1010249960
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1010249960?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Conoco, CNOOC Settle Claim Over China Oil Spill
Author: Ordóñez, Isabel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 Apr 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: ConocoPhillips reached an agreement with Chinese regulators to resolve all pending government claims related to June oil spills in Bohai Bay, off northeastern China.
Under the agreement, Conoco will pay $173 million to the Chinese State Oceanic Administration over the next two years and will contribute $18 million by December 2014 toward social projects benefiting Bohai Bay, the Houston-based company said Monday.
The agreement also provides that China National Offshore Oil Corp. will contribute $76 million toward such projects.
The initial programs will focus on improving protection of the marine environment and reducing pollutants in the bay.
Following a partial shutdown last summer, the Chinese government in September ordered a complete halt in production at the field, Peng Lai 19-3, which produced an average 56,000 barrels a day in 2010.
In two accidents in June, more than 3,000 barrels of oil and mud used in drilling leaked through the seafloor near platforms at the field, which is operated by Conoco. China National Offshore Oil's CNOOC Ltd. unit owns 51% of the field.
Conoco said it continues to work with Cnooc to meet the requirements of relevant agencies to permit the field to return to normal operations.
Conoco said last week that by the end of the first quarter, gross daily production from Peng Lai had reached 40,000 barrels following a resumption of production there in the fourth quarter.
Write to Isabel Ordóñez at
Credit: By Isabel Ordóñez
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 30, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1010260746
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1010260746?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Cleaning Up Oil Spilled From Louisiana Pipeline
Author: González, Ángel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 Apr 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: HOUSTON--Exxon Mobil Corp. said Monday it was cleaning up oil that spilled from a company pipeline in rural Louisiana.
An estimated 1,900 barrels of oil from the North Line crude pipeline were contained in the immediate vicinity of the spill, and there were no injuries reported, Exxon said. Also, air-quality monitoring detected "no danger to the public," although further checks are ongoing, the Irving, Texas, company said. The cleanup started Sunday, using vacuum trucks to collect the oil.
The cause of the spill was still being investigated, the company said. The pipeline was shut down after Exxon detected a loss of pressure on Saturday night.
The Louisiana spill comes nearly a year after an Exxon pipeline crossing the Yellowstone River in Montana broke, releasing crude into the waterway and resulting in a major cleanup effort.
"Exxon Mobil Pipeline Company regrets that this spill has occurred and we apologize for any disruption or inconvenience," said Karen Tyrone, an Exxon executive, in a press release. "Our crews will be on location until the cleanup has been completed. Fortunately the oil was contained in the immediate area which will enhance our recovery efforts."
The North Line originates in St. James, La., and transports oil to the northern part of the state.
Credit: By Ángel González
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 30, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1010284763
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1010284763?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Moody's Updates Global Risk Report, Cites Oil Risks
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 Apr 2012: n/a.
ProQuest document link
Abstract:
Moody's Investors Service maintained its modest global economic forecast for 2012 and 2013, revising its view of potential risks to account for deteriorating economic conditions in Europe and the danger of an oil shock derailing major countries' growth.
Full text: Moody's Investors Service maintained its modest global economic forecast for 2012 and 2013, revising its view of potential risks to account for deteriorating economic conditions in Europe and the danger of an oil shock derailing major countries' growth.
Moody's still expects growth in 2012 will be lower than in 2011, and materially below the pace set in 2010.
"We're maintaining our forecast for a modest global recovery," analysts Elena Duggar said. "This is the first time in two years that we don't see deterioration in our outlook for the seven largest economies."
At the same time, Moody's sees the prospect of a deeper recession in the euro area, an oil-price shock driven by geopolitical risks and a so-called hard landing in China as the biggest potential threats to the biggest economies' recovery.
Moody's report predicts somewhat healthier U.S. growth this year, while the euro area is expected to experience a mild recession.
Many emerging Group of 20 economies will report economc growth slightly below levels seen last year, Moody's said. Emerging market economies are seen growing 5.8% in 2012 and 6% in 2013, slightly below the estimated 6.6% rate for 2011.
-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; Andrew.FitzGerald@dowjones.com
Subject: Economic forecasts; Recessions; Euro; Economic conditions
Location: United States--US China Europe
Company / organization: Name: Moodys Investors Service Inc; NAICS: 522110, 523930, 561450; Name: Group of Twenty; NAICS: 926110; Name: Dow Jones Newswires; NAICS: 519110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 30, 2012
column: DJFX Trader
Section: Forex
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1010285566
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1010285566?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Virginia Could Be an Energy Power--If Washington Would Let It; In 2010, my state was poised to become the first on the East Coast permitted to produce oil and natural gas offshore. Then politics intervened.
Author: McDonnell, Bob
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 Apr 2012: n/a.
ProQuest document link
Abstract:
In a letter to the president last month, the coalition outlined a number of steps that can be taken immediately to incorporate offshore energy production into a comprehensive national energy policy.
Full text: When President Obama endorsed an "all of the above" energy strategy in this year's State of the Union address, he gave the impression that he was finally adopting an aggressive policy. Unfortunately, the president's words are worlds apart from his actions--especially when it comes to developing our nation's abundant offshore oil and natural gas resources.
To see that disconnect in action, look at the Commonwealth of Virginia. In 2010, Virginia was poised to become the first state on the East Coast permitted to produce oil and natural gas offshore. In 2007, the federal government had designated certain offshore areas as available for oil and gas leases, raising the prospect of thousands of new jobs and significant new revenues for the state and local governments.
However, our opportunity was extinguished and the lease sale canceled after November, when the Obama administration abruptly dropped Virginia from the government's latest leasing plan, with little explanation and even less regard for the strong bipartisan and public support for the offshore initiative. At a moment when we should be looking for every opportunity to safely produce more domestic energy, the Obama administration unilaterally declared a seven-year timeout.
Three months later, the president announced federal approval of leasing plans for wind-power development off the coast of Virginia. This was a welcome development; we are strong supporters of doing all we can to maximize our offshore wind opportunities in the Commonwealth. Taken together, however, the two decisions reflect a discordant approach to energy policy. There is no reason, other than political calculation, that we couldn't have been home to the East Coast's first offshore oil and natural gas development as well.
Virginia is not alone in playing witness to the president's apparent disdain for domestic oil and natural gas production. The administration's perpetual slow-walk approach is especially noticeable in the Gulf of Mexico and off Alaska's coast.
In the Gulf, delays in permitting have resulted in dramatically reduced investments. The Energy Information Administration projects that Gulf production will decrease by over 200,000 barrels per day in 2012 compared with levels before the president assumed office. Some studies, including one published last year by the energy research firm IHS CERA, have indicated that closing this gap could provide between 110,000 to 230,000 jobs across a multitude of sectors.
Meanwhile, in Alaska's Beaufort and Chukchi Seas, Shell, for instance, has been forced to spend $4 billion over five years on plan-development costs and other expenses of dealing with repeated permitting delays. These were not the result of deficiencies in proposed operational plans. They were caused by challenges and legal actions by environmental groups to delay or invalidate the proposed permits--actions that the current administration could review but did little to oppose.
It shouldn't take a herculean effort to approve a project that the host state strongly supports and that could generate 55,000 new jobs per year for 50 years, along with $145 billion in new payroll and $193 billion in additional government revenues over the same period.
If an "all of the above" energy strategy--one that includes offshore oil and natural gas development--is what the administration seeks, there is an organization willing to work with the president. The Outer Continental Shelf Governors Coalition is comprised of the governors of seven coastal states, including Virginia, Texas and Alaska.
In a letter to the president last month, the coalition outlined a number of steps that can be taken immediately to incorporate offshore energy production into a comprehensive national energy policy. They include increasing the speed and predictability of permitting and expanding access to new reserves. The president can implement all of these recommendations with the stroke of a pen. To date, he has not acknowledged our outreach.
During my term as governor, we have focused on making Virginia the energy capital of the East Coast. In just two years our state has taken aggressive actions to harness the power of offshore wind and promote greater utilization of solar energy. Had the president not stopped Virginia's offshore oil and gas efforts, a portion of the revenue from those efforts would have gone--under a law passed during my term of office--to renewable energy research.
We remain committed to developing Virginia's offshore oil and gas. Energy is the lifeblood of our nation's economic growth. More energy means more jobs and we need to use all of our domestic energy resources.
Mr. McDonnell is governor of Virginia and chairman of the Republican Governors Association.
Credit: By Bob McDonnell
Subject: Natural gas; Petroleum industry; Energy policy
Location: Alaska Virginia Gulf of Mexico
People: Obama, Barack
Company / organization: Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Apr 30, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1010285581
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1010285581?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Libya Oil Office Disruption Hearkens Renewed Risk
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]01 May 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: LONDON--For more than a week, armed men have prevented workers from entering the headquarters of one of Libya's leading oil producers, claiming they had protected the company and deserved compensation for it, local oil officials say.
The conflict, which has so far not affected Libya's oil output, highlights the brittle nature of Libya's oil recovery. Some experts and officials warn that insecurity increasingly threatens the Libyan comeback, which until now has progressed more rapidly than initially expected.
Any setback in Libya's oil rebound may drive oil prices up after output swiftly rebounded in the North African country, helping calm markets rattled by Iran supply fears.
Arabian Gulf Oil Co., the country's largest oil operation with over a quarter of its production, is threatening to shut its fields if protesters continue to picket at the entrance of its Benghazi headquarters.
"After Thursday, if there is no solution, we will stop production," the company's spokesman Abdeljalil Mayouf said Tuesday, adding it will become unable to pay its wages and contractors.
Since toppling strongman Moammar Gadhafi in August, the new regime has swiftly brought back production close to its prewar level of 1.6 million barrels--a critical achievement for in a country that relies on oil for 80% of its revenue.
But cracks are starting to show up in this success story as the new regime struggles to ensure security. Some of the former fighters who have protected oil interests during the course of the recovery contend they are owed compensation from Arabian and other oil companies.
In another recent incident, former fighters entered the offices of Repsol SA's joint-venture Akakus Oil Operations uninvited in the eastern city of Tripoli, saying they had not been paid in six months for protecting its wells in the Southern desert, said Najeeb Tantush, operations manager at the company.
Last week, the oil ministry even took the rare step of warning against attacks on oil officials--citing Akakus and Agoco. The incidents are leading "to losses directly and indirectly for the government," it said.
Though some Libyan oil officials are skeptical insecurity could halt production, experts say the rising tension is deterring international oil companies from bringing back all their expatriates on the ground. That means Libya could fail to replace every barrel it produces, they say.
Insecurity "is one of the primary reasons that IOCs have restricted their personnel to Tripoli and have not brought expatriates," said Geoff Porter, an independent consultant who advises the companies on Libya.
Without IOCs bringing back staff "production may well stagnate just below precrisis levels, worse, it risks slipping backward," U.K. bank Barclays said in a note Thursday. Libyan oil industry still depends in large part from foreign skills and equipment to drill wells for basic maintenance or exploration.
In addition, Barclays noted that with Libya's war damage compounded decades of underinvestment to make its oil industry vulnerable to technical failures.
"Temporary fixes have allowed Libyan output to resume swiftly but we believe current production levels are simply not sustainable," it said.
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 1, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1010412079
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1010412079?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Argentina's Peso Problem --- Nationalization of Oil Company Rattles Investors, Opening Fissure for Currency
Author: Parks, Ken
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]02 May 2012: C.4.
ProQuest document link
Abstract:
Concerns over the economic direction taken by Argentina's government has sent the gap between a tightly controlled official exchange rate and a parallel rate -- largely set by businesses conducting complex transactions in stock and bond markets to secure dollars -- to multiyear highs.
Full text: BUENOS AIRES -- Argentina's move in April to nationalize its largest oil-and-gas company is deepening foreign investors' fears over the country's economic policies, further undermining its currency.
Concerns over the economic direction taken by Argentina's government has sent the gap between a tightly controlled official exchange rate and a parallel rate -- largely set by businesses conducting complex transactions in stock and bond markets to secure dollars -- to multiyear highs.
This rate, called the "blue-chip swap rate," fell to 5.69 Argentine pesos per dollar, a 29% discount to the official rate, on April 18, two days after the announcement. That was the biggest discount since November 2008, at the height of the financial crisis.
The latest catalyst came when President Cristina Kirchner said her government would seize a controlling stake in oil company YPF SA. The gap between the two rates has widened since Ms. Kirchner implemented foreign-exchange controls and import restrictions following her re-election in October.
The blue-chip swap involves the purchase of Argentine sovereign bonds or the local shares of companies with listings in the U.S., and the subsequent sale of those securities abroad for dollars. The blue-chip swap rate is the exchange rate that is implicit in these transactions.
The lower value of the parallel rate reflects expectations that Argentina eventually could have to devalue its currency at a swifter pace to trim capital flight and appease exporters.
Siobhan Morden, head of Latin America strategy at Jefferies & Co., says the parallel rate is a barometer of risk. "It reflects dollar demand and less confidence in the currency," she said.
YPF's controlling shareholder, Spain's Repsol YPF, has vowed to fight the expropriation in court. The Spanish government has threatened trade sanctions.
The nationalization has raised doubts about whether Argentina will be able to attract the billions of dollars in foreign investment needed to develop the country's vast oil and gas deposits.
On Friday, the alternate rate was about 5.47 pesos per dollar, a 24% discount to the official rate of 4.41525 pesos. Markets in Argentina were closed on Monday and Tuesday.
Even though the gap has shrunk recently, the blue-chip swap rate should remain high, Ms. Morden said.
Businesses and wealthy individuals have turned to the blue-chip swap to obtain dollars to pay foreign suppliers or as a way to get money out of the country. It is a legal way to skirt foreign-exchange restrictions.
Nomura Securities fixed-income strategist Boris Segura estimates that blue-chip swap transactions account for 10% to 5% of the domestic foreign-exchange market.
"In itself it's not a huge outlet for people to source dollars," Mr. Segura said. "That is the problem. That is why you get more volatility in the blue-chip swap because it's a relatively small window to exit."
Mr. Segura said that during past bouts of market volatility -- elections or Ms. Kirchner's fight with the farming sector in 2008 -- the blue-chip premium would widen but then return to precrisis levels after a few weeks. That hasn't happened this time, he said.
Analysts say the chasm between blue-chip and spot rates has its roots in Ms. Kirchner's economic policies that have put a priority on growth at the expense of inflation, which most private-sector economists say is running between 20% and 25% a year. Through its almost daily intervention in the local foreign-exchange market, the central bank has allowed the peso to weaken only about 2.5% against the dollar this year. The gradual depreciation of the peso, coupled with high inflation, actually has caused the peso to firm versus the dollar when adjusted for inflation, to the detriment of exporters in the manufacturing sector.
If Argentines are sensitive to the prospects of the blue-chip swap rate, so are Argentine authorities, which monitor the rate because of its importance as an indicator of market sentiment.
Traders say that pension fund agency Anses, Argentina's largest institutional investor with more than 200 billion pesos in assets under management, periodically sells dollar bonds on the local market to narrow the gap between the official and blue-chip rates.
Representatives for Anses and the Economy Ministry didn't respond to emails seeking comment. "We follow it, but it's a small market," a central bank spokesman said in reference to the blue-chip swap.
---
Taos Turner and Prabha Natarajan contributed to this article.
Credit: By Ken Parks
Subject: Foreign exchange money reports
Classification: 9180: International; 3500: Foreign exchange administration
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: May 2, 2012
column: Currency Trading
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1010465824
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1010465824?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
India Cuts Back on Iran Oil Imports; New Delhi, Under Pressure from U.S., Calls for Trim in Shipments, as Sanctions Drive Tehran's Production to 20-Year Low
Author: Sharma, Rakesh; Choudhury, Santanu
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 May 2012: n/a.
ProQuest document link
Abstract:
According to Vienna-based JBC Energy GmbH, Iran's crude output fell to 3.2 million barrels a day in April, down 150,000 barrels a day in two months.
Full text: NEW DELHI--India's top two importers of crude oil from Iran plan to reduce shipments by at least 15% this financial year, people with knowledge of the move said, in an important victory for the U.S.-led sanctions effort against Tehran.
The shift came as a new report said that, in a sign international sanctions are having an effect, Iran's oil output has dropped to its lowest level in more than 20 years.
New Delhi, ahead of a visit next week by Secretary of State Hillary Clinton, eased up on its public defiance of U.S. efforts to isolate Iran, asking state-owned Mangalore Refinery & Petrochemicals Ltd. and closely held Essar Oil Ltd. to cut back imports of Iranian oil in the year that ends in March 2013, the people with knowledge of the move said.
Indian officials have said they would continue to buy from Tehran, but they will be increasingly stymied by efforts by the U.S. and European Union to strangle Iran's oil trade to get Tehran to make compromises on its nuclear program.
As a result of Iran's growing isolation, Iran's crude output fell to 3.2 million barrels a day in April, down 150,000 barrels a day in two months, according to Vienna-based JBC Energy GmbH. That level hadn't been hit since 1990, in the aftermath of the Iran-Iraq war.
Though Iran's oil production was already hurt by previous sanctions, a round this year targeting exports "is making things worse--reducing the amount of money Tehran itself has available to invest," said Trevor Houser, a partner at New York-based economic research firm Rhodium Group.
The Organization of Petroleum Exporting Countries has concluded that international oil markets are well supplied, in a cushion against fears that declines in Iranian production and exports will drive up prices.
Tehran says its nuclear program is for peaceful purposes, but the U.S. and others hold it is aimed at weapons production. Iran returned to negotiations over the program last month in Istanbul and has agreed to meet again on May 23 in Baghdad.
The return to the table came under pressure after the EU agreed to ban all oil imports from Iran from July 1, and European businesses began to sever ties. The U.S., meanwhile, introduced measures to isolate Iran's central bank, the main conduit for oil revenue. Those sanctions take effect on June 28.
Asian importers such as Japan and South Korea have trimmed their imports in the first quarter of 2012 following lobbying by the U.S. Though Beijing opposes sanctions, China cut its imports this year by more than half, customs data show, because of a pricing dispute.
Indian officials, however--riling the U.S.--have said their country, which imports 80% of its crude oil and relies on Tehran for 12% of those imports, needed to continue to buy Iranian oil to meet its needs.
The U.S. State Department said in March that 12 countries, including India and China, were at risk of sanctions because of purchases of Iranian oil. The Obama administration also gave waivers to Japan and EU nations that it said had moved quickly to cut Iranian imports.
But Mrs. Clinton earlier this year told Congress that India was cooperating on squeezing Iran much more than statements by government officials had conveyed.
New Delhi asked its top oil importers to cut back in the coming year because of demands from the U.S., one of the people familiar with the request said, adding: "Definitely, there is a lot of pressure from the U.S." A spokesman for India's oil ministry didn't respond to a request to comment.
India hasn't publicly said it was aiming to cut back on trade with Iran, and has sought to increase trade in other areas. Foreign Minister S.M. Krishna said last week that the nation's crude imports from Iran are guided by its energy-security needs.
But India has been forced to reduce its purchases as local refiners find it hard to get financing, shipping and insurance for Iranian oil because of U.S. sanctions pressure, Indian officials say.
"There's been an attempt to diversify our purchases. Things have become very complicated," Foreign Secretary Ranjan Mathai said in a recent interview.
Officials estimate India imported around 14 million tons of Iranian crude in the fiscal year that ended March 31--a drop of over 20% from the previous year.
Crude imports from Iran fell to 18.5 million tons in the year that ended March 31, 2011, from 21.2 million tons in the year ended March 31, 2010, according to government data.
India reached an agreement with Iran in February to pay for almost half of its oil imports from Tehran in Indian rupees because U.S. sanctions made using dollars for transactions nearly impossible. Iran has been looking at ways of buying more goods from India with the rupees it gets from selling its oil.
The reductions in crude imports from Iran, though, seem to reflect that India has little wiggle room.
On Wednesday, a sign of the difficulty of India's position emerged when food ministry officials in New Delhi indicated that a plan for Tehran to import as much as three million metric tons of wheat was facing obstacles. Tehran said it will buy Indian wheat only if it is completely free from a fungal disease. Indian officials called the demand an attempt by Iran to drive down the price, saying the fungus is commonly found in small traces in many countries' wheat supplies.
"We have asked them whether wheat supply from other countries is entirely free from disease," an Indian food ministry official said.
Iran and Pakistan have also disagreed over the price Tehran is willing to pay for wheat, Pakistani media said Wednesday.
Benoît Faucon and Biman Mukherji contributed to this article.
Write to Rakesh Sharma at and Santanu Choudhury at
Credit: By Rakesh Sharma and Santanu Choudhury
Subject: Petroleum industry; Oil sands; Sanctions; American dollar
Location: India United States--US China Iran Japan Persian Gulf
People: Clinton, Hillary
Company / organization: Name: Essar Oil Ltd; NAICS: 211111; Name: Mangalore Refinery & Petrochemicals Ltd; NAICS: 325110, 324110; Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 2, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1010515076
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1010515076?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iran's Oil Output at Lowest Level in 20 Years
Author: Faucon, Benoit
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 May 2012: n/a.
ProQuest document link
Abstract:
According to Vienna-based JBC Energy GmbH, Iran's crude output fell to 3.2 million barrels a day in April, down 150,000 barrels a day in two months.
Full text: LONDON--Iran's oil output has reached its lowest level in 20 years, independent data showed Wednesday, as the impact of sanctions dramatically deepens.
The output decline underscores how pressure on Iran is increasingly hurting the country's coffers---with oil and gas normally accounting for more than half of its export revenue.
According to Vienna-based JBC Energy GmbH, Iran's crude output fell to 3.2 million barrels a day in April, down 150,000 barrels a day in two months. That level hadn't been hit since the aftermath of the Iran-Iraq war in 1990.
Iran's oil industry is targeted by a tightening web of sanctions over its nuclear program. The West suspects the program has military aims--which Iran denies.
The decline is "the result of the country's growing isolation due to its nuclear program," JBC said in a note.
For years, oil-field production in Iran has been hindered by sanctions that bar U.S. and European companies from investing there or supplying technologies to Tehran.
But since the beginning of the year, the measures have been compounded by sanctions directly targeting its oil sales. They include a planned European Union ban on imports of Iranian oil, which has led to a 14% decline in the country's crude exports in March as refiners anticipate the embargo.
But Tehran's oil sales are also coming under pressure in its core markets such as Japan or China. There, the U.S. has been lobbying governments to cut Iranian oil imports in exchange for an exemption on a ban to deal with Iran's central bank.
Data released Thursday by Japan's Ministry of Economy, Trade and Industry showed that the country imported 36% less oil from Iran in March 2012 from a year earlier.
China's customs service figures also show March imports of Iranian oil have fallen by more than half compared with last year.
State-owned National Iranian Oil Co. Wednesday denied any drop in exports to Japan and China and has always maintained its production is unaffected by sanctions.
India's two largest importers of crude oil from Iran will also cut Iranian oil imports by at least 15% at the request of the government, people with direct knowledge of the matter said Wednesday.
Though Iran's production was already hit by previous sanctions, the latest round targeting exports "is making things worse--reducing the amount of money Tehran itself has available to invest," said Trevor Houser, a partner at New York-based economic research firm Rhodium Group.
Write to Benoit Faucon at
Credit: By Benoit Faucon
Subject: Exports; Petroleum industry; Oil sands; Sanctions
Location: Iran United States--US China Japan
Company / organization: Name: National Iranian Oil Co; NAICS: 324110; Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 2, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1010559310
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1010559310?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Canada Eyes New Oil Market; Two Pipeline Companies Plan to Divert Crude to Refineries on the East Coast
Author: Welsch, Edward
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 May 2012: n/a.
ProQuest document link
Abstract:
The new routes likely would divert shipments of crude away from the U.S. Midwest--historically the primary destination for Canadian crude--and could create ripple effects across oil markets. Because of rising output in the U.S., the Midwest now has a glut of oil, a situation that has weighed on both U.S. and Canadian crude prices.
Full text: CALGARY--With more oil than customers, Canada's landlocked West has sought to carve out new markets in the U.S. Gulf Coast and Asia. The next frontier is east.
Pipeline companies Enbridge Inc. and TransCanada Corp. are exploring ways to ship crude to both U.S. and Canadian refineries on the East Coast, the latest projects aimed at reconfiguring energy infrastructure to accommodate North America's oil-output boom.
Enbridge plans to reverse the flow of oil on an existing pipeline by the first quarter of next year, and TransCanada is looking at converting a natural-gas pipeline to oil.
The new routes likely would divert shipments of crude away from the U.S. Midwest--historically the primary destination for Canadian crude--and could create ripple effects across oil markets. Because of rising output in the U.S., the Midwest now has a glut of oil, a situation that has weighed on both U.S. and Canadian crude prices. A reduction in oil imports from Canada probably would lead to tighter supplies and higher prices for both countries, analysts say.
"[Canada] definitely needs new markets, and the East Coast is one option for Canadian supply," said Jackie Forrest, global oil analyst at research firm IHS CERA.
High-quality crude oil, referred to in the industry as "light" and "sweet," from Canada has traded almost $6 per barrel less on average than benchmark U.S. prices this year, according to Platts, an oil-price information service. From 2007 to 2011, Canadian light crude has averaged roughly $3 more.
One reason for the weakening price is new competition. Production of a similar grade of crude oil out of North Dakota has almost tripled over three years to 558,000 barrels a day as of February, according to the U.S. Energy Information Administration. Sellers of those barrels are vying for some of Canada's oldest customers--refineries that buy some 577,000 barrels a day of light, sweet crude, according to Canada's National Energy Board.
When some Midwest refineries suspended operations for maintenance in February--causing storage facilities and pipelines to fill up--competition got so heated that the per-barrel discount to U.S. benchmark prices widened to $22.41, the biggest ever.
"There is just so much in the U.S. that the production in Canada, unless it stays in Canada, is going to add even more to the market, and there's going to be more downward pricing pressure," said Trisha Curtis, an energy analyst at the Energy Policy Research Foundation.
The discount narrowed after the refineries came back on line but prices fell again in March after another refinery had to halt its purchases. On Wednesday, Marathon Oil Corp. and Devon Energy Corp., which both have stakes in Canadian oil projects, attributed disappointing first-quarter earnings to unusually low prices for Canadian crude.
This week, prices for Canadian crude crept back above U.S. crude. On Wednesday, Canadian oil was $2.34 over the U.S. benchmark, according to West Texas Intermediate, which closely tracks futures on the New York Mercantile Exchange. Nymex crude futures lost 0.9% to end at $105.22 a barrel.
Even though Canada is the biggest exporter to the U.S., it has to import 650,000 barrels of light crude from Africa and the Middle East because of the lack of pipeline connections from the West to the East. The prices of the imports are well above prices for U.S. and Canadian crude.
Enbridge and TransCanada have presented two preliminary proposals. Enbridge wants to reverse the flow of a pipeline that currently takes foreign crude from Canada's eastern ports to Ontario. The pipeline initially would have a capacity of 50,000 barrels a day and later ramp up to 200,000 barrels a day, said Enbridge Chief Executive Pat Daniel. TransCanada is mulling a separate plan that would modify part of its existing, 1,500-mile natural gas pipeline from Alberta to Montreal to transport oil instead.
Both plans could face stiff opposition. Many provincial politicians and environmentalists in Ontario and Quebec have criticized Alberta's oil-sands industry for its higher carbon footprint, compared to conventional drilling, and say they want to discourage the wider use of the tarry crude.
TransCanada's plan could leave its gas customers in the cold. TransCanada's executive vice president for operations Don Wishart said some negotiation would have to be done with the line's gas customers.
Credit: By Edward Welsch
Subject: Petroleum refineries; Petroleum industry; Oil sands; Crude oil prices; Energy economics
Location: Asia United States--US Canada North America
Company / organization: Name: Enbridge Inc; NAICS: 486110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 2, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1010577328
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1010577328?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: India Cuts Back on Iran Oil Imports --- New Delhi, Under Pressure from U.S., Calls for Trim in Shipments, as Sanctions Drive Tehran's Production to 20-Year Low
Author: Sharma, Rakesh; Choudhury, Santanu
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]03 May 2012: A.8.
ProQuest document link
Abstract:
[...]of Iran's growing isolation, Iran's crude output fell to 3.2 million barrels a day in April, down 150,000 barrels a day in two months, according to Vienna-based JBC Energy GmbH.
Full text: NEW DELHI -- India's top two importers of crude oil from Iran plan to reduce shipments by at least 15% this financial year, people with knowledge of the move said, in an important victory for the U.S.-led sanctions effort against Tehran.
The shift came as a new report said that, in a sign international sanctions are having an effect, Iran's oil output has dropped to its lowest level in more than 20 years.
New Delhi, ahead of a visit next week by Secretary of State Hillary Clinton, eased up on its public defiance of U.S. efforts to isolate Iran, asking state-owned Mangalore Refinery & Petrochemicals Ltd. and closely held Essar Oil Ltd. to cut back imports of Iranian oil in the year that ends in March 2013, the people with knowledge of the move said.
Indian officials have said they would continue to buy from Tehran, but they will be increasingly stymied by efforts by the U.S. and European Union to strangle Iran's oil trade to get Tehran to make compromises on its nuclear program.
As a result of Iran's growing isolation, Iran's crude output fell to 3.2 million barrels a day in April, down 150,000 barrels a day in two months, according to Vienna-based JBC Energy GmbH. That level hadn't been hit since 1990, in the aftermath of the Iran-Iraq war.
Though Iran's oil production was already hurt by previous sanctions, a round this year targeting exports "is making things worse -- reducing the amount of money Tehran itself has available to invest," said Trevor Houser, a partner at New York-based economic research firm Rhodium Group.
The Organization of Petroleum Exporting Countries has concluded that international oil markets are well supplied, in a cushion against fears that declines in Iranian production and exports will drive up prices.
Tehran says its nuclear program is for peaceful purposes, but the U.S. and others hold it is aimed at weapons production. Iran returned to negotiations over the program last month in Istanbul and has agreed to meet again on May 23 in Baghdad.
The return to the table came under pressure after the EU agreed to ban all oil imports from Iran from July 1, and European businesses began to sever ties.
The U.S., meanwhile, introduced measures to isolate Iran's central bank, the main conduit for oil revenue. Those sanctions take effect on June 28.
Asian importers such as Japan and South Korea have trimmed their imports in the first quarter of 2012 following lobbying by the U.S.
Though Beijing opposes sanctions, China cut its imports this year by more than half, customs data show, because of a pricing dispute.
Indian officials, however -- riling the U.S. -- have said their country, which imports 80% of its crude oil and relies on Tehran for 12% of those imports, needed to continue to buy Iranian oil to meet its needs.
The U.S. State Department said in March that 12 countries, including India and China, were at risk of sanctions because of purchases of Iranian oil. The Obama administration also gave waivers to Japan and EU nations that it said had moved quickly to cut Iranian imports.
But Mrs. Clinton earlier this year told Congress that India was cooperating on squeezing Iran much more than statements by government officials had conveyed.
New Delhi asked its top oil importers to cut back in the coming year because of demands from the U.S., one of the people familiar with the request said, adding: "Definitely, there is a lot of pressure from the U.S." A spokesman for India's oil ministry didn't respond to a request to comment.
India hasn't publicly said it was aiming to cut back on trade with Iran, and has sought to increase trade in other areas. Foreign Minister S.M. Krishna said last week that the nation's crude imports from Iran are guided by its energy-security needs.
But India has been forced to reduce its purchases as local refiners find it hard to get financing, shipping and insurance for Iranian oil because of U.S. sanctions pressure, Indian officials say.
"There's been an attempt to diversify our purchases. Things have become very complicated," Foreign Secretary Ranjan Mathai said in a recent interview.
Officials estimate India imported around 14 million tons of Iranian crude in the fiscal year that ended March 31 -- a drop of over 20% from the previous year.
Crude imports from Iran fell to 18.5 million tons in the year that ended March 31, 2011, from 21.2 million tons in the year ended March 31, 2010, according to government data.
India reached an agreement with Iran in February to pay for almost half of its oil imports from Tehran in Indian rupees because U.S. sanctions made using dollars for transactions nearly impossible. Iran has been looking at ways of buying more goods from India with the rupees it gets from selling its oil.
The reductions in crude imports from Iran, though, seem to reflect that India has little wiggle room.
On Wednesday, a sign of the difficulty of India's position emerged when food ministry officials in New Delhi indicated that a plan for Tehran to import as much as three million metric tons of wheat was facing obstacles. Tehran said it will buy Indian wheat only if it is completely free from a fungal disease.
Indian officials called the demand an attempt by Iran to drive down the price, saying the fungus is commonly found in small traces in many countries' wheat supplies.
"We have asked them whether wheat supply from other countries is entirely free from disease," an Indian food ministry official said.
Iran and Pakistan have also disagreed over the price Tehran is willing to pay for wheat, Pakistani media said Wednesday.
---
Benoit Faucon and Biman Mukherji contributed to this article.
Credit: By Rakesh Sharma and Santanu Choudhury
Subject: Petroleum industry; Oil sands; Petroleum production; International trade; Sanctions; Imports
Location: United States--US India Iran
People: Clinton, Hillary
Company / organization: Name: Essar Oil Ltd; NAICS: 211111; Name: Mangalore Refinery & Petrochemicals Ltd; NAICS: 325110, 324110; Name: European Union; NAICS: 926110, 928120; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910
Classification: 9180: International; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.8
Publication year: 2012
Publication date: May 3, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1010773293
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1010773293?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Canada Eyes New Oil Market --- Two Pipeline Companies Plan to Divert Crude to Refineries on the East Coast
Author: Welsch, Edward
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]03 May 2012: C.4.
ProQuest document link
Abstract:
The new routes likely would divert shipments of crude away from the U.S. Midwest -- historically the primary destination for Canadian crude -- and could create ripple effects across oil markets. Because of rising output in the U.S., the Midwest now has a glut of oil, a situation that has weighed on both U.S. and Canadian crude prices.
Full text: CALGARY -- With more oil than customers, Canada's landlocked West has sought to carve out new markets in the U.S. Gulf Coast and Asia. The next frontier is east.
Pipeline companies Enbridge Inc. and TransCanada Corp. are exploring ways to ship crude to both U.S. and Canadian refineries on the East Coast, the latest projects aimed at reconfiguring energy infrastructure to accommodate North America's oil-output boom.
Enbridge plans to reverse the flow of oil on an existing pipeline by the first quarter of next year, and TransCanada is looking at converting a natural-gas pipeline to oil.
The new routes likely would divert shipments of crude away from the U.S. Midwest -- historically the primary destination for Canadian crude -- and could create ripple effects across oil markets. Because of rising output in the U.S., the Midwest now has a glut of oil, a situation that has weighed on both U.S. and Canadian crude prices. A reduction in oil imports from Canada probably would lead to tighter supplies and higher prices for both countries, analysts say.
"[Canada] definitely needs new markets, and the East Coast is one option for Canadian supply," said Jackie Forrest, global oil analyst at research firm IHS CERA.
High-quality crude oil, referred to in the industry as "light" and "sweet," from Canada has traded almost $6 per barrel less on average than benchmark U.S. prices this year, according to Platts, an oil-price information service. From 2007 to 2011, Canadian light crude has averaged roughly $3 more.
One reason for the weakening price is new competition. Production of a similar grade of crude oil out of North Dakota has almost tripled over three years to 558,000 barrels a day as of February, according to the U.S. Energy Information Administration. Sellers of those barrels are vying for some of Canada's oldest customers -- refineries that buy some 575,000 barrels a day of light, sweet crude, according to Canada's National Energy Board.
When some Midwest refineries suspended operations for maintenance in February -- causing storage facilities and pipelines to fill up -- competition got so heated that the per-barrel discount to U.S. benchmark prices widened to $22.41, the biggest ever.
"There is just so much in the U.S. that the production in Canada, unless it stays in Canada, is going to add even more to the market, and there's going to be more downward pricing pressure," said Trisha Curtis, an energy analyst at the Energy Policy Research Foundation.
The discount narrowed after the refineries came back on line but prices fell again in March after another refinery had to halt its purchases. On Wednesday, Marathon Oil Corp. and Devon Energy Corp., which both have stakes in Canadian oil projects, attributed disappointing first-quarter earnings to unusually low prices for Canadian crude.
This week, prices for Canadian crude crept back above U.S. crude. On Wednesday, Canadian oil was $2.34 over the U.S. benchmark, according to West Texas Intermediate, which closely tracks futures on the New York Mercantile Exchange. Nymex crude futures lost 0.9% to end at $105.22 a barrel.
Even though Canada is the biggest exporter to the U.S., it has to import 650,000 barrels of light crude from Africa and the Middle East because of the lack of pipeline connections from the West to the East. The prices of the imports are well above prices for U.S. and Canadian crude.
Enbridge and TransCanada have presented two preliminary proposals. Enbridge wants to reverse the flow of a pipeline that currently takes foreign crude from Canada's eastern ports to Ontario. The pipeline initially would have a capacity of 50,000 barrels a day and later ramp up to 200,000 barrels a day, said Enbridge Chief Executive Pat Daniel. TransCanada is mulling a separate plan that would modify part of its existing, 1,500-mile natural gas pipeline from Alberta to Montreal to transport oil instead.
Both plans could face stiff opposition. Many provincial politicians and environmentalists in Ontario and Quebec have criticized Alberta's oil-sands industry for its higher carbon footprint, compared to conventional drilling, and say they want to discourage the wider use of the tarry crude.
TransCanada's plan could leave its gas customers in the cold. TransCanada's executive vice president for operations Don Wishart said some negotiation would have to be done with the line's gas customers.
Credit: By Edward Welsch
Subject: Crude oil; Commodity prices
Company / organization: Name: Enbridge Inc; NAICS: 486110
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: May 3, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1010782936
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1010782936?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil-Spill Trial Set for January
Author: Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 May 2012: n/a.
ProQuest document link
Abstract:
[...]on Thursday, Kurt Mix, a former BP engineer who is the first person to face criminal charges related to the spill, pleaded not guilty to two counts of obstruction of justice.
Full text: A federal judge in New Orleans has postponed the first civil trial over the Deepwater Horizon incident until Jan. 14, 2013.
Originally set for Feb. 27 this year, the trial was delayed twice so BP PLC and lawyers for thousands of Gulf Coast residents and businesses could reach a settlement over damages from the worst offshore oil spill in U.S. history. Judge Carl Barbier gave preliminary approval to that deal, worth an estimated $7.8 billion, this week.
The trial Judge Barbier has now set for January will determine the level of liability for BP, drilling rig owner Transocean Ltd. and contractor Halliburton Co. in the deadly April 2010 accident.
State and federal officials argued the trial should be held this summer, but BP said it should wait until after the final terms of the settlement were set in early November, and the judge agreed on Thursday.
Also on Thursday, Kurt Mix, a former BP engineer who is the first person to face criminal charges related to the spill, pleaded not guilty to two counts of obstruction of justice.
Mr. Mix is accused of deleting text messages to and from a supervisor and a contractor despite warnings from BP to preserve all documents and data related to the spill.
He entered his plea before a magistrate judge in New Orleans and remains free on a $100,000 unsecured bond.
Credit: By Tom Fowler
Subject: Settlements & damages; Litigation
Location: United States--US
Company / organization: Name: BP PLC; NAICS: 324110, 447110, 211111; Name: Halliburton Co; NAICS: 213112, 237990; Name: Transocean Ltd; NAICS: 213111, 213112
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 3, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1010817702
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1010817702?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
For Big Oil, the Libya Opening That Wasn't
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]04 May 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Some big oil companies hoped regime change in Libya, and a sense of political opening elsewhere in the Middle East and North Africa, would bring relief in some of the tough terms they had agreed to in partnership deals with national oil companies.
That hasn't happened.
As Libya's Moammar Gadhafi fell last year with the help of the West and an interim regime took the reins, the hope among some oil companies was that they would receive new tax breaks and a better share of fields' output in current and future deals.
But the interim government in Libya, as well as administrations elsewhere, largely plan to keep the same tough terms in place for most conventional fields, as governments are mindful not to appear to be selling out their countries' crown jewels.
New opportunities lie mostly in so-called unconventional projects, which are especially expensive or require advanced technology to develop. Higher oil prices are needed for such projects to pay off, making them riskier and less profitable than those available to national oil companies.
For such projects in Libya, investment conditions "can be improved," Libya's Oil Minister Abdulrahman Benyezza said in a recent interview.
For decades, many European companies had enjoyed deals that granted them half of the high-quality oil produced in Libyan fields. Some major oil companies hoped the country would open further to investment after sanctions from Washington were lifted in 2004 and U.S. giants re-entered the North African nation.
But in the years that followed, the Gadhafi regime renegotiated the companies' share of oil from each field to as low as 12%, from about 50%. Libya's state-owned National Oil Co. continues to get the bulk of the barrels produced in joint-ventures with oil majors.
Just after the fall of the regime, several foreign oil companies expressed hopes of better terms on existing deals or attractive ones for future contracts. Among the incumbents that expressed hopes in Libyan expansion were France's Total SA and Royal Dutch Shell PLC.
"We see Libya as a great opportunity under the new government," Sara Akbar, chief executive of privately owned Kuwait Energy Co., said in an interview in November. "Under Gadhafi, it was off the radar screen" because of its "very harsh" terms, said Mrs. Akbar, whose company doesn't have a licence in Libya.
Others took a more cautious approach. Contractual terms "determine what investment you are going to get," said Martin Bachmann, an exploration and production executive director at Germany's Wintershall Holding GmbH at the time. "That's for the new leadership to consider."
Libya's oil officials say they will maintain the predetermined levels of payouts for existing contracts, which cover conventional oil production and exploration. The officials say no new deals will be signed before elections scheduled for June.
Even then, any changes to the current investment framework would be acceptable only in unproven areas such as deep offshore, or in unconventional oil and gas projects, said Tamim Osman, an adviser to the country's largest state-owned producing operation, Arabian Gulf Oil Co.
Libya's National Oil Co., Mr. Osman added, might look for a foreign partner to develop southeast Libya's Kufra basin, where hydrocarbons are thought be trapped in thick, porous sandstone formations. In such cases, producing nations depend on the private companies for new technology and know-how.
"Anybody who is trying the unproven, high-risk areas should be given improved terms," Mr. Osman said. "But in areas where oil has already been discovered, there is no such need."
In spite of some hopes to the contrary, that leaves international oil companies looking largely at high-risk, high-cost leftovers.
"I don't think it's nice to see that IOCs only get called [by state companies] on unconventional" projects, Total's Chief Executive Christophe de Margerie said on the side of a Kuwait conference in March. "Conventional is kept for national oil companies. If we could have a little mix, it could be better for us."
The dynamic is similar in Algeria, which sharply boosted its social spending in jobs and housing to avert the sort of turmoil faced by its neighbors. The North Africa nation will keep existing conventional oil contracts--which are considered severe, though less so than in Libya--unchanged.
Algerian authorities are considering tax incentives for foreign oil companies, but mostly for difficult terrains such as offshore and risky onshore acreage, according to energy minister Youcef Yousfi. These include large swaths of shale--which has proven a game changer in the U.S. with huge discoveries of oil and gas.
After barring majors from a giant project of conventional oil in the 1990s, Kuwait is also in talks with Total and Exxon Mobil Corp. to develop its heavy oil--a thick, hard-to-extract type of oil. Most of Kuwait's conventional and easy-to-pump oil projects aren't open for discussion.
Whereas conventional oil production in the Middle East needs prices of $5 to $25 a barrel to break even, unconventional assets typically need $50 to $113 a barrel, according to the International Energy Agency. Most producing countries figure they can keep pumping without new foreign help, but want assistance to develop more ambitious projects that can prevent long-term output decline.
The IEA warned last year that, if the Middle East and North Africa don't invest enough in oil and gas reserves, oil prices could rocket to $150 a barrel. Among the factors that could push prices to that level, the agency cited "constraints on inward investment as a result of stronger resource nationalism, particularly in regimes seeking to pre-empt popular uprisings."
The region is generally "extremely difficult to get access" to but political turmoil is "making investment more complex and politically risky" and therefore expensive, said Peter Hutton, London-based analyst at Canadian-owned broker RBC Capital Markets LLC.
Write to Benoit Faucon at
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 4, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1011003631
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1011003631?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: For Big Oil, the Libya Opening That Wasn't
Author: Faucon, Benoit
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]05 May 2012: A.9.
ProQuest document link
Abstract:
Algerian authorities are considering tax incentives for foreign oil companies, but mostly for difficult terrains such as offshore and risky onshore acreage, according to energy minister Youcef Yousfi.\n
Full text: Some big oil companies hoped regime change in Libya, and a sense of political opening elsewhere in the Middle East, would bring relief in some of the tough terms they had agreed to in partnership deals with national oil companies.
That hasn't happened.
As Libya's Moammar Gadhafi fell last year with the help of the West and an interim regime took the reins, the hope among some oil companies was that they would receive new tax breaks and a better share of fields' output in current and future deals.
But the interim government in Libya, as well as administrations elsewhere, largely plan to keep the same tough terms in place for most conventional fields, as governments are mindful not to appear to be selling out their countries' crown jewels.
New opportunities lie mostly in so-called unconventional projects, which are especially expensive or require advanced technology to develop. Higher oil prices are needed for such projects to pay off.
For such projects in Libya, investment conditions can be improved, Libya's Oil Minister Abdulrahman Benyezza said in a recent interview.
For decades, many European companies had enjoyed deals that granted them half of the high-quality oil produced in Libyan fields. Some major oil companies hoped the country would open further to investment after sanctions from Washington were lifted in 2004.
But in the years that followed, the Gadhafi regime renegotiated the companies' share of oil from each field to as low as 12%, from about 50%.
Just after the fall of the regime, several foreign oil companies expressed hopes of better terms on existing deals or attractive ones for future contracts.
Among the incumbents that expressed hopes in Libyan expansion were France's Total SA and Royal Dutch Shell PLC.
"We see Libya as a great opportunity under the new government," Sara Akbar, chief executive of privately owned Kuwait Energy Co., said in an interview in November. "Under Gadhafi, it was off the radar screen" because of its "very harsh" terms.
Others took a more cautious approach. Contractual terms "determine what investment you are going to get," said Martin Bachmann, an executive director at Germany's Wintershall Holding GmbH at the time. "That's for the new leadership to consider."
Libya's oil officials say they will maintain the predetermined levels of payouts for existing contracts, which cover conventional oil production and exploration. The officials say no new deals will be signed before elections scheduled for June.
Even then, any changes to the current investment framework would be acceptable only in unproven areas such as deep offshore, said Tamim Osman, an adviser to the country's largest state-owned producing operation, Arabian Gulf Oil Co.
"I don't think it's nice to see that IOCs only get called [by state companies] on unconventional" projects, Total's Chief Executive Christophe de Margerie said in March. "Conventional is kept for national oil companies. If we could have a little mix, it could be better for us."
The dynamic is similar in Algeria, which sharply boosted its social spending in jobs and housing to avert the sort of turmoil faced by its neighbors. The North Africa nation will keep existing conventional oil contracts -- which are considered severe, though less so than in Libya -- unchanged.
Algerian authorities are considering tax incentives for foreign oil companies, but mostly for difficult terrains such as offshore and risky onshore acreage, according to energy minister Youcef Yousfi.
Credit: By Benoit Faucon
Subject: Petroleum industry; Tax incentives; Petroleum refineries
Location: Libya
Company / organization: Name: Total SA; NAICS: 211111, 324110, 447190; Name: Royal Dutch Shell PLC; NAICS: 213112, 221210, 324 110
Classification: 9178: Middle East; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.9
Publication year: 2012
Publication date: May 5, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1011025489
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1011025489?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Clinton Praises India's Pullback on Iran Oil
Author: Sharma, Amol; Wright, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 May 2012: n/a.
ProQuest document link
Abstract:
Mrs. Clinton, speaking Monday to a live televised town hall meeting in the eastern city of Kolkata, said India had begun to reduce imports but could cut back even further as there are adequate oil supplies from countries like Saudi Arabia and Iraq.
Full text: NEW DELHI--U.S. Secretary of State Hillary Clinton, who is on a three-day visit to India, praised New Delhi for beginning to reduce oil purchases from Iran but stopped short of saying whether the country had done enough to avoid targeted U.S. sanctions.
The U.S. is calling on countries to reduce purchases of Iranian oil as a way of exerting pressure on Tehran to give up its nuclear program, which Western nations believe is intended to develop weapons but Iran maintains is for peaceful energy purposes.
Washington has given 12 nations, including India, Turkey and China, until June 28 to significantly reduce Iranian oil imports. Financial institutions of nations that don't comply could face sanctions if they engage in petroleum-related transactions with Iran's central bank. Those penalties may effectively exclude them from the U.S. banking system.
Mrs. Clinton, speaking Monday to a live televised town hall meeting in the eastern city of Kolkata, said India had begun to reduce imports but could cut back even further as there are adequate oil supplies from countries like Saudi Arabia and Iraq. "We commend the steps they have taken and we hope they will do even more," Mrs. Clinton said. "There are ways for India to continue to meet its energy requirements."
The U.S. already has granted Japan and the European Union a waiver from sanctions after they took action to reduce Iranian oil purchases. The EU said earlier this year it will ban all Iranian oil imports from July 1, and Japan reduced imports from Tehran by between 15% and 22% in the second half of 2011.
Faced with tightening sanctions, Iran returned to negotiations over its nuclear program last month in Istanbul and has agreed to meet again on May 23 in Baghdad.
India imports about three-quarters of its oil requirements, and officials have argued that the country needs Iranian oil to meet its growing energy needs.
Under U.S. pressure, though, New Delhi has been forced to cut back on purchases from Iran, which now make up about 9% of the country's total oil imports, down from 12% last year. New Delhi recently asked two Indian oil refiners, the largest importers of Iranian crude, to cut purchases from Tehran by at least 15% in the year ending March 31, 2013, two people with knowledge of the matter said last week.
U.S. sanctions, brought in over the past year, have made it harder to get U.S.-dollar financing, insurance and shipping for purchases of Iranian oil, Indian officials say.
But India also has been seeking ways to continue to purchase Iranian oil. In February, Tehran agreed to accept payment in Indian rupees for 45% of its oil sales to New Delhi as a way to get around difficulties in obtaining U.S. dollars for transactions. The nations are working to set up a credit window between state-owned banks to process the payments.
On Monday, a group of 50 Iranian businesspeople began a visit to India aimed at looking for local goods to purchase with the rupees that Tehran will get for its oil sales, said Anand Seth, a spokesman for the Federation of Indian Export Organizations.
The Iranian business delegation arrived in New Delhi just ahead of Mrs. Clinton, who flew Monday to the capital from Kolkata. She was scheduled to meet with Indian Prime Minister Manmohan Singh later in the evening and, on Tuesday morning, with her Indian counterpart, S.M. Krishna.
Earlier in the day, Mrs. Clinton met the chief minister of West Bengal, Mamata Banerjee, in Kolkata. Ms. Banerjee last year played a major role in derailing India's plans to allow foreign supermarkets to own stakes in Indian businesses, which would have allowed major investments by U.S. companies such as Wal-Mart Stores Inc.
Ms. Banerjee, who contends such a move would kill small mom-and-pop stores, said the issue didn't come up in their talks. A U.S. government statement said Mrs. Clinton brought up Washington's desire for "increasing U.S. investment in West Bengal, including in the retail sector."
Mrs. Clinton, who took questions from a live studio audience on a range of subjects--from human rights to foreign investment to the role of women in politics--said the U.S. needs India "to keep the pressure on Iran." She detailed what she said is the Iranian regime's "aggressive history," pointing to what she said was Iran's plot to kill Saudi Arabia's U.S. ambassador last year by hiring "a drug-trafficking hit man."
Mrs. Clinton said India is beginning to feel the impact, too, and she blamed Iran for an attack on an Israeli diplomat in Delhi in February.
"We need India to be part of the international effort," she said.
Margherita Stancati
contributed to this article.
Write to Amol Sharma at
Credit: By Amol Sharma And Tom Wright
Subject: Oil sands; Petroleum industry
Location: Japan United States--US Iran India Turkey China
People: Clinton, Hillary
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wal l Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 7, 2012
column: India News
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1011168723
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/10 11168723?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. Presses India On Iran Oil Buys
Author: Sharma, Amol
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 May 2012: n/a.
ProQuest document link
Abstract:
Washington hasn't specified thus far how much individual countries need to reduce imports to avoid sanctions. setting up potentially tense discussions next week Carlos Pascual, a senior State Department official, will be in India next week to survey the energy sector and help determine what specific Indian facilities must do, a U.S. official said.
Full text: NEW DELHI--A U.S. special envoy will visit India next week to assess the country's capability to shift crude imports from Iranto other suppliers, an evaluation that will help determine what New Delhi needs to do to head off U.S. sanctions that are set to come into effect next month.
After a three-day India visit that included meetings with Prime Minister Manmohan Singh and other top officials, Secretary of State Hillary Clinton said she was encouraged by the steps India has already taken to reduce Iran imports. But she pressed Indian officials to do more, saying the cutbacks would help international efforts to persuade Iran to abandon its nuclear ambitions.
"I welcome the progress India is making to reduce its purchases from Iran and hope to see continuing progress," Mrs. Clinton told reporters after meeting Tuesday with her Indian counterpart, S.M. Krishna. "We believe that if the international community eases the pressure or wavers in our resolve, Iran will have less incentive to negotiate in good faith."
The U.S. is calling on several countries, including India, Turkey, China and South Korea, to substantially reduce purchases of Iranian oil by June 28 or face sanctions on financial institutions that do business with Iran's central bank.
The U.S. is pushing Iraq and Saudi Arabia as alternative suppliers. Japan and the European Union have already taken steps to dramatically rein in Iranian oil imports, earning waivers from possible U.S. sanctions.
International pressure, including sanctions, helped to bring Iran back to the negotiating table last month in Istanbul, Mrs. Clinton said, and India can help sustain that pressure.
Washington hasn't specified thus far how much individual countries need to reduce imports to avoid sanctions. setting up potentially tense discussions next week Carlos Pascual, a senior State Department official, will be in India next week to survey the energy sector and help determine what specific Indian facilities must do, a U.S. official said.
India, which imports more than three-quarters of its oil, has reduced purchases from Iran from about 12% of total oil imports last year to roughly 9% now.
Indian officials pledged to continue discussions on Iran with the U.S. but stopped short of making any commitments to reduce imports further.
Mr. Krishna said India is reliant on Middle Eastern oil imports to meet its surging demand for fuel--and said India also has deep cultural ties in the region. This week India is hosting a business delegation from Iran.
"Iran is a key country for our energy needs," Mr. Krishna said. India, he added, would base its decisions on "commercial, financial and technical considerations."
One issue for India is that some of its refineries are designed to handle the kind of heavy crude Iran supplies and would need to be converted to process alternative varieties of crude, the official said.
In a news conference, Mrs. Clinton and Mr. Krishna spoke positively about growing U.S.-India trade, which is expected to surpass $100 billion this year, as well as expanded military and counterterrorism cooperation.
But Mrs. Clinton called for India to open up further to U.S. investment. During the trip, she raised concerns about India's stalled reforms aimed at allowing investments by foreign supermarkets and big-box retail stores.
She also said U.S. nuclear-energy companies are wary of selling equipment to India because of Indian regulations that would make them liable for accidents. In many countries, nuclear-plant operators assume all liability.
"I truly believe there is much more potential to unleash," she said. "We need to continue to reduce barriers and open our markets to more trade and investment."
Mr. Krishna said he assured Mrs. Clinton that India is committed "to provide a level playing field to all U.S. companies within the framework of national law and our international obligations."
For his part, Mr. Krishna said he raised concerns about "mobility of professionals" to the U.S. India has been frustrated by a U.S. increase in visa fees--and what it believes are stepped-up visa rejections--both of which have made life difficult for Indian tech outsourcing companies that send workers to the U.S. to work on client sites.
Write to Amol Sharma at
Credit: By Amol Sharma
Subject: International relations-US; Energy industry; Sanctions
Location: United States--US Iran India
People: Singh, Manmohan Clinton, Hillary
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 8, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1011472387
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1011472387?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Furt her reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Saudi Arabia Touts Ability to Fill Oil-Supply Gap
Author: Iwata, Mari; Narioka, Kosaku
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 May 2012: n/a.
ProQuest document link
Abstract:
TOKYO--Saudi Arabia reiterated Tuesday it is very well-equipped to fill any gap between global supply and demand thanks both to its ample spare crude-oil output capacity and oil stocks, but suggested that the Organization of Petroleum Exporting Countries could potentially discuss a change to the group members' output when ministers meet next month.
Full text: TOKYO--Saudi Arabia reiterated Tuesday it is very well-equipped to fill any gap between global supply and demand thanks both to its ample spare crude-oil output capacity and oil stocks, but suggested that the Organization of Petroleum Exporting Countries could potentially discuss a change to the group members' output when ministers meet next month.
"We [Saudi Arabia] have 2.5 million barrels a day of spare capacity, and 80 million barrels of stocks," Saudi Oil Minister Ali Naimi told reporters, adding that his country is now producing around 10 million barrels of crude oil a day.
"We always satisfy our customer's requests. Whenever there is a request, we'll satisfy it," Mr. Naimi said. "Oil prices are still too high," the Saudi minister added, but he declined to say what level he would be comfortable with.
Asked whether OPEC might raise its output ceiling next month, he replied: "You have to wait for the meeting there. We have to discuss that."
Iran has criticized Saudi Arabia, claiming that it has ramped up output to take some of Iran's share of the market, which in turn has raised the prospect of a difficult OPEC meeting. But Mr. Naimi told reporters in Tokyo that "there is no tension" among OPEC members.
Mr. Naimi's comments come ahead of a July 1 ban by the European Union of imports of Iranian crude oil, reduced imports of its crude from some other countries and a near halt to oil exports by Sudan--factors that have spurred increased demand for alternative crudes, and which in turn have underpinned prices.
The U.S. has demanded that Iran's customers reduce purchases of Iranian oil and not engage in petroleum-related transactions with Iran's central bank as a way of exerting pressure on Tehran to give up its nuclear program.
If they don't, they risk sanctions which may effectively exclude them from the U.S. banking system.
On Tuesday, Mr. Naimi met Yukio Edano, Japan's Minister of Economy, Trade and Industry, to discuss oil supplies to Japan, as well as Japan's role in Saudi Arabia's renewable energy and manufacturing sectors.
During the closed-door meeting, Mr. Naimi told Mr. Edano that Saudi Arabia has sufficient spare capacity to deal with any "contingency," according to a senior METI official who was present.
Neither minister mentioned Iran during the meeting, the official said.
In March, the U.S. decided to exempt Tokyo from sanctions, recognizing Japanese moves to cut its dependency on Iranian oil.
Between January and March 2012, Japan trimmed imports from Iran by more than 20%, to around 350,000 barrels a day, as political pressure from the U.S. to reduce imports mounted.
U.S. Secretary of State Hillary Clinton on Monday praised New Delhi for beginning to reduce oil purchases from Iran, but stopped short of saying whether this was enough to avoid penalties. It is unclear just what action the U.S. might take against India, or another major customer, China, if it deems their responses are insufficient.
Also on Monday, South Korean Minister of Strategy and Finance Bahk Jae-wan, speaking in Abu Dhabi, said Saudi Arabia and the United Arab Emirates have pledged to make up for any shortfall in Iranian oil exports to his country.
Write to Mari Iwata at
Credit: By Mari Iwata And Kosaku Narioka
Subject: Petroleum industry; Oil prices; Cartels; Meetings
Location: United States--US Iran Japan Saudi Arabia
People: Edano, Yukio
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 8, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1011472485
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1011472485?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Here Be Oil Plugs: Spill-Containment Kits Go Global; BP's 500-Ton System, Which Needs Seven Planes to Deploy, Is in Vanguard of World-Wide Disaster Response Efforts
Author: González, Ángel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 May 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: HOUSTON--Companies that developed new ways to contain offshore oil spills after the Deepwater Horizon disaster are taking the technology global, hoping to burnish their reputations and reduce the risks of a perilous but profitable business.
Chief among them is BP PLC, the U.K. oil giant at the center of the Deepwater Horizon accident two years ago, which killed 11 people, unleashed a massive oil slick in the U.S. Gulf of Mexico and nearly brought the company to its knees.
BP unveiled a 500-ton spill-containment device last week that is designed to be flown at a moment's notice to any part in the world where the company scours the ocean's depths for oil. The system, which can be lowered onto the seabed by a drilling rig and then assembled on top of a deep-water well on the sea floor to stop a gusher, is stowed away at a cavernous former steel mill near the Houston Ship Channel.
The BP system is an assembly of boxes and cylinders roughly the size and shape of a townhouse and looks like a giant set of yellow, metallic Legos. That heft is needed to operate at depths of up to 10,000 feet and withstand high-pressure leaks of up to 15,000 pounds per square inch. The kit can be placed on top of a broken blowout preventer--manhole-like devices that are themselves designed as plugs--to cover a leak, or on top of an open leaking well. The system steers the jet of escaping crude and gas into a pipeline toward the surface, where it can be loaded onto ships or flared.
The kit, which cost $50 million to develop, includes saws and large mechanical pincers that can cut through broken well equipment and remove any debris resulting from a blowout.
It takes five huge Antonov Co. cargo planes, with wing spans approaching the size of a football field, as well as two Boeing Corp. B747-400 aircraft, to haul the entire kit to its destination. Still, it can reach BP's remotest operations within 10 days, company executives said.
"We are looking at risk in BP much differently than two years ago," Richard Morrison, the head of BP's global deep-water response.
BP's kit is the latest milestone for what has become a sizable deep-water drilling risk-reduction industry seemingly overnight. As high oil prices and rapidly dwindling reserves make offshore crude essential, demonstrating the ability to quickly corral a deep-water spill has become critical to the oil industry, which once dismissed such disasters as improbable events.
Initially available in the U.S. Gulf, where oil companies drew from the technology developed by BP to stop the Deepwater Horizon gusher, containment systems are spreading everywhere oil companies drill for oil that is under deep water. BP says that there are about 12 deep-water spill caps available world-wide, and that number will increase to 20 in 2013.
Chevron Corp. has been battling oil seeps found last November on the Brazilian sea floor with specially built containment devices. Total SA of France, which is currently fighting a shallow-water natural-gas leak off the British coast, plans to deploy two deep-water containment systems at production platforms in Africa by 2013, said company executive Yves-Louis Darricarrère.
The global mobilization is helping drum up business for subsea-equipment makers and transport companies. ASCO Freight Management LLC, a logistics firm that runs the warehouses where BP's kit and another containment system are held, received a boost from the response to the Deepwater Horizon disaster. The April 2010 accident brought "all hands on deck" after the industry slowdown that followed the financial crisis, said special-projects manager Alan Finney.
Subsea-equipment companies such as Cameron International Corp. are benefitting from a push by oil companies to equip rigs with a double set of blowout preventers, the containment devices meant to stop the flow of oil in a well accident, said Tom Curran, an energy analyst with Wells Fargo Securities. Cameron not only stands to make more money as the safety systems spread throughout the planet, it also gets an image boost, Mr. Curran said.
Major oil companies have banded together to share spill-containment resources through cooperatives after prodding from U.S. lawmakers. Marine Well Containment Corp. was created in mid-2010, even as BP scrambled to stop its catastrophic spill. A competing consortium, Helix Well Containment Group, followed shortly afterward.
In the U.K., the Oil Spill Prevention and Response Advisory Group unveiled a submarine cap for leaking wells last September. Another joint industry effort, the Subsea Well Response Project, intends to place four deep-water containment systems in 2013 at four international locations, such as Africa, Brazil and the Pacific.
Oil companies are also building their own private spill-fighting solutions. BP has a well cap based in Angola, where some of its largest deep-water fields lay, in addition to the global deep-water containment system it stores in Houston. So far BP's containment system is the only one that can be flown to its destination.
"We we want to get there quickly," said Geir Karlsen, the leader of the company's containment-response system.
Write to Ángel González at
Credit: By Ángel González
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 8, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1011472775
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1011472775?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Mobil, Monsanto: Money Flow Leaders (XOM, MON)
Author: MARKET DATA STAFF
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 May 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Exxon Mobil Corp. topped the list in late trading for, which tracks stocks that fell in price but had the largest inflow of money. See the.
Monsanto Co. topped the list for, which tracks stocks that rose in price but had the largest outflow of money. See the.
Go to () for complete coverage.
Credit: By MARKET DATA STAFF
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 8, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1011472776
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1011472776?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: U.S. Presses India On Iran Oil Buys
Author: Sharma, Amol
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]09 May 2012: A.9.
ProQuest document link
Abstract:
A U.S. special envoy will visit India next week to assess the country's capability to shift crude imports from Iran, an evaluation that will help determine what New Delhi needs to do to head off U.S. sanctions that are set to come into effect next month.
Full text: NEW DELHI -- A U.S. special envoy will visit India next week to assess the country's capability to shift crude imports from Iran, an evaluation that will help determine what New Delhi needs to do to head off U.S. sanctions that are set to come into effect next month.
After a three-day India visit that included meetings with Prime Minister Manmohan Singh and other top officials, Secretary of State Hillary Clinton said she was encouraged by the steps India has already taken to reduce Iran imports. But she pressed Indian officials to do more, saying the cutbacks would help international efforts to persuade Iran to abandon its nuclear ambitions.
"I welcome the progress India is making to reduce its purchases from Iran and hope to see continuing progress," Mrs. Clinton told reporters after meeting Tuesday with her Indian counterpart, S.M. Krishna. "We believe that if the international community eases the pressure or wavers in our resolve, Iran will have less incentive to negotiate in good faith."
The U.S. is calling on several countries, including India, Turkey, China and South Korea, to substantially reduce purchases of Iranian oil by June 28 or face sanctions on financial institutions that do business with Iran's central bank.
The U.S. is pushing Iraq and Saudi Arabia as alternative suppliers. Japan and the European Union have already taken steps to rein in Iranian oil imports, earning waivers from possible U.S. sanctions.
International pressure, including sanctions, helped to bring Iran back to the negotiating table last month in Istanbul, Mrs. Clinton said, and India can help sustain that pressure.
Washington hasn't specified thus far how much individual countries need to reduce imports to avoid sanctions. Carlos Pascual, a senior State Department official, will be in India next week to survey the energy sector and help determine what specific Indian facilities must do, a U.S. official said.
India, which imports more than three-quarters of its oil, has reduced purchases from Iran from about 12% of total oil imports last year to roughly 9% now.
Indian officials pledged to continue discussions on Iran with the U.S. but stopped short of making any commitments to reduce imports further.
Mr. Krishna said India is reliant on Middle Eastern oil imports to meet its surging demand for fuel -- and said India also has deep cultural ties in the region. This week India is hosting a business delegation from Iran.
"Iran is a key country for our energy needs," Mr. Krishna said. India, he added, would base its decisions on "commercial, financial and technical considerations."
Credit: By Amol Sharma
Subject: Sanctions; Diplomacy; Energy policy; International relations-US -- India; Crude oil
Location: United States--US Iran India
People: Singh, Manmohan Clinton, Hillary
Company / organization: Name: European Union; NAICS: 926110, 928120
Classification: 9180: International; 1300: International trade & foreign investment; 1210: Politics & political behavior; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.9
Publication year: 2012
Publication date: May 9, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1011531573
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1011531573?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: New Tactic in Oil Spills: Containment Kits Go Global --- BP's 500-Ton System, Which Takes Seven Planes to Deploy, Is in Vanguard of World-Wide Disaster Response Efforts
Author: Gonzalez, Angel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]09 May 2012: B.11.
ProQuest document link
Abstract:
Total SA of France, which is currently fighting a shallow-water natural-gas leak off the British coast, plans to deploy two deep-water containment systems at production platforms in Africa by 2013, said company executive Yves-Louis Darricarrere.
Full text: HOUSTON -- Companies that developed new ways to contain offshore oil spills after the Deepwater Horizon disaster are taking the technology global, hoping to burnish their reputations and reduce the risks of a perilous but profitable business.
Chief among them is BP PLC, the U.K. oil giant at the center of the Deepwater Horizon accident two years ago, which killed 11 people and unleashed a massive oil slick in the U.S. Gulf of Mexico.
BP unveiled a 500-ton spill-containment device last week that is designed to be flown at a moment's notice to any part of the world where the company scours the ocean's depths for oil. The system, which can be lowered onto the seabed by a drilling rig and then assembled on top of a deep-water well on the sea floor to stop a gusher, is stowed away at a cavernous former steel mill near the Houston Ship Channel.
The BP system is an assembly of boxes and cylinders roughly the size and shape of a townhouse and looks like a giant set of yellow, metallic Legos. That heft is needed to operate at depths of up to 10,000 feet and withstand high-pressure leaks of up to 15,000 pounds per square inch. The kit can be placed on top of a broken blowout preventer -- manhole-like devices that are themselves designed as plugs -- to cover a leak, or on top of an open leaking well. The system steers the jet of escaping crude and gas into a pipeline toward the surface, where it can be loaded onto ships or flared.
The kit, which cost $50 million to develop, includes saws and large mechanical pincers that can cut through broken well equipment and remove any debris resulting from a blowout.
It takes five huge Antonov Co. cargo planes, with wing spans approaching the size of a football field, as well as two Boeing Corp. B747-400 aircraft, to haul the entire kit to its destination. Still, it can reach BP's remotest operations within 10 days, company executives said.
"We are looking at risk in BP much differently than two years ago," Richard Morrison, the head of BP's global deep-water response.
BP's kit is the latest milestone for what has become a sizable deep-water drilling risk-reduction industry seemingly overnight. As high oil prices and rapidly dwindling reserves make offshore crude essential, demonstrating the ability to quickly corral a deep-water spill has become critical to the oil industry, which once dismissed such disasters as improbable events.
Initially available in the U.S. Gulf, where oil companies drew from the technology developed by BP to stop the Deepwater Horizon gusher, containment systems are spreading everywhere as oil companies drill for oil that is under deep water. BP says that there are about 12 deep-water spill caps available world-wide, and that number will increase to 20 in 2013.
Chevron Corp. has been battling oil seeps found last November on the Brazilian sea floor with specially built containment devices. Total SA of France, which is currently fighting a shallow-water natural-gas leak off the British coast, plans to deploy two deep-water containment systems at production platforms in Africa by 2013, said company executive Yves-Louis Darricarrere.
The global mobilization is helping drum up business for subsea-equipment makers and transport companies. ASCO Freight Management LLC, a logistics firm that runs the warehouses where BP's kit and another containment system are held, received a boost from the response to the Deepwater Horizon disaster. The April 2010 accident brought "all hands on deck" after the industry slowdown that followed the financial crisis, said special-projects manager Alan Finney.
Subsea-equipment companies such as Cameron International Corp. are benefiting from a push by oil companies to equip rigs with a double set of blowout preventers, the containment devices meant to stop the flow of oil in a well accident, said Tom Curran, an energy analyst with Wells Fargo Securities.
Major oil companies have banded together to share spill-containment resources through cooperatives after prodding from U.S. lawmakers. Marine Well Containment Corp. was created in mid-2010, even as BP scrambled to stop its catastrophic spill. A competing consortium, Helix Well Containment Group, followed shortly afterward.
In the U.K., the Oil Spill Prevention and Response Advisory Group unveiled a submarine cap for leaking wells last September. Another joint industry effort, the Subsea Well Response Project, intends to place four deep-water containment systems in 2013 at four international locations, such as Africa, Brazil and the Pacific.
Credit: By Angel Gonzalez
Subject: Petroleum industry; Response time; Disasters; Oil spills; Emergency preparedness; Safety programs
Location: United Kingdom--UK
Company / organization: Name: BP PLC; NAICS: 324110, 447110, 211111
Classification: 9180: International; 9110: Company specific; 8510: Petroleum industry; 5340: Safety management
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.11
Publication year: 2012
Publication date: May 9, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1011531589
Document URL: https://login.ezproxy.uta.edu/login?url=https://search.pro quest.com/docview/1011531589?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Blue Chips Sink a Fifth Day in Row --- Worries Over Greece Weigh on Shares in U.S. and Europe; Crude Oil Slides, Down 8.6% Over 5 Days
Author: Jarzemsky, Matt
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]09 May 2012: C.4.
ProQuest document link
Abstract:
European stocks sank, as the Greek political deadlock fueled fears of further economic turmoil in the euro zone, pushing the Greek stock index to its lowest finish in nearly two decades. The worries over Greece overshadowed the National Federation of Independent Business's small-business optimism index, which rose in April.
Full text: The Dow industrials fell a fifth consecutive day and stocks in Europe tumbled as jitters over political uncertainty in Greece outweighed upbeat U.S. and German economic data.
The Dow Jones Industrial Average slid 76.44 points, or 0.6%, to 12932.09, extending its retreat from last week's four-year closing high. The Standard & Poor's 500-stock index shed 5.86 points, or 0.4%, to 1363.72, its lowest close in nearly a month. Consumer-discretionary and financial shares led declines across eight of the index's 10 sectors. The utilities and health-care sectors, typically seen as defensive, rose.
The Nasdaq Composite lost 11.49 points, or 0.4%, to 2946.27, paring losses after touching its lowest intraday level since February.
"The Greek elections unnerved the market," said Andrew Slimmon, managing director at Morgan Stanley Smith Barney. "It's also the timing of all this. We had a very good first four months of the equity market. We're coming into the summer and there's the prevailing 'sell in May, go away' idea."
Talks among Greece's leading political parties to form a new coalition government languished, raising fears the country may not be able to implement agreed-to budget cuts and overhauls. European stocks sank, as the Greek political deadlock fueled fears of further economic turmoil in the euro zone, pushing the Greek stock index to its lowest finish in nearly two decades.
The Stoxx Europe 600 index sank 1.7%. Greece's ASE Composite Index closed at its lowest level since November 1992, dropping 3.6%. The U.K.'s FTSE 100 fell 1.8% and turned negative for the year.
Among major indexes, the German DAX index lost 1.9% to 6444.74, France's CAC-40 index lost 2.8% to 3124.80, and the U.K.'s FTSE 100 index fell 1.8% to 5554.55, and turned negative for the year.
"Overseas, there's a problem there. I think it's going to spill over into other markets," said Stephen J. Carl, head equity trader at the Williams Capital Group in New York. "I thought the selling would be more rapid than it is."
The worries over Greece overshadowed the National Federation of Independent Business's small-business optimism index, which rose in April. The index's reading was the highest since December 2007. In Germany, economic data showed industrial production rose more than expected in March.
Asian markets were mixed following Monday's sharp losses, with Japan's Nikkei Stock Average rising 0.7%. China's Shanghai Composite eased 0.1%.
Crude-oil prices fell 0.9% to finish at $97.01 a barrel. Crude has fallen 8.6% in the past five sessions.
The dollar rose against the euro but fell against the yen.
Treasury prices rose, with the 10-year note's yield, which moves inversely to its price, falling as low as 1.814% in intraday trading, the weakest level in more than three months. Late in New York, the yield was at 1.837%.
In corporate news, Fossil plunged $47.25, or 38%, to $78.52, after the watch company cut its 2012 financial targets and reported lower-than-expected first-quarter sales amid soft European demand.
Dun & Bradstreet skidded 10.66, or 14%, to 65.04, as the commercial-information company said core revenue will be mostly flat and said it would cease operating a China-based business that is under investigation.
Wendy's fell 20 cents, or 4.1%, to 4.67, after the fast-food restaurant operator reported first-quarter results that missed expectations, citing margin pressure resulting from higher fresh beef costs.
McDonald's dropped 1.96, or 2.1%, to 93.55, after saying same-store growth at restaurants open at least 13 months slowed in April at a faster pace than expected.
Electronic Arts slumped 65 cents, or 4.3%, to 14.48, after the videogame maker forecast lower-than-expected fiscal-year revenue.
FreightCar America rose 50 cents, or 2.4%, to 21.26 after the railroad-car maker's first-quarter results beat forecasts.
GTx jumped 31 cents, or 10%, to 3.41 after the drug maker said the FDA lifted its hold on clinical trials for its prostate-cancer treatment.
In early Asian trading Wednesday, stock markets fell as failed coalition talks in Greece stoked fresh concerns about the fragility of Europe's monetary union. Japan's Nikkei was downl 1%, South Korea's Kospi was down 0.5% and Australia's S&P ASX 200 was 0.5% lower.
Credit: By Matt Jarzemsky
Subject: Dow Jones averages; Stock prices; Daily markets (wsj)
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: May 9, 2012
column: Tuesday's Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1011597951
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1011597951?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Continues Slide as Traders Brace for Jump in Supply
Author: Strumpf, Dan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 May 2012: n/a.
ProQuest document link
Abstract:
Futures slumped ahead of a weekly report from the Energy Information Administration, expected to show crude-oil inventories last week rose two million barrels, according to a survey of analysts by Dow Jones Newswires.
Full text: NEW YORK--Oil futures fell for the sixth consecutive session Wednesday ahead of government data expected to show another increase in U.S. crude inventories.
Light, sweet crude for June delivery fell $1.24, or 1.3%, to $95.77 a barrel on the New York Mercantile Exchange. Brent crude on ICE Futures Europe fell 92 cents, or 0.8%, to $111.81 a barrel.
Futures slumped ahead of a weekly report from the Energy Information Administration, expected to show crude-oil inventories last week rose two million barrels, according to a survey of analysts by Dow Jones Newswires.
If the survey is correct, crude stockpiles in the U.S. will again be at their highest level since 1990, amid weak demand for oil and gasoline and steadily rising production.
"We've gotten build after build after build after build" in inventories, said Rich Ilczyszyn, chief market strategist at iiTrader in Chicago. "We know demand is waning a bit. We know that China is not firing on all cylinders."
The data, due at 10:30 a.m. Eastern time, are also expected to show that U.S. gasoline stockpiles last week fell 600,000 barrels, according to analysts. Stocks of distillates, including heating oil and diesel, are seen falling 100,000 barrels, while refiners are seen raising operations 0.3 percentage point to 86.3% of capacity.
Prices could continue their fall if the data match an even more bearish report from the American Petroleum Institute, an industry group, released Tuesday. The API said crude inventories last week surged 7.8 million barrels.
Wednesday's losses extends the steepest selloff in crude this year. The last time Nymex crude fell six sessions in a row was January 2011.
A weakening global economic outlook, together with cooling tensions between Iran and the West and rising production have clobbered crude prices this month. The slide was intensified by last week's weaker-than-expected report on April employment in the U.S., the world's biggest oil consumer, then continued into this week.
Heightened uncertainty in Europe, meanwhile, is also weighing on prices. Talks to form a new coalition government in Greece have made little progress, while the election of a socialist president in France who has vowed to challenge the continent's recent austerity push has injected a measure of uncertainty over European fiscal reform.
"As Spanish debt continues to be sold down, Greece edges towards another potential default as repayments on some of their debt is due next week," said Matt Smith, analyst at Summit Energy, in a note to clients.
Earlier this week, Saudi Oil Minister Ali Naimi said "oil prices were too high" and hinted that the Organization of Petroleum Exporting Countries could discuss raising its output ceiling and its meeting next month.
Total OPEC crude output rose to 31.26 million barrels a day in April, up 1.3% from a revised March figure, the EIA said Tuesday.
Front-month June reformulated gasoline blendstock, or RBOB, recently fell 0.44 cent, or 0.2%, to $2.99 a gallon. June heating oil fell 2.29 cents, or 0.8%, to $2.9672 a gallon.
Write to Dan Strumpf at
Credit: By Dan Strumpf
Subject: Petroleum industry; Oil prices; Crude oil prices; Coalition governments; Futures
Location: United States--US
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: New York Mercantile Exchange; NAICS: 523210; Name: American Petroleum Institute; NAICS: 541820, 813910; Name: Dow Jones Newswires; NAICS: 519110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 9, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1012060361
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1012060361?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Colombia, China Strike Oil Deals; Agreements Could Help Direct Exports Away From U.S., European Energy Markets
Author: Hall, Simon
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 May 2012: n/a.
ProQuest document link
Abstract:
The ministerial team accompanying Mr. Santos held talks to develop central Colombia coking-coal reserves, on building a railway to the Pacific coast to cut shipping coasts to Asia, on developing mineral deposits in the Amazon basin and on supplying solar panels to up to 2,000 schools not connected to power grids.
Full text: BEIJING--Colombian and Chinese officials struck agreements that may help direct much of the Latin American nation's future oil and coal exports to Asia and away from U.S. and European markets.
The agreements, signed Wednesday during a trade and investment promotion trip to China in which Colombian President Juan Manuel Santos met with Chinese President Hu Jintao, come as the U.S. ally rethinks its traditional reliance on markets in the north and west, said Colombian Mines and Energy Minister Mauricio Cárdenas in an interview.
With demand growing in China and elsewhere and the evolving energy market in the U.S., "we have to start shifting our markets to Asia," he said.
On Wednesday, state-controlled China Development Bank signed a preliminary agreement to provide financing for an ambitious project to pipe 600,000 barrels a day of Venezuelan and Colombian oil through the jungles of both countries and across the Andes to southern Colombia's Pacific coast, from where it would be exported to China and other Asian markets. Details have yet to be completed.
Chinese and Colombian officials also agreed to start talks on bringing in state-controlled Sinochem International Corp. as a possible equity partner in the pipeline project. Mr. Santos said Mr. Hu and Chinese companies had shown a strong interest in joining the pipeline project.
The ministerial team accompanying Mr. Santos held talks on developing central Colombia coking-coal reserves, building a railway to the Pacific coast to cut shipping costs to Asia, developing mineral deposits in the Amazon basin, and on supplying solar panels to up to 2,000 schools not connected to power grids. Coking coal is used to make steel.
Colombia exported just 56,000 barrels a day of crude to China in the first three months of 2012, compared with China's overall crude imports of 5.69 million barrels a day in the period. About half of Colombia's oil normally goes to the U.S.
Colombian oil output will hit the one-million-barrels-a-day milestone in a few weeks, and could rise to 1.5 million barrels daily by the end of the decade.
The country's relationship with China is very different from that of leftist neighbors Venezuela and Ecuador, both of which have huge debts with Beijing.
Colombia has market-friendly investment policies and warm political ties with Washington. Still, U.S. demand has slowed as the economy matures, trimming demand for sources such as coal, and as it shifts its energy mix toward natural gas, a result of a boom in production from new sources such as shale gas.
"It is absolutely true, and not just with coking coal," Mr. Cárdenas said. "It is also with thermal coal, as with the development of shale gas in the U.S. We know that there will be less demand there."
The pipeline project comes as China has increased its investment in oil exploration and production in the region.
Sinochem in 2009 took over Colombian and Syrian oil assets from Emerald Energy PLC for $867 million, and in February it bought Colombia oil and pipeline assets from Total SA. State oil giant China Petrochemical Corp., known as Sinopec Group, also has producing investments in Colombia.
Mr. Cardenas said results of bidding by domestic and foreign companies for 109 oil and gas concessions, in which "four or five" Chinese groups are interested, will be out in November. He also said Chinese officials told him China wanted to be a strategic partner for energy with Colombia, and that oil produced by Chinese companies in Venezuela could be sent through the pipeline.
The final route of the pipeline hasn't been decided. It will carry 300,000 barrels a day of Colombian and Venezuelan crude each when completed in 2018.
Mr. Cardenas said talks also have been held with state-run China Railways Materials Co. on building a railroad from the center of the country to the Pacific coast to permit the exploitation of large coking-coal reserves there and the cheaper export of the steelmaking fuel to China and Asian markets than through the Panama Canal. For now, all of Colombia's coal exports go through its Caribbean ports.
He said talks also are under way with Chinese companies about joint ventures to tap reserves of the mineral coltan, which is used as a conductor in a number of consumer-electronic products. Given the ecological importance of the area where the reserves are located and the presence of indigenous peoples, any project decisions would be made with sensitivity, Mr. Cardenas said.
Write to Simon Hall at
Credit: By Simon Hall
Subject: Pipelines; Petroleum industry; Natural gas; Coal; Development banks
Location: Beijing China United States--US Colombia Asia China
People: Hu Jintao
Company / organization: Name: China Petrochemical Corp; NAICS: 324110; Name: China Development Bank; NAICS: 522110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 9, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1012060369
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1012060369?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Group Plans Oil-Storage Facility for Louisiana
Author: Dezember, Ryan; Lefebvre, Ben
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 May 2012: n/a.
ProQuest document link
Abstract:
Petroplex said the facility will be the only independent "for-hire" storage terminal in the St. James market. Besides Baton Rouge-based Petroplex and Macquarie, others involved in the project include energy-infrastructure developer Quanta Services Inc. and Harley Marine Service Inc. founder and Chief Executive Harley Franco, whose company will operate the facility's barge docks.
Full text: NEW YORK--A consortium including Australian investment bank Macquarie Group said Wednesday it plans to build a 10-million-barrel oil-storage terminal in Louisiana, a $600 million bet on both rising North American crude production and increasing exports of refined petroleum products.
The group, led by closely held storage-tank developer Petroplex International LLC, plans to start construction in the first half of 2013 in St. James Parish, La., and begin operations in 2014. The facility will initially have storage capacity for between four and six million barrels. It is being designed to accommodate an array of liquids, including crude oil; refined petroleum products, such as fuel oil and diesel; chemicals; renewable fuels and bitumen, the thick crude that comes from Canada's oil sands.
Situated between New Orleans and Baton Rouge, the facility is planned for an area with several refineries that are expected to see an influx of crude from Canada's oil sands and U.S. shale formations, which include North Dakota's Bakken and Ohio's Utica, and Texas fields. Those sources are producing more that nearby facilities can process.
Those and other onshore oil fields are forcing a rapid reconfiguration of U.S. energy infrastructure, which has long been geared toward moving imported oil from the Gulf Coast, which hosts the world's largest refining complex, to the nation's interior.
Next week, the Seaway Pipeline, linking Houston to the world's largest oil storage facility in Cushing, Okla., is scheduled to be reversed to carry U.S. and Canadian crude to the Gulf Coast for processing. And Royal Dutch Shell PLC plans to reverse the flow of its Houma-To-Houston Pipeline to deliver crude from gushing Texas fields to Louisiana refineries early next year.
Meanwhile, the North American oil boom has helped the U.S. become a net fuel exporter for the first time since World War II. In April, U.S. refiners shipped out nearly 900,000 barrels a day of gasoline, diesel and other products, mostly to Latin America and Europe. Exports have helped some refiners, including Valero Energy Corp., Marathon Petroleum Corp. and Tesoro Corp. prosper despite flat domestic demand.
The proposed Petroplex facility--which will be linked to long-haul pipelines, refineries, waterways and rail lines--will be able to store either crude ahead of processing or refined products awaiting distribution or export, Petroplex said. Petroplex said the facility will be the only independent "for-hire" storage terminal in the St. James market.
Besides Baton Rouge-based Petroplex and Macquarie, others involved in the project include energy-infrastructure developer Quanta Services Inc. and Harley Marine Service Inc. founder and Chief Executive Harley Franco, whose company will operate the facility's barge docks.
Credit: By Ryan Dezember And Ben Lefebvre
Subject: Oil sands; Petroleum refineries; Petroleum industry; Pipelines
Location: Texas United States--US Canada Louisiana St James Parish Louisiana
Company / organization: Name: Marathon Petroleum Corp; NAICS: 324110; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Tesoro Corp; NAICS: 324110; Name: Valero Energy Corp; NAICS: 211111, 324110, 486210; Name: Macquarie Group; NAICS: 523110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 9, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1012060399
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1012060399?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Equipment, Services & Distribution
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 May 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: The key to one of Gary F. Hovis's best stock picks for 2011 had less to do with the science of finance and much to do with the art of politics.
The Argus Research Co. analyst noticed that a particularly conservative new member was named to the Oklahoma Corporation Commission--a state regulatory body that rules on utility rates. That commissioner's experience led Mr. Hovis to believe that future rate cases for one of his companies, natural-gas and power utility OGE Energy Corp., would go smoothly.
"That's made all the difference in the world," the 73-year-old Mr. Hovis says, as OGE notched a 28% return for 2011 that helped put him atop the rankings of analysts covering oil equipment, services and distribution in the annual Best on the Street survey.
The 43-year veteran of the Wall Street stock-analysis business has been following the energy industry from his earliest days when he moved to New York after finishing business school at Washington University in St. Louis.
The tools of the trade have changed greatly since then, but Mr. Hovis says his techniques for analyzing companies largely haven't. There are the "tried and true" financial-strength metrics, the demographics for the regions served by the companies, and the physical infrastructure with which the companies contend.
But new technologies make the policy-and-politics research much easier, he says. "In the past, if you wanted to find out what that new commissioner on the Georgia Utility Commission was like, it might take you a few days on the phone," Mr. Hovis says. "Today you just Google him and you've got enough for a three-quarter-page profile just like that."
Other analysts may stray into technical analysis of a stock, focusing on trends in how a stock is traded. "But as far as utilities go, that kind of analysis just doesn't contribute to good reporting on a company," Mr. Hovis says.
The OGE call wasn't even Mr. Hovis's best performer. His 10½-month buy on Houston-based exploration and pipeline firm El Paso Corp., which was acquired by rival Kinder Morgan Energy Partners LP in 2011 at a hefty premium, earned investors a 78% return. Many analysts had rated El Paso a buy.
Not all of Mr. Hovis's picks were so strong. He maintained full-year hold ratings on Buckeye Partners LP, Enterprise Products Partners LP, Magellan Midstream Partners LP and Kinder Morgan, and all had positive returns.
Looking forward, Mr. Hovis is intrigued by the surge in domestic oil and natural-gas production from old and new fields alike, and what it will mean for pipeline-infrastructure companies and U.S. power generation.
"More and more electric utilities are building new, less-expensive gas-fired generating units, resulting in what we think will be stronger earnings and cash flow going forward," he says.
Among Mr. Hovis's top picks for 2012 is Spectra Energy Corp., a Houston-based natural-gas gathering, processing, pipeline and storage firm. He recently increased the 12-month target price for the stock by about 24%, to $37, based on a steady stream of new projects, including two new natural-gas pipelines in Texas, an important natural-gas supply line for New York City and a new gas gathering and processing system in British Columbia.
Tom Fowler
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 10, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1011918726
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1011918726?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Colombia to Send More Oil to China
Author: Hall, Simon
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]10 May 2012: A.12.
ProQuest document link
Abstract:
The team accompanying Mr. Santos held talks on developing central Colombia coking-coal reserves, building a railway to the Pacific coast to cut shipping costs to Asia, developing mineral deposits in the Amazon basin, and on supplying solar panels to as many as 2,000 schools not connected to power grids.
Full text: BEIJING -- Colombian and Chinese officials struck agreements that may help direct much of the Latin American nation's oil and coal exports to Asia and away from U.S. and European markets.
The agreements, signed Wednesday during a trade and investment promotion trip to China in which Colombian President Juan Manuel Santos met with Chinese President Hu Jintao, come as the U.S. ally rethinks its traditional reliance on markets in the north and west, Colombian Mines and Energy Minister Mauricio Cardenas said in an interview.
With demand growing in China and elsewhere and the evolving energy market in the U.S., "we have to start shifting our markets to Asia," he said.
On Wednesday, China cut its heavily regulated gasoline and diesel prices for the first time in six months, as easing global oil prices offer a tailwind to the world's No. 2 economy.
State-controlled China Development Bank signed a preliminary pact to provide financing for a project to pipe 600,000 barrels a day of Venezuelan and Colombian oil to southern Colombia's Pacific coast, from where it would be exported to China and other Asian markets. Details have yet to be completed.
Chinese and Colombian officials also agreed to start talks on bringing in state-controlled Sinochem International Corp. as a possible equity partner in the pipeline project.
The team accompanying Mr. Santos held talks on developing central Colombia coking-coal reserves, building a railway to the Pacific coast to cut shipping costs to Asia, developing mineral deposits in the Amazon basin, and on supplying solar panels to as many as 2,000 schools not connected to power grids. Coking coal is used to make steel.
Colombia exported just 56,000 barrels a day of crude to China in the first three months of 2012, compared with China's overall crude imports of 5.69 million barrels a day in the period. About half of Colombia's oil normally goes to the U.S.
Colombian oil output will hit the one-million-barrels-a-day milestone in a few weeks, and could rise to 1.5 million barrels daily by the end of the decade.
The country's relationship with China is very different from that of leftist neighbors Venezuela and Ecuador, both of which have huge debts with Beijing.
Colombia has market-friendly investment policies and warm political ties with Washington. Still, U.S. demand has slowed, trimming demand for resources such as coal, and as it shifts its energy mix toward natural gas.
"It is absolutely true, and not just with coking coal," Mr. Cardenas said. "It is also with thermal coal, as with the development of shale gas in the U.S. We know that there will be less demand there."
Sinochem in 2009 took over Colombian and Syrian oil assets from Emerald Energy PLC for $867 million, and in February bought Colombian assets from Total SA.
Credit: By Simon Hall
Subject: Oil; Coal; Trade agreements; International trade
Location: Colombia China
Classification: 9180: International; 1300: International trade & foreign investment; 1510: Energy resources
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.12
Publication year: 2012
Publication date: May 10, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1011919421
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1011919421?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Best on the Street: 2012 Analysts Survey (A Special Report) --- Oil & Gas Producers
Author: Ordonez, Isabel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]10 May 2012: C.14.
ProQuest document link
Abstract:
[...]by the time Mr. Bouvier started covering Petrohawk, with a buy rating, the stock was falling from grace among analysts because of concerns about declining natural-gas prices and the company's large debt.
Full text: Jason Bouvier secured the No. 1 ranking in the Best on the Street survey's oil and gas producers sector thanks to his belief that some companies driving the U.S. shale-gas boom were going to have their payday in 2011.
His best-performing call was Petrohawk Energy Corp., which was acquired by Anglo-Australian resource giant BHP Billiton Ltd. in a deal that closed in August. BHP purchased Petrohawk shares at a 65% premium to their last closing price before the deal was unveiled in July. "I always thought they would get a healthy premium, but what they got was massive," says Mr. Bouvier, an analyst at the Scotia Capital unit of Scotiabank Group.
Before Mr. Bouvier started covering Petrohawk in January 2010, the company had been a favorite pick among analysts, because its assets in some of the most prolific shale formations in the U.S. were thought to make it a likely takeover target. Also, Petrohawk management had a track record of selling oil and gas companies for a premium. But by the time Mr. Bouvier started covering Petrohawk, with a buy rating, the stock was falling from grace among analysts because of concerns about declining natural-gas prices and the company's large debt.
Although Mr. Bouvier had some worries, he maintained his buy recommendation throughout 2010 and even when the stock rebounded in the first half of 2011 as the company began switching from natural-gas to oil production. His conviction paid off: The acquisition price for the shares, announced July 14, was more than double the stock's price at the start of the year.
Mr. Bouvier says he doesn't gauge companies' profitability based on short-term cash-flow generation. He takes a long-term view instead. "When a big company is going to buy a firm, they are not focused on the next-year cash flow," he says. "They look at the asset base."
Mr. Bouvier, 39 years old, also scored with Range Resources Corp., one of the largest natural-gas producers in the prolific Marcellus Shale. He went into 2011 with a buy rating, after the shares had been beaten down. The stock climbed from around $35 a share in the third quarter of 2010 to more than $70 in October 2011, when he lowered his rating to a hold. Range Resources returned 30% during the period of his buy call last year.
Not all of Mr. Bouvier's calls were so well timed. He regrets not downgrading Whiting Petroleum Corp. from a hold in the spring of 2011 when he felt the company's valuation was too rich. Although he captured a solid gain during a brief buy-rated period from the end of September through early November, Whiting shares lost more than 40% during two separate periods when he had it rated a hold.
Mr. Bouvier will exclusively cover Canada-based oil and gas companies after Scotia Capital closes the purchase of investment firm Howard Weil, which was announced in March. His top pick for 2012 is Surge Energy Inc., a Canadian oil and gas company. He likes the company because it focuses on drilling for crude oil, which is currently more profitable than drilling for natural gas, and because he estimates its production will climb 60% this year.
Credit: By Isabel Ordonez
Subject: Series & special reports; Petroleum industry; Natural gas industry; Securities analysis
Location: United States--US
People: Bouvier, Jason
Classification: 9190: United States; 8510: Petroleum industry; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.14
Publication year: 2012
Publication date: May 10, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: Feature
ProQuest document ID: 1012047560
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1012047560?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Traders Fear New Regulations Will Lead to Higher Costs
Author: Kent, Sarah
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 May 2012: n/a.
ProQuest document link
Abstract:
[...]some argue, position limits will prompt funds and other financial investors to leave the market, removing liquidity and thereby increasing volatility.
Full text: The oil market is bracing itself for a wave of change as contentious regulations begin to come into effect this year, just as soaring oil prices shine a spotlight on the issue of market oversight.
High gasoline prices in the U.S. and Europe--the two regions seeking to undertake serious regulatory overhauls--have added weight to the push for tougher market supervision, which began in 2008 when prices spiked to record highs just as the financial crisis hit.
Proposed regulatory changes, some of which have already been passed into law, include restrictions on the size of investors' commodity holdings, tougher rules on transparency and insider trading and a push for more products not traded on exchanges to go through central clearing houses. These identify the obligations both sides of a trade have to a contract and also take on the credit risk.
However, market participants have raised concerns that restrictions on the size of holdings might discourage financial players from participating in the market, while more stringent regulatory obligations and a push to clear the majority of products could increase prices. The overall result, they say, may be less market liquidity and increased volatility--exactly the reverse of what was intended.
In the U.S., the role of speculators in the oil market is shaping up to be a major political issue in the run up to presidential elections at the end of the year.
President Barack Obama has been vocal in calling for tougher market supervision, pushing Congress to give the Commodity Futures Trading Commission new powers to direct exchanges to increase their margin requirements. Meanwhile, position limits have become the subject of debate in Congress, increasing pressure on the CFTC to move ahead promptly with its mandate to enforce these new rules.
Many say discussions over regulation have become too politicized and as a result several of the proposed changes could significantly alter--and potentially hamper--the way the market operates.
"When it gets politicized like this, it's not a good thing because emotion begins to drive people and you lose track of reality," says Tom Lasala, managing director and chief regulatory officer at CME Group, which owns the exchange where Nymex crude--one of the world's main oil benchmarks--is traded.
In the U.S., the CFTC is in the process of fine-tuning new rules that will apply to the oil market in the coming months, while the European Union is also discussing numerous regulatory changes, some of which are likely to be implemented as early as the end of this year.
In both cases, one of the most contentious areas is the big push to introduce rules limiting the size of positions financial players, like hedge funds, can hold in the market.
Politicians argue that these limits will be an effective way of preventing excessive speculation and price manipulation--a key reason, many say, for the current high oil prices.
But market participants say speculators provide valuable liquidity and aren't responsible for price fluctuations.
"Excessive speculation is very sexy to point to but--let's be sensible about it--the clear evidence of that has yet to come forward as far as we're concerned," says CME's Mr. Lasala.
In fact, some argue, position limits will prompt funds and other financial investors to leave the market, removing liquidity and thereby increasing volatility.
But regulators aren't convinced the industry's concerns are justified.
In some commodities markets in the U.S., position limits have existed for decades, says Steven Adamske, director of public affairs at the CFTC.
The grains market, which includes wheat and corn, has been subject to this kind of oversight since the 1930s, while in the U.S. speculative traders are already subject to limits set by the exchanges.
The industry argues that a more appropriate way to regulate the market is through position management, which would allow regulators to set position thresholds that would trigger alerts when exceeded, but wouldn't necessarily result in regulatory action. This is how many exchanges already operate.
"Position management is very granular and we monitor companies throughout the trading day," says Simon Martin, compliance and regulatory policy manager at ICE Futures Europe, where Brent, one of the world's largest oil futures contracts, is traded.
Market participants argue that this is the kind of oversight the oil market needs, but regulators remain concerned about the role speculators play in the market.
"It is important to be able to impose position limits, when necessary, when there are concerns in terms of market integrity or orderly functioning of markets," Chantal Hughes, spokeswoman for Michel Barnier, the European Commissioner for the internal market, said in a statement.
While the most vocal debate has been over position limits, the most significant change investors could be facing is in the cost of doing business.
A more rigorous reporting burden is set to increase the cost of compliance, while regulatory changes that would push most transactions currently executed off exchanges, or over the counter, through central clearing houses, could also increase prices, market participants say.
"There is quite a lot of concern in the marketplace generally that the requirements may well increase costs as well as potentially increase a lot of procedural complexity, and that could decrease liquidity," says Jayesh Parmar, lead partner at consultancy Baringa Partners' energy advisory practice.
Even regulations that aren't directly intended to affect the oil market could have a significant impact on costs, participants say.
Basel III, the new set of global banking regulations hammered out by the Bank for International Settlements and due for implementation over the next six years, is a particular concern. The rules call for an additional charge on banks taking counterparty risk on derivatives contracts of the kind oil consumers might use to hedge themselves.
"Basel III could lead to tremendous extra cost for the entire sector because of the additional capital requirements banks have to comply with," says Marc Schwabe, manager in the finance division of German airline Lufthansa.
"Just from the capital requirement side it could lead to cost increases of 100-150%," he says, though not all analysts agree that the cost impact will be so high.
This is particularly significant for companies, like airlines, that use a lot of oil and use the oil markets to hedge their exposure to price fluctuations. Energy consumers and producers say some smaller businesses could struggle to operate in a more expensive market, damaging their ability to minimize the risk from price fluctuations.
Regulators say they carried out extensive research into the cost of proposed changes. "All the commission's proposals in this field were accompanied by in-depth impact assessments, which specifically took into account the impact of the proposals on SMEs, and proposals were tailored appropriately," said Ms. Hughes of the European Commission, referring to regulatory changes proposed by the EC.
Many of the regulations in question have yet to be fully formulated, but analysts say that while there is still wiggle room for industry to influence the shape of regulatory change, the time frame for companies to adapt once the new rules are brought into force will be short.
"At this stage, where the wise firms are looking is at the potential impact, and those that can afford to are beginning to look at their options," says Chris Collins, director in KPMG's regulatory change team.
"2012 is the critical year to get all this in place," he adds.
Write to Sarah Kent at
Credit: By Sarah Kent
Subject: Futures trading; Presidential elections; Speculation
Location: United States--US
People: Obama, Barack
Company / organization: Name: Congress; NAICS: 921120; Name: Commodity Futures Trading Commission; NAICS: 926140, 926150; Name: European Union; NAICS: 926110, 928120; Name: CME Group; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 10, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1012057009
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1012057009?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil & Gas Producers
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 May 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Jason Bouvier secured the No. 1 ranking in the Best on the Street survey's oil and gas producers sector thanks to his belief that some companies driving the U.S. shale-gas boom were going to have their payday in 2011.
His best-performing call was Petrohawk Energy Corp., which was acquired by Anglo-Australian resource giant BHP Billiton Ltd. in a deal that closed in August. BHP purchased Petrohawk shares at a 65% premium to their last closing price before the deal was unveiled in July. "I always thought they would get a healthy premium, but what they got was massive," says Mr. Bouvier, an analyst at the Scotia Capital unit of Scotiabank Group.
Before Mr. Bouvier started covering Petrohawk in January 2010, the company had been a favorite pick among analysts, because its assets in some of the most prolific shale formations in the U.S. were thought to make it a likely takeover target. Also, Petrohawk management had a track record of selling oil and gas companies for a premium. But by the time Mr. Bouvier started covering Petrohawk, with a buy rating, the stock was falling from grace among analysts because of concerns about declining natural-gas prices and the company's large debt.
Although Mr. Bouvier had some worries, he maintained his buy recommendation throughout 2010 and even when the stock rebounded in the first half of 2011 as the company began switching from natural-gas to oil production. His conviction paid off: The acquisition price for the shares, announced July 14, was more than double the stock's price at the start of the year.
Mr. Bouvier says he doesn't gauge companies' profitability based on short-term cash-flow generation. He takes a long-term view instead. "When a big company is going to buy a firm, they are not focused on the next-year cash flow," he says. "They look at the asset base."
Mr. Bouvier, 39 years old, also scored with Range Resources Corp., one of the largest natural-gas producers in the prolific Marcellus Shale. He went into 2011 with a buy rating, after the shares had been beaten down. The stock climbed from around $35 a share in the third quarter of 2010 to more than $70 in October 2011, when he lowered his rating to a hold. Range Resources returned 30% during the period of his buy call last year.
Not all of Mr. Bouvier's calls were so well timed. He regrets not downgrading Whiting Petroleum Corp. from a hold in the spring of 2011 when he felt the company's valuation was too rich. Although he captured a solid gain during a brief buy-rated period from the end of September through early November, Whiting shares lost more than 40% during two separate periods when he had it rated a hold.
Mr. Bouvier will exclusively cover Canada-based oil and gas companies after Scotia Capital closes the purchase of investment firm Howard Weil, which was announced in March. His top pick for 2012 is Surge Energy Inc., a Canadian oil and gas company. He likes the company because it focuses on drilling for crude oil, which is currently more profitable than drilling for natural gas, and because he estimates its production will climb 60% this year.
Isabel Ordóñez
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 10, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1012060384
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1012060384?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iran Oil Exports Fall as Sanctions Tighten
Author: Herron, James
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]11 May 2012: n/a.
ProQuest document link
Abstract:
Global oil production rose by 600,000 barrels a day in April, and oil stocks in member countries of the Organization of Economic Cooperation and Development rose above the five-year average in March for the first time in 10 months.
Full text: LONDON--Iranian crude oil exports fell sharply again in April and could be down by as much as one million barrels a day this quarter as many countries reduce imports ahead of sanctions that come into effect on July 1, the International Energy Agency said Friday.
Iran's oil production remained steady at 3.3 million barrels a day in April, but 15% to 25% of that oil wasn't sold and had to be pumped into floating tanker storage, the IEA said, a process the country could continue for a couple of months before filling its storage and having to shut down fields, according to David Fyfe, head of the IEA's oil markets division.
This fresh data from the IEA, which represents the interests of major energy-consuming rich countries, shows how the economic pressure of Western sanctions is ratcheting up ahead of crucial talks on Iran's nuclear program in Baghdad later this month.
It also shows how, due to oil production increases from other members of the Organization of Petroleum Exporting Countries, sanctions should be able to proceed without hurting oil consumers.
"There is enough room between the level of OPEC production and the level of the call on OPEC [oil] to allow for a greater disruption to Iranian supplies," said Olivier Jakob, Managing Director of consultancy Petromatrix.
In order to either dodge sanctions or obscure their impact, Iran's fleet of oil tankers have started to play "hide and seek" by disabling their tracking beacons, the IEA said in its monthly oil market report.
Out of 38 Iranian oil tankers, only one is currently broadcasting its location, according the tracking service Marine Traffic. The lack of data makes it difficult to precisely determine how badly the sanctions are affecting Iran's oil earnings.
In official submissions to OPEC, the Iranian authorities claim to have actually increased oil production by 38,000 barrels a day since the new sanctions were agreed in January, to 3.8 million barrels a day in April. OPEC's own analysts, using secondary data sources, estimate that Iran's oil production has fallen by 152,000 barrels a day since January to 3.2 million barrels a day in April.
Preliminary trade figures show the Islamic Republic's crude exports fell by 600,000 barrels a day to 1.6 million barrels a day in April, a shipping source said last week.
Based on the average price of Iran's main heavy-crude export grade, a drop in exports of this size would have lost the country around $2 billion in revenue.
A top Iranian oil official declined to comment on the latest IEA data. Other oil officials in Tehran confirmed last week that the amount of oil the country is storing in ships doubled to 24 million barrels between March and late April.
If Iran fills its storage and is forced to shut down fields, it could have effects beyond lost export earnings, said Mr. Fyfe. Domestic natural gas supply, which also comes from oil fields, could be affected and there is a danger of long-term damage to the productivity of older fields, he said.
The oil market should still be able to cope with the withdrawal of as much as 1 million barrels a day of Iranian crude without dipping into oil stocks, despite supply and demand being "marginally tighter" in the second half of the year, Mr. Fyfe said.
The IEA slightly increased its estimate of global demand for OPEC crude in the second half of the year to 30.8 million barrels a day, but production from the group in April was 31.89 million barrels a day. "OPEC's Gulf producers appear to have ramped up output ahead of the anticipated disruption in Iranian crude flows," the IEA said.
Benoît Faucon contributed to this article.
Credit: By James Herron
Subject: Petroleum industry; Oil sands; Petroleum production; Sanctions; Production increases
Location: Iran
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: International Energy Agency; NAICS: 928120; Name: Dow Jones Newswires; NAICS: 519110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 11, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1012237144
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1012237144?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Chevron's Ecuador Morass; The U.S. oil company charges that the $18 billion judgment against it was secured by fraud.
Author: O'Grady, Mary Anastasia
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 May 2012: n/a.
ProQuest document link
Abstract:
Both the expert and the plaintiffs lawyers deny the charge. [...]continues Chevron's long-running struggle against Ecuadorean jurisprudence.
Full text: Chevron Corporation went to U.S. federal court in Miami on May 4 seeking the records of eight accounts at Banco Pichincha in Ecuador. The oil company maintains that these records could prove that an Ecuadorean geological engineer, who was hired by the court to be an independent expert in the case of Maria Aguinda y Otros vs. Chevron, was bribed by plaintiffs lawyers. Both the expert and the plaintiffs lawyers deny the charge.
Thus continues Chevron's long-running struggle against Ecuadorean jurisprudence.
Chevron bought Texaco in 2001. In 2003, 48 Ecuadoreans sued the company in Ecuadorean court, alleging that Texaco, which operated in Ecuador from 1972 through 1992, damaged public lands in the Amazon jungle. In February 2011, the court ruled in favor of the plaintiffs and assigned damages and penalties totaling a whopping $18.2 billion, including $8.6 billion in punitive damages because Chevron failed to apologize.
Of course it is possible that the $40 million that Texaco spent in a cleanup when it left Ecuador was inadequate, even though the government inspected it and in 1998 signed off on the remediation. But state-owned, environmentally challenged PetroEcuador, the company that assumed Texaco's Ecuador assets 20 years ago, now puts the cost of cleaning up its operations at $70 million. So naturally the sheer magnitude of the judgment invites scrutiny.
Chevron charges that the case was fraught with fraud, both on the part of plaintiffs lawyers and the Ecuadorean court. It has filed a RICO (racketeering) suit in the New York Southern District Court against the Amazon Defense Coalition (ADC)--a nongovernmental organization that advocates on behalf of the lawsuit--as well as the plaintiffs and some of the plaintiffs lawyers and consultants.
One of Chevron's allegations is that geological engineer Richard Cabrera, the court-appointed "independent" expert who would assess the rain forest damage, was working secretly for the plaintiffs lawyers. It cites outtakes from the ADC film "Crude" that show the two sides meeting together before his appointment and documents secured through discovery in U.S. courts to support that allegation. Chevron also claims that documents prepared by the plaintiffs lawyers became part of the Ecuadorean court's judgment, which it says casts doubt on the court's neutrality.
ADC spokeswoman Karen Hinton says that Mr. Cabrera's report contains identical language as a report prepared by the plaintiffs lawyers because their findings were the same, and that plaintiffs lawyers met with Mr. Cabrera "consistent with court rules." As to the plaintiff documents found in the court's judgment, Ms. Hinton argues that they were there legitimately because they "were submitted into the record."
Chevron has gone to U.S. federal court more than 20 times trying to show that fraud was committed by certain plaintiffs lawyers and their consultants and thereby obtain documents that it believes will demonstrate that the case was rigged. In nine instances U.S. courts have sharply criticized the Ecuadorean court proceedings.
In one instance, addressing Chevron's claim that the plaintiffs' representatives "ghostwrote" Mr. Cabrera's report, the U.S. District Court for the Western District of North Carolina observed that "While this court is unfamiliar with the practices of the Ecuadorian judicial system, the court must believe that the concept of fraud is universal, and that what has blatantly occurred in this matter would in fact be considered fraud by any court. If such conduct does not amount to fraud in a particular country, then that country has larger problems than an oil spill." Patton Boggs, which is acting on behalf of the plaintiffs, says the various courts' statements about fraud were "made in the narrow context of determining whether there was a basis for waiver of the attorney-client privilege based upon the crime-fraud exception"--in other words, to justify Chevron's getting access to the documents.
Chevron has also raised questions about who benefits from the huge judgment. The Ecuadorean court ordered that an ADC-established trust handle roughly $8.7 billion of the payout for environmental remediation, clean water, public health and community projects. It also ordered a 10% award for the ADC. But individual plaintiffs seem to get nothing, and the court's supervisory role over the trust in a country not famous for judicial integrity is hardly reassuring.
This leaves an amount roughly equal to the punitive damages of $8.6 billion unassigned. Chevron says that documents it has secured in discovery indicate that at the time of the judgment more than $5.7 billion of the payout was spoken for by interests outside the Indian community. They included Patton Boggs and the U.K.-based investor Burford Group, which does "litigation financing." Burford has admitted that it had invested $4 million in the case but sold its interest to a third party. It now only has a "residual interest in the outcome." Patton Boggs says it does not comment on fee arrangements with clients.
ADC spokeswoman Karen Hinton denies that outsiders are big winners. "The lion's share of the payment will go back into the rainforest and for the people," she insists. Perhaps a U.S. court can get to the bottom of it all.
Write to
Credit: By Mary Anastasia O'Grady
Subject: Litigation; Federal court decisions; Attorneys
Location: United States--US Ecuador
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 13, 2012
column: The Americas
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1012771644
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1012771644?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil & Gas
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 May 2012: n/a.
ProQuest document link
Abstract:
[...]while we had the right earnings call for the stock, we had the wrong call from a market sentiment perspective."
Full text: Stubborn optimism about the oil and gas sector paid off for Huey Chiang Yap.
While the industry last year was ending a two-year rally, Mr. Yap figured it still had a little more room to go as deregulation allowed big companies in the sector more freedom.
The 45-year-old's picks--including SapuraCrest Petroleum Bhd., Dialog Group Bhd. and Petronas Gas Bhd.--each clocked returns of 40% to 50% for the year.
"We called for an 'overweight' on the oil and gas sector for 2011 even though the sector had already performed strongly in 2009 and 2010 as we recognized Malaysia's Economic Transformation Program to be a key catalyst for the industry in terms of domestic contract flows and M&A opportunities," the RHB Research Institute analyst in Kuala Lumpur said.
"We were right on the sector call, and we were right to accord bigger valuation premiums to the big-cap oil & gas stocks as investors' interest was heavily concentrated on the larger companies."
However, not all of his picks were fueled by similar investor enthusiasm. While he remained relatively supportive of offshore platform services company Dayang Enterprise Holdings Bhd., with buy and hold recommendations throughout the year, the share struggled, losing 7.2% in 2011.
"We were surprised by the steady decline in Dayang's share price in spite of the company consistently achieving quarterly earnings expectations," he said. "Therefore, while we had the right earnings call for the stock, we had the wrong call from a market sentiment perspective."
Nonetheless, Mr. Yap said the call hasn't turned out to be all negative, as Dayang has made a turnaround, up more than 15% for the year so far in 2012.
Eric Bellman
Subject: Stock prices; Investment policy
Location: Malaysia Kuala Lumpur Malaysia
Company / organization: Name: SapuraCrest Petroleum; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 13, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1012771726
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1012771726?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The Attraction of Big Oil's Little Helpers
Author: Flynn, Alexis
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 May 2012: n/a.
ProQuest document link
Abstract:
While the world's giant onshore oil reservoirs in countries like Saudi Arabia and Russia are difficult for foreign companies to access, firms like BP, Exxon Mobil Corp. and Royal Dutch Shell PLC have turned to previously inaccessible and hard-to-reach areas like the Arctic as well as the Gulf of Mexico.
Full text: Buying shares of the largest oil companies is the entry point for many investors who want the play the continuing boom in the energy sector.
But some are turning their gaze to the oil-services sector as a better way to harness high returns--although these firms come with attendant risks. These companies bring equipment and expertise to drilling sites and work for everyone from the biggest energy firms to national oil companies and start-up prospectors. They are benefiting from a huge surge in production activity as oil firms go further and deeper in their search for hydrocarbons.
With investment in unconventional methods like deep-water drilling, liquefaction of natural gas and heavy-oil production set to increase by 75% over the next three years, firms like Schlumberger Ltd., National Oilwell Varco Inc. and Fugro NV are set to enjoy an "unprecedented increase in activity and complexity," Goldman Sachs said.
In particular, Goldman highlights the importance of ultra-deepwater exploration, where it forecasts capital expenditures will surge from $9.8 billion in 2011 to $50 billion by 2015.
The rush for deep-water exploration hasn't abated despite the Deepwater Horizon disaster of 2010 and the continuing and costly legal dispute between BP PLC and its former partners.
While the world's giant onshore oil reservoirs in countries like Saudi Arabia and Russia are difficult for foreign companies to access, firms like BP, Exxon Mobil Corp. and Royal Dutch Shell PLC have turned to previously inaccessible and hard-to-reach areas like the Arctic as well as the Gulf of Mexico. Previously viewed as too expensive a venture, they have turned profitable because of the rise in oil prices. However, the price tags that run into tens of billions of dollars can make some "Big Oil" investors nervous because they are essentially a bet that crude prices will continue to stay high.
The appeal of oil-services firms is that they are less prone to the vagaries of the underlying commodity: Once the job has been agreed, they'll be paid for it.
"Looking forward to 2013, we believe the [oil-services] sector is poised to deliver good earnings growth, reflecting the strong project [approvals] in 2011 and that we expect in 2012," Goldman analysts say.
The enthusiasm is shared by those at Credit Suisse, which say the European oil-services sector can continue to sustain organic revenue growth of 9%, double the rate of global GDP.
Both Goldman and Credit Suisse highlight subsea equipment manufacturers like Houston firm Cameron International Corp. and subsea construction firms like Italy-based Saipem SpA and French-based Technip SA, which was recently hired by BP for a project in the Gulf of Mexico.
However, the sector isn't without risks.
As Credit Suisse points out, while oil-services companies are less sensitive to the month-to-month fluctuations of the oil price, their business, and their share prices, face the same challenges of all European companies: sluggish demand, inflation and the high cost of capital.
"There are numerous well-known risks to the European markets, and oil services will suffer as much as any sector from a market downturn," its analysts said.
For their part, the bank's analysts believe the global economic recovery is likely to strengthen through 2013.
While major oil companies remain most investors' picks for their defensive qualities, the sector's first-quarter earnings reports underscore how big companies are running out of easy-to-access oil.
Analysts say a new enthusiasm for oil-services companies should be viewed against that backdrop.
"We expect the oil services companies that are well placed in growth areas to continue to see good backlog growth," the Goldman analysts said. "We believe this is possible given the strong pipeline of existing projects combined with the current high oil price, and the higher level of capacity in the oil services supply chain."
Credit: By Alexis Flynn
Subject: Petroleum industry; Oil prices; Prices; Capital expenditures
Company / organization: Name: National Oilwell Varco Inc; NAICS: 333132; Name: Schlumberger Ltd; NAICS: 213111, 213112, 334419, 334513, 511210, 541512; Name: BP PLC; NAICS: 324110, 447110, 211111; Name: Goldman Sachs Group Inc; NAICS: 523120, 523110; Name: Fugro NV; NAICS: 541990; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Credit Suisse Group; NAICS: 522110; Name: Technip SA; NAICS: 541330; Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 13, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1012771727
Document URL: https://login.ezproxy.uta.edu/login?url =https://search-proquest-com.ezproxy.uta.edu/docview/1012771727?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Traders Mind the Gap on Prices; Spread Between European and U.S. Crude Drawing Big Bets on When--and How Much--It Will Shrink
Author: DiColo, Jerry; Gross, Jenny
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 May 2012: n/a.
ProQuest document link
Abstract:
The number of over-the-counter contracts used to bet on CME Group Inc.'s Brent-WTI calendar swap, an instrument for betting on the monthly average of the spread, is up 6% since the start of the year to roughly 56,000 as of late April. Since January 2011, when prices first diverged, their number has soared by 66%.
Full text: It is the biggest question in the global crude-oil market: When will the gap between U.S. and European oil prices shrink back to normal? It also is one of the biggest trades.
Traders have been homing in an unusually large gulf between prices of the benchmark U.S. oil contract, known as West Texas Intermediate, and the European benchmark, known as Brent. Usually the two oil contracts trade within a few dollars of each other. But for more than a year, they have diverged widely.
Currently, Brent trades at $111.57 a barrel, $16.79 above WTI's price of $94.78. Since January 2011, the gap has been as wide as $27.88, but as recently as December it was below $8.
Now traders are seizing on signs that this spread could soon shrink. Industry experts say a new pipeline scheduled to come online in the U.S. this week is likely to help reduce a glut of oil in the Midwest. But opinions vary on how much--or even whether--the planned opening of the Seaway pipeline on May 17 will help drive up WTI prices and narrow the gap between the two oil prices.
It is easy to find someone to take both sides of the trade, said Michael Hiley, head of over-the-counter energy markets at broker Newedge Group. "It's been straight-up 'trade the spread,'" Mr. Hiley said.
The number of over-the-counter contracts used to bet on CME Group Inc.'s Brent-WTI calendar swap, an instrument for betting on the monthly average of the spread, is up 6% since the start of the year to roughly 56,000 as of late April. Since January 2011, when prices first diverged, their number has soared by 66%.
Louis-Cyprien Doucet, an independent trader based in Paris, said he expects the gap between the two will shrink toward $10 a barrel, and then narrow more when Seaway increases its capacity later in the year. "My strategy is to simultaneously go long WTI and go short Brent" at the times when the gap between the two widens, expecting to profit when the spread narrows, he said.
In the futures market, traders can bet on timing as well as direction.
Analysts at Goldman Sachs told clients last month that by the end of this year the spread will narrow even further, to about $5.
The firm recommended clients bet that prices for WTI futures for September delivery will rise, by buying the September WTI contract. At the same time, traders could bet the price of Brent for September will fall.
Andy Lebow, a broker and trader at Jefferies in New York, said about three-quarters of the trades he has seen have been straightforward "spread" bets. He also said a more conservative strategy known as "trading the box" is on the rise.
In a box trade, traders hedge their spread bets by taking the opposite positions in another contract month. For instance, if a trader believes that the WTI discount will narrow at the end of the year, he or she would take positions in December contracts for WTI and Brent. But to protect against wild price swings, a trader might make the opposite wager in a June contract.
The box trade would be profitable as long as the WTI spread narrows faster in December than it does in June. The downside: While losses are potentially limited by the offsetting trades, so too are gains.
But there also are signs that WTI's discount to Brent won't disappear as quickly as some traders anticipate. Analysts point to the relatively wide gap of $12.20 a barrel between WTI and Brent on futures contracts that offer oil deliveries in December. This suggests some traders don't think Seaway's reversal will do enough to prevent another glut.
Analysts at JPMorgan predict the gap will narrow to $6 or less with Seaway's start-up, but widen again at the end of the year when a big BP PLC refinery in Indiana shuts down for scheduled maintenance. With less crude demand in the Midwest during this time, supplies are likely to swell again and press down on WTI.
Yu-Dee Chang, principal and head trader at ACE Investment Strategists LLC, which manages $75 million, said he has been switching in and out of trades. When the discount is near $20, he will bet on a narrowing spread, buying WTI and selling Brent. But should it shrink to $10, he will bet the other way, selling WTI and buying Brent. "I want to trade the extremes," Mr. Chang said.
He said he expects the spread to fluctuate in the short term amid uncertainty over the approval process for a similar pipeline. Longer term, the price gap likely will narrow as Midwest supplies diminish, he said.
Write to Jerry DiColo at and Jenny Gross at
Credit: By Jerry DiColo And Jenny Gross
Subject: Petroleum industry; Pipelines; Prices; Oil prices
Location: United States--US
Company / organization: Name: CME Group; NAICS: 523210; Name: Goldman Sachs Group Inc; NAICS: 523120, 523110; Name: Newedge Group; NAICS: 523120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 15, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1013598242
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1013598242?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Traders Mind the Gap on Prices --- Spread Between European and U.S. Crude Drawing Big Bets on When -- and How Much -- It Will Shrink
Author: DiColo, Jerry; Gross, Jenny
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]15 May 2012: C.4. [Duplicate]
ProQuest document link
Abstract:
The number of over-the-counter contracts used to bet on CME Group Inc.'s Brent-WTI calendar swap, an instrument for betting on the monthly average of the spread, is up 6% since the start of the year to roughly 56,000 as of late April. Since January 2011, when prices first diverged, their number has soared by 66%.
Full text: The large gap between U.S. and European oil prices has captivated the global crude-oil market for months. Now, with a new pipeline coming that could send U.S. prices up, traders are focused on when or whether that gap will narrow.
Typically, prices of the benchmark U.S. oil contract, known as West Texas Intermediate, and the European benchmark, known as Brent, have traded within a few dollars of each other. But for more than a year, they have diverged widely.
Currently, Brent trades at $111.57 a barrel, $16.79 above WTI's price of $94.78. Since January 2011, the gap has been as wide as $27.88, but as recently as December it was below $8.
There are signs that this spread could soon shrink. Industry experts say a new pipeline scheduled to come online in the U.S. this week is likely to help reduce a glut of oil in the Midwest.
But opinions vary on how much -- or even whether -- the planned opening of the Seaway pipeline on May 17 will help drive up WTI prices.
It is easy to find someone to take both sides of the trade, said Michael Hiley, head of over-the-counter energy markets at broker Newedge Group. "It's been straight-up 'trade the spread,'" Mr. Hiley said.
The number of over-the-counter contracts used to bet on CME Group Inc.'s Brent-WTI calendar swap, an instrument for betting on the monthly average of the spread, is up 6% since the start of the year to roughly 56,000 as of late April. Since January 2011, when prices first diverged, their number has soared by 66%.
Louis-Cyprien Doucet, an independent trader based in Paris, said he expects the gap between the two will shrink toward $10 a barrel, and then narrow more when Seaway increases its capacity later in the year.
"My strategy is to simultaneously go long WTI and go short Brent" at the times when the gap between the two widens, expecting to profit when the spread narrows, he said.
In the futures market, traders can bet on timing as well as direction.
Analysts at Goldman Sachs told clients last month that by the end of this year the spread will narrow even further, to about $5.
The firm recommended clients bet that prices for WTI futures for September delivery will rise, by buying the September WTI contract. At the same time, traders could bet the price of Brent for September will fall.
Andy Lebow, a broker and trader at Jefferies in New York, said about three-quarters of the trades he has seen have been straightforward "spread" bets. He also said a more conservative strategy known as "trading the box" is on the rise.
In a box trade, traders hedge their spread bets by taking the opposite positions in another contract month.
For instance, if a trader believes that the WTI discount will narrow at the end of the year, he or she would take positions in December contracts for WTI and Brent. But to protect against wild price swings, a trader might make the opposite wager in a June contract.
The box trade would be profitable as long as the WTI spread narrows faster in December than it does in June. The downside: While losses are potentially limited by the offsetting trades, so too are gains.
But there also are signs that WTI's discount to Brent won't disappear as quickly as some traders anticipate. Analysts point to the relatively wide gap of $12.20 a barrel between WTI and Brent on futures contracts that offer oil deliveries in December. This suggests some traders don't think Seaway's reversal will do enough to prevent another glut.
Analysts at JPMorgan predict the gap will narrow to $6 or less with Seaway's start-up, but widen again at the end of the year when a big BP PLC refinery in Indiana shuts down for scheduled maintenance. With less crude demand in the Midwest during this time, supplies are likely to swell again and press down on WTI.
Yu-Dee Chang, principal and head trader at ACE Investment Strategists LLC, which manages $75 million, said he has been switching in and out of trades. When the discount is near $20, he will bet on a narrowing spread, buying WTI and selling Brent. But should it shrink to $10, he will bet the other way, selling WTI and buying Brent. "I want to trade the extremes," Mr. Chang said.
He said he expects the spread to fluctuate in the short term amid uncertainty over the approval process for a similar pipeline.
Longer term, the price gap likely will narrow as Midwest supplies diminish, he said.
Credit: By Jerry DiColo and Jenny Gross
Subject: Pipelines; Petroleum industry; Futures; Commodity prices; Crude oil
Location: United States--US
Company / organization: Name: CME Group; NAICS: 523210; Name: Goldman Sachs Group Inc; NAICS: 523120, 523110; Name: Newedge Group; NAICS: 523120
Classification: 3400: Investment analysis & personal finance; 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: May 15, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1013601687
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1013601687?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
India to Cut Iranian Oil Imports 11%
Author: Choudhury, Santanu; Sharma, Rakesh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 May 2012: n/a.
ProQuest document link
Abstract:
NEW DELHI--U.S. efforts to cajole India into reducing its crude-oil imports from Iran appear to be bearing fruit, with junior oil minister R.P.N. Singh telling the upper house of Parliament Tuesday that refiners are targeting an 11% overall reduction in crude imports from the Islamic Republic this fiscal year.
Full text: NEW DELHI--U.S. efforts to cajole India into reducing its crude-oil imports from Iran appear to be bearing fruit, with junior oil minister R.P.N. Singh telling the upper house of Parliament Tuesday that refiners are targeting an 11% overall reduction in crude imports from the Islamic Republic this fiscal year.
India, which relies on Iran for about a tenth of its crude imports, has found its access to Iranian oil complicated by insurance and bank settlement obstacles set up by the West in an effort to block Iran's sales networks.
U.S. Secretary of State Hillary Clinton said during a visit to New Delhi earlier this month that she was encouraged by the steps taken by India to cut Iranian imports, even as she pressed the South Asian country to make further cuts to support international efforts to curb Iran's nuclear ambitions.
Indian refiners plan to import around 15.5 million metric tons of crude from Iran in the year that began on April 1, down from the 17.44 million tons purchased in 2011-12 and 18.50 million tons in 2010-11, Mr. Singh said in response to a lawmaker's query.
Refiners base their import targets on "technical, commercial and other considerations," he said.
"In order to reduce its dependence on any particular region of the world, India has been consciously trying to diversify its sources of crude-oil imports to strengthen the country's energy security," he added.
The minister's response coincides with a visit by U.S. special energy envoy Carlos Pascual, who told reporters Tuesday that Iran wasn't on the agenda in his meetings with Indian counterparts. "We had ... a fantastic discussion on global energy-security issues," Mr. Pascual said.
In addition to India, the U.S. has asked several other major oil importers, including Turkey, China, South Korea and Japan, to reduce their purchases of Iranian oil by June 28 or face sanctions on financial institutions that do business with Iran's central bank.
Tehran says its nuclear program is for peaceful purposes, but the U.S. and others allege it is aimed at weapons production.
Japan and the European Union have already taken steps to cut Iranian oil imports, earning waivers from U.S. sanctions.
Iran's increasing isolation has begun to take effect, with the country's crude output falling by 4.5% from February to April, when it produced 3.2 million barrels a day, according to Vienna-based JBC Energy GmbH. That level hadn't been hit since 1990, in the aftermath of the Iran-Iraq war.
Mr. Singh said India currently imports oil from more than 30 countries, and "there is no shortage or gap envisaged in crude-oil procurement" by local refiners.
The Indian government has directed Mangalore Refinery & Petrochemicals Ltd. and Essar Oil Ltd., the country's top two importers of crude from Iran, to reduce Iranian oil shipments by at least 15% this financial year, two people with knowledge of the move said earlier this month.
Write to Santanu Choudhury at and Rakesh Sharma at
Credit: By Santanu Choudhury And Rakesh Sharma
Subject: Petroleum industry; Oil sands
Location: India United States--US Iran
People: Clinton, Hillary
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 15, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1013603025
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1013603025?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
North Dakota Tops Alaska in Oil Output
Author: Nicas, Jack
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 May 2012: n/a.
ProQuest document link
Abstract:
Exploration is targeting new oil fields in Ohio and is breathing new life into aging fields, such as the Permian Basin in Texas.
Full text: North Dakota has passed Alaska to become the No. 2 oil-producing state in the country, reflecting how the embrace of new drilling technology is redrawing the U.S. energy map.
North Dakota's daily production of oil rose 3.1% to 575,490 barrels in March, according to preliminary state data, 1.4% more than Alaska's daily production of 567,480 barrels for the month.
Texas, which pumped 1.7 million barrels a day in February, holds a firm grip on first place.
The leap past Alaska came "substantially earlier than we thought. We had graphed this out [to happen] early next year," said Ron Ness, president of the North Dakota Petroleum Council, which represents more than 350 companies in the state's oil fields. "I don't foresee us giving Texas a run right now, but certainly we've moved up in the batting lineup."
In four years, oil output has quadrupled in North Dakota. In March 2008, the state was the No. 8 oil-producing state at 144,000 barrels a day.
But since then, new technology called hydraulic fracturing, or fracking, has allowed companies to access the roughly 4.3 billion barrels of crude believed to lie in the Bakken shale beneath parts of North Dakota, Montana and Canada.
Fracking has opened up vast new areas for oil--and natural gas--production. Much like the oil surge in North Dakota, energy companies have drilled thousands of wells in Pennsylvania, tripling the commonwealth's gas production in the past few years. Exploration is targeting new oil fields in Ohio and is breathing new life into aging fields, such as the Permian Basin in Texas.
North Dakota is likely to hold onto the No. 2 spot, as Alaska's output has steadily declined over the past decade. Six years ago, Alaska produced about eight times more oil than North Dakota.
"Unless things change up here--they find another patch of oil--I think they will pass us for good," said Stephen McCains, a statistician for the Alaska Oil and Gas Conservation Commission.
In December, North Dakota moved past California into third place. California, which recently had jockeyed for the No. 2 position with Alaska, now finds itself at No. 4.
With about 40% as much daily oil production as North Dakota, Oklahoma and New Mexico are Nos. 5 and 6 in the U.S., respectively.
North Dakota's ascent caught local lawmakers off guard. In March 2011, their two-year state budget included a forecast that daily production would hit 425,000 barrels by June 2013. It reached that level by July 2011.
The booming oil fields and high-paying jobs there have drawn thousands of workers to the state.
Of the 15 counties in the U.S. with the lowest unemployment rates, 11 are in North Dakota--some with rates below 1%. But the sudden rush of out-of-towners has clogged highways, hotel rooms and lines at local restaurants, residents say.
In Williston, N.D.--the fastest-growing small city in the U.S., according to census data--construction is also booming to keep up with demand. In 2011, the city issued $358 million worth of building permits, up from $45 million in 2009.
Housing is still "extremely short," said city auditor John Kautzman. "We have lots of vertical construction, but we're not in a position where we're caught up yet." On Wednesday, government and business leaders will convene in Williston for the "Bakken Housing Summit" with a goal of building 5,000 homes in the area by 2014.
Write to Jack Nicas at
Credit: By Jack Nicas
Subject: Petroleum industry; Oil sands; Oil fields; State budgets; Natural gas; Hydraulic fracturing
Location: California United States--US Alaska Texas North Dakota
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 15, 2012
Section: US
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1013831851
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1013831851?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. News: North Dakota Tops Alaska in Oil Output
Author: Nicas, Jack
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]16 May 2012: A.3.
ProQuest document link
Abstract:
Exploration is targeting new oil fields in Ohio and is breathing new life into aging fields, such as the Permian Basin in Texas.
Full text: North Dakota has passed Alaska to become the No. 2 oil-producing state in the country, reflecting how the embrace of new drilling technology is redrawing the U.S. energy map.
North Dakota's daily production of oil rose 3.1% to 575,490 barrels in March, according to preliminary state data, 1.4% more than Alaska's daily production of 567,480 barrels for the month.
Texas, which pumped 1.7 million barrels a day in February, holds a firm grip on first place.
The leap past Alaska came "substantially earlier than we thought. We had graphed this out [to happen] early next year," said Ron Ness, president of the North Dakota Petroleum Council, which represents more than 350 companies in the state's oil fields. "I don't foresee us giving Texas a run right now, but certainly we've moved up in the batting lineup."
In four years, oil output has quadrupled in North Dakota. In March 2008, the state was the No. 8 oil-producing state at 144,000 barrels a day.
But since then, new technology called hydraulic fracturing, or fracking, has allowed companies to access the roughly 4.3 billion barrels of crude believed to lie in the Bakken shale beneath parts of North Dakota, Montana and Canada.
Fracking has opened up vast new areas for oil -- and natural gas -- production. Much like the oil surge in North Dakota, energy companies have drilled thousands of wells in Pennsylvania, tripling the commonwealth's gas production in the past few years. Exploration is targeting new oil fields in Ohio and is breathing new life into aging fields, such as the Permian Basin in Texas.
North Dakota is likely to hold onto the No. 2 spot, as Alaska's output has steadily declined over the past decade. Six years ago, Alaska produced about eight times more oil than North Dakota.
"Unless things change up here -- they find another patch of oil -- I think they will pass us for good," said Stephen McCains, a statistician for the Alaska Oil and Gas Conservation Commission.
In December, North Dakota moved past California into third place. California, which recently had jockeyed for the No. 2 position with Alaska, now sits at No. 4. With about 40% as much daily oil production as North Dakota, Oklahoma and New Mexico are Nos. 5 and 6 in the U.S., respectively.
North Dakota's ascent caught local lawmakers off guard. In March 2011, their two-year state budget included a forecast that daily production would hit 425,000 barrels by June 2013. It reached that level by July 2011.
The booming oil fields and high-paying jobs there have drawn thousands of workers to the state. Of the 15 counties in the U.S. with the lowest unemployment rates, 11 are in North Dakota -- some with rates below 1%. But the sudden rush of out-of-towners has clogged highways, hotel rooms and lines at local restaurants, residents say.
In Williston, N.D. -- the fastest-growing small city in the U.S., according to census data -- construction is also booming to keep up with demand. In 2011, the city issued $358 million worth of building permits, up from $45 million in 2009.
Credit: By Jack Nicas
Subject: Oil fields; Petroleum production; Hydraulic fracturing
Location: North Dakota
Classification: 9190: United States; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.3
Publication year: 2012
Publication date: May 16, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspaper s
Language of publication: English
Document type: News
ProQuest document ID: 1013736476
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1013736476?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iraq Replaces Iran as India's Second-Largest Crude Oil Supplier
Author: Sharma, Rakesh; Choudhury, Santanu
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 May 2012: n/a.
ProQuest document link
Abstract:
Access to Iranian oil has been complicated by insurance and bank settlement obstacles set up by the West as part of efforts to block the Islamic Republic's sales networks and force it to abandon an alleged program to develop nuclear weapons.
Full text: NEW DELHI - Iraq replaced Iran as India's second-largest crude oil supplier in the recently ended financial year, preliminary government data showed Wednesday, as New Delhi cut shipments from Tehran ahead of impending sanctions from the U.S. and the European Union.
Saudi Arabia remained the largest oil supplier, while Iran slid to fourth spot in the year ended March 31, according to the data compiled by India's oil ministry.
India, which meets four-fifths of its crude oil needs through imports, has expedited its diplomatic efforts to increase purchases from countries such as Saudi Arabia, Qatar, Kuwait and Iraq to compensate for lower imports from Iran.
Globally, Iranian oil exports are declining as importers are cutting shipments ahead of U.S. sanctions that come into effect on June 28. Sanctions by the EU will start on July 1.
The U.S. has asked major oil importers such as India, Turkey, China, South Korea and Japan to drastically trim their purchases of Iranian oil or face sanctions on financial institutions that do business with Iran's central bank.
Access to Iranian oil has been complicated by insurance and bank settlement obstacles set up by the West as part of efforts to block the Islamic Republic's sales networks and force it to abandon an alleged program to develop nuclear weapons. Tehran, however, says its nuclear program is for peaceful purposes.
Shipments to India from Iran fell 5.7% in the last financial year to 17.44 million metric tons, or 349,300 barrels a day, the oil ministry data showed.
Imports from Iraq, meanwhile, surged 43% to 24.51 million tons, or 490,900 barrels a day. Purchases from Saudi Arabia rose 19% to 32.63 million tons, or 653,500 barrels a day, and from Kuwait climbed 54% to 17.67 million tons, or 353,900 barrels a day.
India insists that raising imports from other countries doesn't signal it is bowing to U.S. pressure. It says it is trying to diversify its oil sources and reduce dependence on any one country.
Indian refiners have targeted to import about 15.5 million tons of crude oil from Iran in the current financial year, junior Oil Minister R.P.N. Singh said Tuesday.
New Delhi expects to boost shipments from Saudi Arabia by up to 100,000 barrels each year over the next few years, Oil Minister Jaipal Reddy said in February.
Oil imports by India are growing each year as the country's refiners expand capacity to meet rising demand at home. India's refining capacity is set to grow 46% to 6.23 million barrels a day by March 2017, Oil Secretary G.C. Chaturvedi said on April 16.
Write to Rakesh Sharma at and Santanu Choudhury at
Credit: By Rakesh Sharma And Santanu Choudhury
Subject: Oil sands; Petroleum industry
Location: Qatar Iraq India Kuwait United States--US Iran Saudi Arabia
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online ); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 16, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1013793966
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1013793966?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Money's Rich Bounty
Author: Spiegelman, Willard
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 May 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Shreveport, La.
When Ralph Waldo Emerson said "beauty breaks in everywhere" he was thinking of nature, but he might as well have been thinking of art. America overflows with excellent little museums, tucked away in small towns, and worth a detour or even a trip.
Consider the R.W. Norton Art Gallery, located in Louisiana's third-largest city. Shreveport is now more famous for horse racing, casinos and drive-through daiquiri-dispensing stands than for the fine arts. The Norton occupies 43 acres of lush garden space--filled with purling streams, azaleas, magnolias, large pines and sculptures--in the middle of a quiet residential neighborhood. It's also the spot of choice for local couples posing for wedding photos.
Norton (1886-1940) was a successful oilman whose wife and son amassed an art collection and then started the foundation that opened the gallery in 1966. Two new wings expanded the original building in 1990 and 2003; the collections, too, have continued to grow. Admission is (how many other museums can make this boast?) free.
The unpredictable thing about places like this is not only the serendipity of your initial discovery but also the charming hodgepodge assortment of what you can discover there. In the Norton's library, for instance, you find a double-elephant folio of Audubon's Birds of America; elsewhere, a whole room of antique dolls and two others of Steuben glass. There's the extraordinary Firearms Gallery of small guns in vitrines: nickel-plated revolvers with ivory grips; mother-of-pearl pieces from the Old West; 19th- and 20th- century German and Italian Art Nouveau and Art Deco weapons whose beauty equals their deadliness.
A "Piranesi" corridor has copies of the 16 plates of the master's "Carceri" ("Prisons") series; an adjacent room, suitable for lectures or recitals, is lined with 16th-century tapestries based on Giulio Romano's renderings of the Punic War adventures of Scipio Africanus.
Henry Clay Frick, Isabella Stewart Gardner and Albert Barnes followed their noses to amass great collections. The Nortons did the same, but the results are more random, more American than European. Masterpieces do not abound; interesting things do. Like Fort Worth's Amon Carter Museum, the Norton has a penchant for Western American art, especially that of Frederic Remington and Charles Russell, but it has plenty of other eye-opening surprises.
Most museum-goers can recognize Remington's and Russell's paintings, but the Norton also has remarkable groupings of their sculpture, delicate bronzes that capture the energetic movement of cowboys and horses. The cognoscenti also know the 19th-century landscapes of Albert Bierstadt, Frederic Edwin Church, Asher Durand and George Inness (all here). Fewer have heard of James McDougal Hart or Thomas Hill. What about Andrew Wyeth's sister Henriette, whose "Marie and the Red Geranium" (1935), a vibrant, brightly colored portrait of a soulful African-American woman, commands its wall space?
Consider another pair of siblings, whose works occupy a small room. Rosa Bonheur, famous French painter of animals and rural scenes, is represented by several pictures, including "Boeufs et Taureaux de la Race de Cantal" (1888). But equally fine are works by her brother François Auguste. His "Cattle at Rest" prompted Théophile Gautier to write in 1861 that Bonheur's "animals have the soft and satin-like skin of well-to-do animals, his foliage the brilliant freshness of plants washed in the rain and dried by the sun." The greenery surrounding a sitting bull is indeed gorgeous, as are the dazzling white brushstrokes that capture the essence of this noble beast.
Wandering through the Norton, you randomly come upon works by European masters like Jean-Baptiste-Camille Corot, Meindert Hobbema, Jacob van Ruisdael, from whom our American landscape painters learned. And, voilà: Rodin and Houdon sculptures to complement the Remingtons and Russells.
At the contemporary end of the spectrum, look at the room dedicated to an English artist, Academy Award-winner Peter Ellenshaw (1913-2007). He came to Hollywood and spent much of his working life there. He went on to produce landscape paintings like "Glacier in Alaska" (1991), a colossal study in blue and white, and, larger still, "Himalaya Mountains, Thangpoche Monastery, Nepal" (1982).
Portraits and landscapes abound in this jewel box. But nothing seems as redolent of Louisiana as three little pictures by Martin Johnson Heade (1819-1904)--"Jungle Orchids and Single Hummingbird" (1872), "Giant Magnolias" (c. 1885-95) and "Red Roses & Rosebuds in a Glass" (c. 1880s)--brilliantly colored flowers with details lovingly, almost anatomically rendered. They qualify as floral equivalents of John James Audubon's American birds, still-life orchestrations that are anything but dead.
Outdoors, in the Norton's gardens, you can see living versions of some of these flowers. Heade's pictures make you realize that nature and its beauties have broken into the galleries.
Mr. Spiegelman writes about art for the Journal.
Credit: By Willard Spiegelman
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 16, 2012
Section: Life and Style
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1013857116
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1013857116?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Singapore April Non-Oil Exports +8.3% On Year; +5.2% Expected
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 May 2012: n/a.
ProQuest document link
Abstract:
The city-state's shipments to the European Union, its biggest export destination, fell 12.2% in April from a year earlier, compared with a 4.5% on-year rise in the previous month, IE Singapore said.
Full text: SINGAPORE--Singapore's key non-oil domestic exports rose at a faster-than-expected pace in April mainly due to stronger performances from the pharmaceutical and petrochemical segments.
Exports of goods made in Singapore rose 8.3% in April compared with a year earlier, after falling 4.3% in March, trade promotion agency International Enterprise Singapore said Thursday.
The median estimate of 12 economists in a Dow Jones Newswires poll was for April exports to expand 5.2% from a year earlier.
Compared with the previous month, exports rose 13.1% in seasonally adjusted terms, after contracting 16.8% on month in March. Six economists in the poll had projected a median 6.8% expansion in April.
The city-state's shipments to the European Union, its biggest export destination, fell 12.2% in April from a year earlier, compared with a 4.5% on-year rise in the previous month, IE Singapore said.
Exports to the U.S. dropped 18.6% on year after rising 4.0% in March. Exports to China grew 5.4% after the previous month's 0.9% decrease.
Electronics exports rose 1.0% on year, after rising 2.8% in March, while non-electronics shipments grew 12.2%, compared with a 7.8% fall last month.
In the non-electronics sector, pharmaceutical exports rose 38.4%, after rising 43.0% in the previous month.
Subject: Exports; Oil sands
Location: Singapore China United States--US
Company / organization: Name: European Union; NAICS: 926110, 928120; Name: Dow Jones Newswires; NAICS: 519110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 17, 2012
column: DJ FX Trader
Section: Forex
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1013888584
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1013888584?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Canada's Enbridge to Expand Oil Pipelines
Author: Welsch, Edward
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 May 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: CALGARY--Enbridge Inc. said Wednesday it is moving ahead with 3.2 billion Canadian dollars (US$3.2 billion) in pipeline expansions, mostly to send more crude oil from Canada and North Dakota to the U.S. Midwest and eastern Canada.
The expansions include a full reversal of the Line 9 pipeline from Sarnia, Ontario, to Montreal, where crude oil produced in North America will replace imported crude oil.
The expansions are another step in the reshaping of North America's energy infrastructure to accommodate rising crude-oil production in Canada and the Western U.S.
Pipeline companies are building or expanding pipelines south, west and east from the center of the continent to the coasts. The cheaper North American production is starting to displace foreign oil imports, which are more expensive than U.S. benchmark prices.
"Refineries in Ontario and Quebec are paying premiums of $20 per barrel or more to obtain crude oil from the foreign sources they are currently largely dependent on," the head of Enbridge's liquids pipelines business, Stephen Wuori, said in a release. "Access to Canadian and U.S. Bakken [oil formation] production will help level the playing field for these refineries, protecting their long term viability and safeguarding jobs."
The Calgary pipeline company said C$2.6 billion of the expansions will go to expanding the eastward capacity of the Mainline, the largest pipeline system transporting Canadian crude oil to the U.S. The capacity of the Spearhead North pipeline between Flanagan, Ill., and Griffith, Ind., will increase by 105,000 barrels a day and the capacity of the Line 6B pipeline between Indiana and Michigan will expand by 260,000 barrels a day.
Enbridge also said it will spend C$400 million to expand the Southern Access pipeline between Superior, Wis., and Flanagan, Ill., from 400,000 barrels a day to 560,000 barrels a day. And C$200 million to expand the Alberta Clipper pipeline between Hardisty, Alberta and Superior, Wis., which will increase by 120,000 barrels a day to 570,000 barrels a day.
The expansions are expected to be completed in 2014.
The reversal of the Line 9 pipeline to Montreal will require approval from the National Energy Board, Canada's energy regulator, which is currently reviewing the first phase of the reversal from Sarnia to Westover, Ontario.
Write to Edward Welsch at
Credit: By Edward Welsch
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 17, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1013888591
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1013888591?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Midwest Pipeline to Cut Oil Glut
Author: Berthelsen, Christian
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 May 2012: n/a.
ProQuest document link
Abstract:
NEW YORK--Crude-oil futures declined despite news that the Seaway pipeline in the Midwest will open its spigots, a move expected to reduce a glut of oil and narrow the difference between the oil market's two benchmark contracts.
Full text: NEW YORK--Crude-oil futures declined despite news that the Seaway pipeline in the Midwest will open its spigots, a move expected to reduce a glut of oil and narrow the difference between the oil market's two benchmark contracts.
Though the news was generally bullish for crude prices, the West Texas contract still fell, settling down 25 cents, or 0.3%, to $92.56 a barrel on the New York Mercantile Exchange. The Brent contract fell by an even larger $2.26, or 2.1%, to $107.49.
Both oil contracts were beset by the continued move against risk assets in the markets and a sour economic outlook, with European financial woes and weak U.S. readings on employment and regional business activity weighing.
Operators of the Seaway pipeline that will flow crude from a Midwest storage hub to the Gulf Coast's refinery complex announced it will open this weekend. The move will lower oil supplies that have pooled in the middle of the country and narrow the spread between the contracts for West Texas Intermediate, the U.S. benchmark, and Brent, the European standard. The spread contracted nearly $2 on Thursday to $14.93.
The flow of crude through the reversed Seaway pipeline, running from Cushing, Okla., to the Gulf, is expected to bring the two benchmarks closer to parity. The difference between the two contracts was more than $19 early last month.
Historically, the contracts usually traded within pennies of each other, but a large gap opened up in the last two years as fundamentals of the U.S. and global markets moved in different directions.
Still, supply-demand fundamentals have been deteriorating in the oil markets, with U.S. government data showing inventories at a 22-year high, rising more than 10% in the last eight weeks on a combination of weakening demand and growing supply.
Though the Seaway pipeline is expected to carry 150,000 barrels a day to the Gulf, some analysts and traders say it won't be enough to reduce the growing U.S. supply glut anytime soon--and maybe not even after its capacity is expanded to 400,000 barrels per day early next year.
"There are certainly those that believe even if you get to 350,000 or 400,000, it still won't alleviate oversupply," said Tom Bentz, director of BNP Paribas Prime Brokerage. "Right now, 150,0000 is not going to do it."
Nymex oil futures have fallen 16.3% from their highs earlier this year amid geopolitical tensions between Iran and the West, and 12.8% since the start of the month as financial conditions in Europe have turned south once again. Thursday's loss marked the fifth consecutive new low settlement for 2012, and analysts and traders say they see little upside to the market anytime soon.
"This is a steep and damaging drop in oil prices that will have implications for the foreseeable future," said Dominick Chirichella of the Energy Management Institute in a note. "The uptrend that was in place since late last year (mostly geopolitically driven) has been broken and all technical signs point to a sustained downward trend going forward."
Front-month June reformulated gasoline blendstock, or RBOB, settled down 4.27 cents, at $2.8782 a gallon, its lowest level since Feb. 2. June heating oil finished down 4.86 cents, at $2.8490 a gallon.
Credit: By Christian Berthelsen
Subject: Pipelines; Petroleum industry; Oil prices; Energy management
Location: United States--US West Texas
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 17, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1013988878
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1013988878?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Pipeline Is Ready to Reverse Flow of Oil
Author: Lefebvre, Ben
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 May 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Enterprise Products Partners LP and Enbridge Inc. completed the reversal of the Seaway pipeline on Thursday, setting the stage for crude oil to flow from an Oklahoma storage hub to Gulf Coast refineries.
With the technical aspects now complete, the companies will start shipping oil this weekend to the Gulf Coast from Cushing, Okla., where the recent boom in domestic oil production has brought inventories to historic highs.
The wave of new oil, together with a lack of ways to bring it out of Cushing, had brought benchmark U.S. oil prices as much as $20 below European benchmark Brent.
Enterprise and Enbridge said they will expand the 150,000-barrel-a-day pipeline's capacity to 400,000 barrels a day in the first quarter of 2013.
Credit: By Ben Lefebvre
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 17, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1014009685
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1014009685?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Europe's Oil Refiners Grab Window of Opportunity
Author: Rozhnov, Konstantin
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 May 2012: n/a.
ProQuest document link
Abstract:
There also has been a global shift from gasoline to diesel that requires refineries to invest in upgrades, which many can't afford. Since the start of the economic downturn in 2008, more than one million barrels a day of Europe's refining capacity has been shed through seven refinery shutdowns and capacity reductions at two facilities.
Full text: Stepped-up production from European oil refiners returning from spring maintenance could help keep a lid on gasoline prices in the short term.
This output boost, in lockstep with falling crude prices, will benefit motorists in Europe and the U.S.
But the outlook for refiners in the second half of the year is more downbeat. A lurch in Europe's economic prospects would hit demand. Moreover. new industry players plan to restart several mothballed refining facilities later this year, leading to oversupply.
But for a short while at least, refiners have an opportunity to capitalize on strong profit margins.
"The market needs more refinery output now, and margins are good. But they won't stay at these levels for months," said James Zhang, an analyst at Standard Bank.
The European refining sector has been in dire straits for more than two years because of falling regional demand for oil products as well as competition from bigger and more advanced plants in Asia and the Middle East. There also has been a global shift from gasoline to diesel that requires refineries to invest in upgrades, which many can't afford.
Since the start of the economic downturn in 2008, more than one million barrels a day of Europe's refining capacity has been shed through seven refinery shutdowns and capacity reductions at two facilities. That equals about 8% of its capacity that was online in the first quarter this year.
The International Energy Agency, a Paris-based energy watchdog, said more closures were likely to follow.
But this spring has given the Continent's refiners a glimpse of hope. Seasonal heavy maintenance around the world, which in Europe temporary reduced refining capacity by 1.3 million barrels a day in March, tightened the market.
This coincided with an almost $20 fall in Brent crude prices since the beginning of March and strong demand for fuel in West Africa, the Middle East and Americas. Thursday, Brent crude for July delivery fell $2.26, or 2.1%, to $107.49 a barrel, its lowest settlement since Dec. 30.
As a result, European refining profit margins for Brent jumped in April to almost $5 a barrel from less than a dollar in February, data from the Inernational Energy Agency showed. April margins were the highest in two years, according to the Organization of Petroleum Exporting Countries.
Earlier this year, many refiners had depleted fuel stocks in Europe to limit losses amid higher Brent prices.
Diesel and jet fuel inventories in independent storage in the Amsterdam-Rotterdam-Antwerp region are now 16% lower than a year ago and gasoline stockpiles are down 3%, said Pieter Kulsen, an independent oil analyst at PJK International BV.
With profit margins still relatively strong and as driving season in the northern hemisphere summer nears, refiners are keen to ramp up production.
"You can't ignore seasonal rises in demand, plus storage facilities with summer fuels are almost empty," said a trader with a European company that supplies refineries with crude.
The second half of the year, however, may prove to be much more challenging.
Toril Bosoni, a senior IEA oil market analyst, said the margin improvement could be swiftly reversed soon after refineries come out of maintenance and as Europe's ongoing debt troubles weigh on sentiment. "The demand situation hasn't improved in Europe. ... We could very well see economic run cuts and return to poor margins [going forward]," she said.
In addition, several new players are buying idled refineries. The Trainer refinery in Pennsylvania, Switzerland's Cressier plant, the Antwerp facility in Belgium and Sunoco's Philadelphia refinery are expected to restart later this year and squeeze the profits of operating refiners as the market becomes awash with fuel.
Roy Jordan, downstream consultant at Facts Global Energy, said new industry players buying such properties pose a threat to traditional refiners.
The buyers include Delta Air Lines and commodity traders Gunvor Group and Vitol Holdings BV.
"These companies have very different angles to why they are doing it," Mr. Jordan said. "It could be difficult for traditional refiners in the overcapacity environment to compete."
There is a plus side: Overcapacity stands to benefit motorists at the pump if the extra supply pushes down fuel prices.
Credit: By Konstantin Rozhnov
Subject: Petroleum industry; Petroleum refineries; Profit margins; Gasoline prices
Location: United States--US Europe Middle East
Company / organization: Name: International Energy Agency; NAICS: 928120; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 17, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1014012876
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1014012876?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Brazil Confirms Oil Slick Off Coast
Author: Fick, Jeff
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 May 2012: n/a.
ProQuest document link
Abstract:
Thursday's spill is the latest in a series of incidents to hit Brazil's offshore oil industry since a November leak at the Frade field operated by U.S. oil major Chevron Corp. A drilling accident caused an estimated 2,400 to 3,000 barrels of crude to seep into the Atlantic Ocean from cracks in the seabed.
Full text: RIO DE JANEIRO--The Brazilian Navy confirmed Thursday that an oil slick has been spotted off the coast of Espirito Santo state, with a team still on site trying to determine the source of the oil, a spokeswoman said.
"Yes, there was an oil leak," the Navy spokeswoman said. "Espirito Santo port officials have sent a team to the area to verify what happened." The Navy expects to give more details about the incident later Thursday, when the team returns to shore, the spokeswoman said.
Thursday's spill is the latest in a series of incidents to hit Brazil's offshore oil industry since a November leak at the Frade field operated by U.S. oil major Chevron Corp. A drilling accident caused an estimated 2,400 to 3,000 barrels of crude to seep into the Atlantic Ocean from cracks in the seabed. Production at the field was shuttered in March, when separate seeps were discovered in a nearby area.
The latest slick was discovered close to the P-57 platform operated by state-run energy giant Petroleo Brasileiro, or Petrobras. Petrobras didn't immediately respond to requests for comment. The P-57 platform, which was installed last year, pumps oil from the Jubarte field, which is part of a larger oil-producing area known as the Whales Park because the fields are all named after different types of whales.
Credit: By Jeff Fick
Subject: Petroleum industry; Oil sands
Location: Brazil United States--US Atlantic Ocean
Company / organization: Name: Petroleos Brasileiro SA; NAICS: 211111; Name: Chevron Corp; NAICS: 211111, 324110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 17, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1014013046
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1014013046?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Groups Sue Again Over Oil Drilling off Alaska
Author: Carlton, Jim
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 May 2012: n/a.
ProQuest document link
Abstract:
A coalition of environmental and tribal groups filed a challenge Wednesday to a federal air-emissions permit for a Royal Dutch Shell PLC drilling ship, the latest legal maneuver aimed at stopping the oil giant's exploration plan off Alaska's Arctic coast.
Full text: A coalition of environmental and tribal groups filed a challenge Wednesday to a federal air-emissions permit for a Royal Dutch Shell PLC drilling ship, the latest legal maneuver aimed at stopping the oil giant's exploration plan off Alaska's Arctic coast.
The Obama administration gave Shell the go-ahead last year to move forward with plans to drill for oil in the Chukchi and Beaufort seas. The coalition's court challenge targets a ship that Shell plans to deploy for drilling in the Beaufort Sea starting as early as mid-July when the sea-ice clears.
Shell's opponents said the challenge is part of a strategy to appeal as much of Shell's plan as they can, in hopes a court will block it. "We don't think there should be drilling in the Arctic, period," said Rebecca Noblin, Alaska director of the Center for Biological Diversity, one of eight groups that filed the challenge in the Ninth Circuit Court of Appeals in San Francisco.
"History tells us opposition groups will use the courts in an attempt to stall our program at every turn," said Curtis Smith, a spokesman for Shell's Shell Alaska division. "Our recent filings make clear we have no intention of sitting back and waiting for that to happen."
Anti-drilling groups have filed at least four other challenges against the project since the Interior Department in October said it would uphold nearly 500 oil-drilling leases in the Chukchi Sea that legal challenges had blocked since 2008.
Shell has filed two suits against the coalition since February in federal court in Anchorage, Alaska, as a pre-emptive move to seek court judgments on some other permits the company said it believes the opponents will challenge. Those suits, as well as the challenges, are all pending.
The latest challenge alleges Shell's vessel and support fleet will pollute the Arctic air. Shell officials said the Environmental Protection Agency, which issued the emissions permits under the Clean Air Act, has found the ships would pose no significant impact to the air.
Write to Jim Carlton at
Credit: By Jim Carlton
Subject: Federal court decisions; Litigation; Petroleum industry; Drilling
Location: Alaska Arctic region Chukchi Sea Beaufort Sea
Company / organization: Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Environmental Protection Agency--EPA; NAICS: 924110; Name: Center for Biological Diversity; NAICS: 813312
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 17, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1014045746
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1014045746?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Midwest Pipeline to Cut Oil Glut
Author: Berthelsen, Christian
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 May 2012: n/a.
ProQuest document link
Abstract:
Though the Seaway pipeline is expected to carry 150,000 barrels a day to the Gulf, some analysts and traders say it won't be enough to reduce the growing U.S. supply glut at Cushing anytime soon--and maybe not even after its capacity is expanded to 400,000 barrels a day early next year.
Full text: NEW YORK--Operators of a pipeline that will transport crude from its U.S. Midwest storage hub to the Gulf Coast's refinery complex said they will open the spigots this weekend. The move will reduce a vast glut of oil that has pooled in the middle of the country and could significantly narrow the difference between the oil market's two benchmark contracts.
The spread between the contracts for West Texas Intermediate, the U.S. benchmark, and Brent, the European standard, continued to contract Thursday, by nearly $2 to $14.93.
The flow of crude through the reversed Seaway pipeline, running from Cushing, Okla., to the Gulf, is expected to bring the two benchmarks closer to parity. The difference between the two contracts was more than $19 early last month.
Historically, the contracts usually traded within pennies of each other, but a large gap opened up in the past two years. WTI was weighed down by the excess supply bottled up in the Midwest; Brent was pushed up as Middle East tensions raised supply concerns.
Though the news was generally bullish for U.S. crude prices, the West Texas contract still fell Thursday, settling down 25 cents, or 0.3%, to $92.56 a barrel on the New York Mercantile Exchange. The Brent contract fell by an even larger $2.26, or 2.1%, to $107.49.
Both contracts were beset by the continued move against risk assets in the markets and a sour economic outlook, weighed down by European financial woes and weak U.S. readings on employment and regional business activity.
Still, supply-demand fundamentals have been deteriorating in the oil markets, with U.S. government data showing inventories at a 22-year high, rising more than 10% in the last eight weeks on weakening demand and growing supply.
Though the Seaway pipeline is expected to carry 150,000 barrels a day to the Gulf, some analysts and traders say it won't be enough to reduce the growing U.S. supply glut at Cushing anytime soon--and maybe not even after its capacity is expanded to 400,000 barrels a day early next year. "There are certainly those that believe even if you get to 350,000 or 400,000, it still won't alleviate oversupply," said Tom Bentz, director of BNP Paribas Prime Brokerage. "Right now, 150,0000 is not going to do it."
Nymex oil futures have fallen 16% from their highs earlier this year amid geopolitical tensions between Iran and the West, and 13% since the start of the month as financial conditions in Europe have turned south again. Thursday's loss marked the fifth consecutive new low settlement for 2012. and analysts and traders say they see little upside to the market anytime soon.
"This is a steep and damaging drop in oil prices that will have implications for the foreseeable future," Dominick Chirichella of the Energy Management Institute said in a note. "The uptrend that was in place since late last year (mostly geopolitically driven) has been broken and all technical signs point to a sustained downward trend going forward."
Front-month June reformulated gasoline blendstock, or RBOB, settled down 4.27 cents, at $2.8782 a gallon, its lowest level since Feb. 2. June heating oil finished down 4.86 cents, at $2.8490 a gallon.
Credit: By Christian Berthelsen
Subject: Pipelines; Petroleum industry; Energy management
Location: United States--US West Texas
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 18, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1014067928
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1014067928?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. News: Groups Sue Again Over Oil Drilling Off Alaska
Author: Carlton, Jim
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]18 May 2012: A.4.
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Abstract:
A coalition of environmental and tribal groups filed a challenge Wednesday to a federal air-emissions permit for a Royal Dutch Shell PLC drilling ship, the latest legal maneuver aimed at stopping the oil giant's exploration plan off Alaska's Arctic coast.
Full text: A coalition of environmental and tribal groups filed a challenge Wednesday to a federal air-emissions permit for a Royal Dutch Shell PLC drilling ship, the latest legal maneuver aimed at stopping the oil giant's exploration plan off Alaska's Arctic coast.
The Obama administration gave Shell the go-ahead last year to move forward with plans to drill for oil in the Chukchi and Beaufort seas. The coalition's court challenge targets a ship that Shell plans to deploy for drilling in the Beaufort Sea starting as early as mid-July when the sea-ice clears.
Shell's opponents said the challenge is part of a strategy to appeal as much of Shell's plan as they can, in hopes a court will block it. "We don't think there should be drilling in the Arctic, period," said Rebecca Noblin, Alaska director of the Center for Biological Diversity, one of eight groups that filed the challenge in the Ninth Circuit Court of Appeals in San Francisco.
"History tells us opposition groups will use the courts in an attempt to stall our program at every turn," said Curtis Smith, a spokesman for Shell's Shell Alaska division. "Our recent filings make clear we have no intention of sitting back and waiting for that to happen."
Anti-drilling groups have filed at least four other challenges against the project since the Interior Department in October said it would uphold nearly 500 oil-drilling leases in the Chukchi Sea that legal challenges had blocked since 2008.
Shell has filed two suits against the coalition since February in Anchorage, Alaska, as a pre-emptive move to seek court judgments on some other permits the company said it believes the opponents will challenge. Those suits, as well as the challenges, are all pending.
The latest challenge alleges Shell's vessel and support fleet will pollute the Arctic air. Shell officials said the Environmental Protection Agency, which issued the emissions permits under the Clean Air Act, has found the ships would pose no significant impact to the air.
Credit: By Jim Carlton
Subject: Litigation; Petroleum industry; Drilling; Ships; Permits; Coalitions; Emissions; Oil exploration; Environmentalists; Native North Americans
Location: Alaska Arctic region Chukchi Sea Beaufort Sea
Company / organization: Name: Center for Biological Diversity; NAICS: 813312; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210
Classification: 9180: International; 8510: Petroleum industry; 4330: Litigation
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.4
Publication year: 2012
Publication date: May 18, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1014088951
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1014088951?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Midwest Pipeline To Cut Oil Glut
Author: Berthelsen, Christian
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]18 May 2012: C.4.
ProQuest document link
Abstract:
Though the Seaway pipeline is expected to carry 150,000 barrels a day to the Gulf, some analysts and traders say it won't be enough to reduce the growing U.S. supply glut at Cushing anytime soon -- and maybe not even after its capacity is expanded to 400,000 barrels a day early next year.
Full text: NEW YORK -- Operators of a pipeline that will transport crude from its U.S. Midwest storage hub to the Gulf Coast's refinery complex said they will open the spigots this weekend. The move will reduce a vast glut of oil that has pooled in the middle of the country and could significantly narrow the difference between the oil market's two benchmark contracts.
The spread between the contracts for West Texas Intermediate, the U.S. benchmark, and Brent, the European standard, continued to contract Thursday, by nearly $2 to $14.93.
The flow of crude through the reversed Seaway pipeline, running from Cushing, Okla., to the Gulf, is expected to bring the two benchmarks closer to parity. The difference between the two contracts was more than $19 early last month.
Historically, the contracts usually traded within pennies of each other, but a large gap opened up in the past two years. WTI was weighed down by the excess supply bottled up in the Midwest; Brent was pushed up as Middle East tensions raised supply concerns.
Though the news was generally bullish for U.S. crude prices, the West Texas contract still fell Thursday, settling down 25 cents, or 0.3%, to $92.56 a barrel on the New York Mercantile Exchange. The Brent contract fell by an even larger $2.26, or 2.1%, to $107.49.
Both contracts were beset by the continued move against risk assets in the markets and a sour economic outlook, weighed down by European financial woes and weak U.S. readings on employment and regional business activity.
Still, supply-demand fundamentals have been deteriorating in the oil markets, with U.S. government data showing inventories at a 22-year high, rising more than 10% in the last eight weeks on weakening demand and growing supply.
Though the Seaway pipeline is expected to carry 150,000 barrels a day to the Gulf, some analysts and traders say it won't be enough to reduce the growing U.S. supply glut at Cushing anytime soon -- and maybe not even after its capacity is expanded to 400,000 barrels a day early next year. "There are certainly those that believe even if you get to 350,000 or 400,000, it still won't alleviate oversupply," said Tom Bentz, director of BNP Paribas Prime Brokerage. "Right now, 150,0000 is not going to do it."
Nymex oil futures have fallen 16% from their highs earlier this year amid geopolitical tensions between Iran and the West, and 13% since the start of the month as financial conditions in Europe have turned south again. Thursday's loss marked the fifth consecutive new low settlement for 2012.
Credit: By Christian Berthelsen
Subject: Pipelines; Petroleum industry; Crude oil prices; Commodity prices
Location: United States--US West Texas
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: May 18, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1014088962
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1014088962?accountid=7117
Copyright: (c) 2012 Dow Jones & Compan y, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Europe Enters a Greek Standoff With Oil Price
Author: Peaple, Andrew
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 May 2012: n/a.
ProQuest document link
Abstract:
[...]if a Greek exit were disorderly, triggering a euro-zone banking crisis, prices could fall to $80, as European demand for oil--about 16% of the global total--falls by one million barrels per day, Bank of America reckons.
Full text: Europe's troubled waters are pouring onto oil prices. The spot Brent crude oil price is now back where it started the year at $107 per barrel, having fallen 11% so far this month. Greece's woes and the euro's uncertain future have dragged down oil prices alongside markets in general. Saudi Arabia's efforts to keep oil markets well-supplied and an apparent easing of geopolitical tensions with Iran have helped too. Oil's pullback offers some relief on inflation. But if it comes thanks to a collapse in confidence centered on the euro zone, that will be a pyrrhic victory at best.
How far could oil now drop? Uncertainty over if, how and when Greece might leave the euro zone makes forecasting perilous. Even if Greece could return to the drachma in an orderly way, its currency would likely devalue sharply--that, after all, would be a big part of the rationale for switching currencies. Based on the experience of Asian countries that dropped their dollar peg abruptly in the late 1990s, Greece's oil demand could drop by a third, or 100,000 barrels per day, Bank of America-Merrill Lynch estimates. The bank expects that would bring Brent down to $100 per barrel.
But if a Greek exit were disorderly, triggering a euro-zone banking crisis, prices could fall to $80, as European demand for oil--about 16% of the global total--falls by one million barrels per day, Bank of America reckons. If other countries then fell out of the euro the demand drop could be twice as large--perhaps pushing Brent down to $60 per barrel for up to two years.
That would keep oil above the sub-$40 depths reached in late 2008, but would still be a steep drop, made worse if prices didn't rebound quickly as they did in 2009. Still, oil bulls are far from cowered. A European stabilization, a renewal in Iranian tensions, more supply disruptions in areas from Sudan to the North Sea--all these factors could cause oil prices to rise above $130 per barrel by the fall, says JBC Energy. That indicates just how varied oil forecasts have become.
As it is, the euro's recent weakness means crude is still 7% more expensive priced in that currency than it was a year ago, despite a 4.5% drop in dollar terms. The energy component of euro-zone inflation was still rising by 8.1% in April. Oil is still some way from offering good news for Europe. Equally, though, Europe has the potential to deliver some serious payback to oil prices.
Write to Andrew Peaple at
Credit: By Andrew Peaple
Subject: Petroleum industry; Oil prices; Crude oil prices; Energy economics; Banks; Currency; Eurozone
Location: Greece Europe Iran Saudi Arabia
Company / organization: Name: Bank of America Corp; NAICS: 522110, 551111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 18, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1014176336
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1014176336?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Seaway Crude Oil Pipeline Starts First Flow
Author: Dummett, Ben
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 May 2012: n/a.
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Abstract:
Enterprise Products Partners L.P. and Enbridge Inc. said Saturday that the Seaway pipeline has started to accept crude oil at the Cushing, Okla. storage hub for delivery to the U.S. Gulf Coast.
Full text: TORONTO -- Enterprise Products Partners L.P. and Enbridge Inc. said Saturday that the Seaway pipeline has started to accept crude oil at the Cushing, Okla. storage hub for delivery to the U.S. Gulf Coast.
The bottleneck at the critical Cushing storage hub where crude oil inventories had reached historic highs had contributed to benchmark U.S. oil prices being as much as $20 below European benchmark Brent. But on Thursday, Enterprise and Enbridge announced completion of the much awaited reversal of the Seaway pipeline, setting the stage for crude oil to flow from the storage hub to the Gulf Coast refining hub. At that time, the companies also indicated they would start shipping oil this weekend.
Enterprise and Enbridge, which control the pipeline through a 50/50 joint venture, said the pipeline will have an initial capacity of 150,000 barrels a day. Capacity will expand to 400,000 barrels a day in the first quarter of 2013.
The two companies announced the reversal project in November 2011 after Enbridge bought ConocoPhillips' 50% stake in the pipeline for $1.1 billion.
Write to Ben Dummett at
Credit: By Ben Dummett
Subject: Petroleum industry; Oil prices; Pipelines
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 19, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1014262940
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1014262940?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Saudi Oil Output Passes Russia's, First Time in 6 Years
Author: Said, Summer
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 May 2012: n/a.
ProQuest document link
Abstract:
The Organization of Petroleum Exporting Countries, whose members produce one in three barrels consumed worldwide, has raised output by a combined 2.2 million barrels a day over the past six months to soothe market fears that a July 1 ban by the European Union of imports of Iranian crude could strain oil markets.
Full text: RIYADH--Oil production in Saudi Arabia, the world's largest crude exporter, rose to 9.923 million barrels a day in March, from 9.853 million barrels a day in February, overtaking Russia as the world's largest producer for the first time in six years, official data showed Sunday according to Zawya Dow Jones.
Russia's output in March dropped to 9.920 million barrels a day, from 9.943 million barrels a day in February, according to figures posted on the Joint Organization Data Initiative, or JODI, website. JODI is supervised by the Riyadh-based International Energy Forum and shows data supplied directly by governments dating back to 2002.
The Arab world's largest economy exported 7.704 million barrels a day in March, up from 7.485 million barrels in the month earlier, JODI said. No comparative figures were given on Russia's exports for the same period.
The Organization of Petroleum Exporting Countries, whose members produce one in three barrels consumed worldwide, has raised output by a combined 2.2 million barrels a day over the past six months to soothe market fears that a July 1 ban by the European Union of imports of Iranian crude could strain oil markets.
Saudi officials have previously said that the OPEC member's output is seen continuing at current high levels amid recent efforts by some countries to switch to crude from the kingdom ahead of stifling sanctions on Iran and its exports later this year.
Saudi Arabia's output rose markedly in November to 10.047 million barrels a day--the highest level in three decades--from 9.362 million barrels a day a month earlier on higher demand from Asia.
The kingdom's oil minister, Ali al-Naimi, said earlier this month that the Gulf state is now pumping around 10 million barrels of crude a day and has 2.5 million barrels a day of spare capacity.
Write to Summer Said at
Credit: By Summer Said
Subject: Petroleum industry; Oil sands; Petroleum production
Location: Russia Saudi Arabia
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 20, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1014349742
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1014349742?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
China Oil Imports From Iran Rebound
Author: Ma, Wayne
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 May 2012: n/a.
ProQuest document link
Abstract:
State-controlled China International United Petroleum & Chemical Co., known as Unipec, had skipped purchases from National Iranian Oil Co. as they worked out differences over the terms of the supply agreement.
Full text: BEIJING--China's imports of Iranian crude oil recovered in April after sharp drops earlier this year, suggesting Beijing remains a steady customer despite U.S. efforts to tighten sanctions on Tehran.
China's April crude imports from Iran, at 1.6 million metric tons or about 390,000 barrels a day, were down almost 24% from a year earlier--but up more than 48% from March.
That increase likely reflects the resolution of a commercial dispute between Chinese and Iranian companies. State-controlled China International United Petroleum & Chemical Co., known as Unipec, had skipped purchases from National Iranian Oil Co. as they worked out differences over the terms of the supply agreement. The dispute was resolved in mid-February, and the additional barrels likely started arriving in April, around three weeks after being shipped from Kharg Island in Iran.
The higher volumes from Iran in April may signal further increases in coming months, though the slowdown in February and March makes it unlikely that this year's levels will eclipse last year's. Iran will fully restore crude exports to China in the next few months, a person familiar with Iran's oil sales has said.
Chinese officials have said that Western sanctions aren't likely to affect its imports from the Islamic Republic. By contrast, neighboring countries including Japan and South Korea have reduced Iranian imports as part of efforts to win sanction waivers from the U.S. government.
The U.S. has sought to raise pressure on Iran to curb its nuclear ambitions. China has defended its trade, telling the U.S. it complies with existing United Nations sanctions.
Iran was China's third-largest oil supplier last year, when it shipped about 557,000 barrels a day, after No. 1 Saudi Arabia and No. 2 Angola.
Crude shipments from China's No. 7 supplier last year, Sudan, ground to a standstill in April, after being down 59% and 52% in February and March, respectively. South Sudan, which split off last July, in January halted the flow of crude into Sudan--where the oil-export facilities are--after accusing it of stealing oil. China is by far the largest buyer of crude produced in South Sudan, importing about 260,000 barrels a day last year.
China made up for the losses by boosting imports from Saudi Arabia, Angola, Russia and the United Arab Emirates. Crude shipments from Saudi Arabia in April were up 14% from a year earlier, rising to 4.38 million tons, or 1.07 million barrels a day.
Total crude imports in April were up 3.3% from a year earlier, to 22.26 million tons, or 5.44 million barrels a day, customs data showed. However, they were down from March's 5.57 million barrels a day, likely due to refinery-maintenance season, which is expected to peak in May.
Write to Wayne Ma at
Credit: By Wayne Ma
Subject: Sanctions; Petroleum industry; Oil sands; Shipments
Location: Beijing China United States--US China Iran Saudi Arabia
Company / organization: Name: National Iranian Oil Co; NAICS: 324110; Name: United Nations--UN; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 21, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1014428647
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1014428647?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The Market-Driven Energy Revolution; Prices more than policy are driving the U.S. boom in oil and natural gas production.
Author: Kurtzman, Joel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 May 2012: n/a.
ProQuest document link
Abstract:
The results of these efforts have been impressive. Since 2008, domestic oil production has increased 12%, while imported oil has fallen to 45% of total consumption from 61%.
Full text: Those who doubt that market forces still have the power to transform the world aren't paying attention to America's revitalized energy sector.
Four years ago, oil prices climbed to about $145 a barrel world-wide. The impact on the U.S. economy was devastating. Consumers who paid between $2.50 and $3 for a gallon of gas in 2007 paid as much as $5 a gallon in 2008. For many Americans, the high cost of commuting to and from work meant choosing between paying the mortgage or paying for gas. Many chose the latter.
But eventually prices did what they're supposed to do in a market economy--they prompted the development of new sources of oil as well as oil substitutes. Some companies began drilling new oil wells using new technology including 3D seismic imaging and directional drilling. In 2002, when oil prices were in a trough, there were roughly 800 oil-drilling rigs operating in the U.S. Today, there are roughly 2,000. The last time we had that many rigs drilling for oil was 1985. In addition, energy companies went after and found more offshore oil, and far more "unconventional" oil from shale, tar sands and long-abandoned wells than most people thought possible.
The results of these efforts have been impressive. Since 2008, domestic oil production has increased 12%, while imported oil has fallen to 45% of total consumption from 61%. Four years ago, when prices were high, the U.S. was on track to spend nearly $1 trillion on imported oil each year. Lower prices and falling demand mean we are likely to spend $350 billion this year--still high, but falling.
Not surprisingly, companies also sought opportunities developing cheaper alternatives to oil. Chief among these fuels is natural gas, which is a cleaner fossil fuel than oil and coal. In 2008, estimates were that the U.S. had just 12 years of natural gas reserves left. Plans were being put in place to import liquefied natural gas from the Middle East, perhaps even Russia, to meet future demand.
But high energy prices prompted companies to develop new technologies. Hydraulic fracturing--drilling deep vertical wells then drilling horizontally to release natural gas from shale rock--was perfected. Because of that, natural gas reserves increased dramatically while prices fell. In 2008, natural gas sold for about $12-$14 per thousand cubic feet. Now it sells for about $2 per thousand cubic feet. Instead of supplies lasting only 12 years, there is now sufficient natural gas for at least 100 years.
Rather than importing natural gas, the U.S. may begin exporting it. Since natural gas is sold in local rather than global markets, price differentials between countries are high. Average futures prices are about $9.50 per thousand cubic feet in Europe and about $16 per thousand feet in Asia, versus $2 in the U.S. Pricing differences this big will make exporting natural gas lucrative, perhaps even balancing our perennially in-the-red trading account.
Right now, natural gas is so abundant and cheap that some worry the U.S. and Canada, which has large reserves north of those in the U.S. Midwest, may soon run out of storage capacity. Some companies have even announced plans to curtail drilling due to falling prices and oversupply.
But here the price-mechanism is again at work. Trucking companies and fleet operators, wanting to take advantage of low natural-gas prices, are looking into converting trucks from diesel to natural gas, cutting their fuel bills by half. Passing the bipartisan Natural Gas Act (HR1380 in the House and S1863 in the Senate) would facilitate and accelerate this process by providing tax credits for the cost of conversion and for building natural-gas fuel stations, increasing demand even further.
High energy prices have transformed the American energy landscape. A study released last December by the Congressional Research Service indicates that new oil and gas finds, combined with traditional sources of energy, including cheap-but-dirty coal, has transformed the U.S. from an energy has-been to a heavyweight. According to the CRS, total U.S. energy reserves now exceed those of all other countries, including those in the Middle East. The U.S. is so energy rich there's little to prevent us from achieving energy independence.
Prices more than policy are driving these remarkable changes. Other problems to be fixed, rising CO2 emissions, for example, will also yield to the indomitable pressure of price, if carbon is taxed. While Washington squabbled over which energy direction to take, and which energy bill to kill, the markets moved us in exactly the direction the country should go--toward cheap, plentiful energy.
Mr. Kurtzman is executive director of the Center for Accelerating Energy Solutions at the Milken Institute.
Credit: By Joel Kurtzman
Subject: Natural gas; Oil sands; Oil reserves; Petroleum industry; Energy policy; Natural gas reserves
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 21, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1015034639
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1015034639?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
South Korea Seeks Iran Oil Exemption
Author: Min-Jeong, Lee
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 May 2012: n/a.
ProQuest document link
Abstract:
SEOUL--A South Korean official said media reports this week "aren't factual" that suggested South Korea would stop importing crude oil from Iran in the next couple of months regardless of whether cutting off such imports are requested by the U.S. and the European Union.
Full text: SEOUL--A South Korean official said media reports this week "aren't factual" that suggested South Korea would stop importing crude oil from Iran in the next couple of months regardless of whether cutting off such imports are requested by the U.S. and the European Union.
South Korea is "doing its best" to obtain an exemption from Iran-related U.S. sanctions and to gain access to the EU's insurance services for oil shipments from Iran after July 1, when EU sanctions are due to start, the official said on Tuesday.
The U.S. has exempted nearly a dozen countries from sanctions on Iran in return for significant reductions in their imports of Iranian crude. South Korea would prefer to cut Iranian imports and receive an exemption from the U.S., as neighboring Japan has done, than to completely halt shipments of Iranian crude, which may be problematic given that Iran supplies around a tenth of South Korea's crude requirement.
South Korea expects the EU to decide in June whether it will be eligible for insurance coverage for Iranian shipments after July 1, the official said.
SK Innovation Co., one of two South Korean oil refiners that import Iranian crude, said on Tuesday that it hasn't decided whether to halt Iranian imports and is closely consulting with the government about the matter.
SK Innovation fully owns SK Energy, the country's largest oil refiner, which relies on Iran for around10% to 15% of its crude-oil imports.
The government official's comments came after a newswire said Monday that SK Energy would stop importing crude from Iran after EU sanctions take effect, citing two people familiar with the matter.
Refiner Hyundai Oilbank Co. is likely to stop importing Iranian crude oil from early June, a company official said Tuesday. The company can't risk ordering barrels from Iran that would arrive after the EU embargo takes effect, as earning an exemption on insurance "doesn't look easy," the Hyundai Oilbank official said, noting that it takes about a month for shipments from Iran to arrive in South Korea.
Hyundai Oilbank relies on Iran for around 18%, or 70,000 barrels a day, of its crude imports, the official added. April crude import data, due this week, will be closely watched to see whether the reductions accelerate.
South Korea's imports of Iranian crude oil in the January-March period declined 22.3% compared with the same period in 2011, to 17.7 million barrels, while its imports from other major Middle East producers rose sharply.
Write to Min-Jeong Lee at
Credit: By Min-Jeong Lee
Subject: Oil sands; Petroleum industry; Sanctions
Location: Japan United States--US Iran South Korea
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 22, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1015055008
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1015055008?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
In a Reverse, Brazil's Navy Says Oil Slick Not Present
Author: Fick, Jeff; Lewis, Jeffrey T
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 May 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: BRASILIA--There are no indications of an oil spill at a site off the coast of Espírito Santo state, Brazil's navy and the National Petroleum Agency, or ANP, said last week after an inspection of the area.
Earlier Thursday the navy said a slick was spotted close to the P-57 platform operated by state-run energy giant Petroleo Brasileiro, or Petrobras. The P-57 platform, which was installed last year, pumps oil from the Jubarte field, which is part of a larger oil-producing area known as the Whales Park because the fields are all named after different types of whales.
Petrobras said all the control systems of its offshore drilling and production units in Espírito Santo are operating normally.
The naval inspector who overflew the area did see shadows of clouds on the surface of the ocean in the area, and such shadows are constantly mistaken for oil spills, the navy said in a note.
Thursday's incident comes after a series of spills offshore Brazil, including a leak in November at the Frade field operated by U.S. oil major Chevron Corp. A drilling accident caused an estimated 2,400 to 3,000 barrels of crude to seep into the Atlantic Ocean from cracks in the seabed. Production at the field was closed in March, when separate seeps were discovered in a nearby area.
Credit: By Jeff Fick And Jeffrey T. Lewis
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 22, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1015152948
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1015152948?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Putin Ally Is Named to Head Oil Giant
Author: Kolyandr, Alexander; Boudreaux, Richard
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 May 2012: n/a.
ProQuest document link
Abstract:
The appointment of Igor Sechin, who oversaw energy policy as deputy prime minister and favors a strong state role in the economy, raised doubts about government plans to sell a stake in the company, OAO Rosneft, of which 75% is state-owned.
Full text: MOSCOW--A powerful ally of President Vladimir Putin was named chief executive of Russia's state oil company on Tuesday, completing a realignment of senior positions in Mr. Putin's new administration and cementing his control of economic and security policy.
The appointment of Igor Sechin, who oversaw energy policy as deputy prime minister and favors a strong state role in the economy, raised doubts about government plans to sell a stake in the company, OAO Rosneft, of which 75% is state-owned.
Mr. Sechin had been removed as Rosneft's chairman last year as part of a Kremlin effort to attract private investment by taking government officials off the boards of big state companies. His return to the company was announced by Prime Minister Dmitry Medvedev. Mr. Putin switched jobs with Mr. Medvedev this month and has been Russia's pre-eminent leader for 12 years.
On Monday, the president named a cabinet to work under Mr. Medvedev, removing all but a handful of long-serving ministers in what state television portrayed as an act of renewal. But on Tuesday, Mr. Putin named seven of the ex-ministers to advisory posts in his presidential administration, positioning them as counterweights to their cabinet successors.
Rashid Nurgaliyev, who lost his job as Interior Minister on Monday following scandals over police violence and corruption, landed a top job on Russia's Security Council.
The back-to-back staffing announcements left the country's ruling elite largely intact, suggesting the government is unlikely to embark on political and economic overhauls. Investors pulled $42 billion out of the country in the first four months of this year, and a senior Central Bank official, Alexei Ulyukayev, said Tuesday that a reversal of that trend is unlikely this year.
Mr. Putin's reshuffling coincided with parliament's initial approval of a bill that would sharply raise financial penalties for opposition activists involved in unruly street protests. It underscored Mr. Putin's dominance over his younger partner, in what for the past four years was called a ruling tandem.
Mr. Sechin, the new Rosneft CEO, is one of several officials who share Mr. Putin's background in the security apparatus of the former Soviet Union and a belief in strong central control of politics and the economy. He is considered the most influential person in Russia's energy industry.
The Russian government in mid-2010 put stakes in Rosneft on a list of assets slated for possible sale, but didn't set a deadline for the privatization. With Mr. Sechin's penchant for state control, the sale is unlikely to happen anytime soon, said Valery Nesterov, oil and gas analyst at Troika Dialog brokerage.
Rosneft declined to comment on the appointment or plans to sell off the state's stake.
Mr. Sechin became Rosneft chairman in 2004, the year it swallowed assets of Yukos, the giant private oil company founded by tycoon Mikhail Khodorkovsky, who had been arrested in 2003 on fraud charges and is still in prison. Mr. Sechin went on to negotiate multibillion-dollar partnerships between Rosneft and international oil companies to develop Russia's Arctic resources.
Mr. Khodorkovsky, whose latest appeal of a 13-year sentence was rejected last week, has accused Mr. Sechin of plotting to have him arrested and plundering his company. The government denied the accusations.
Mr. Sechin said Tuesday he would concentrate on raising Rosneft's oil production. Russia in March lost its position as world's largest oil producer to Saudi Arabia following production declines in Siberia.
Maxim Moshkov, an energy analyst at USB, said he believed Mr. Sechin wouldn't be involved in day-to-day management of the company but rather in setting long-term strategy and seeking international partners.
The appointment left unclear the role of Eduard Khudainatov, a technocrat who has been Rosneft CEO and president.
Share prices for Rosneft surged after the announcement in Moscow trading, and rose 1.7% on the day.
Ira Iosebashvili
contributed to this article.
Write to Alexander Kolyandr at and Richard Boudreaux at
Credit: By Alexander Kolyandr And Richard Boudreaux
Subject: Petroleum industry; Acquisitions & mergers; Energy industry; Prime ministers
Location: Russia
People: Medvedev, Dmitri Putin, Vladimir
Company / organization: Name: OAO Rosneft; NAICS: 324110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 22, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1015164825
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1015164825?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
Warburg Backs Deep-Water Oil Explorer
Author: Dezember, Ryan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 May 2012: n/a.
ProQuest document link
Abstract:
NEW YORK--A group of investors led by Warburg Pincus LLC will pump as much as $1.125 billion into a deep-water oil-and-gas exploration start-up, continuing private equity's dive into the Gulf of Mexico.
Full text: NEW YORK--A group of investors led by Warburg Pincus LLC will pump as much as $1.125 billion into a deep-water oil-and-gas exploration start-up, continuing private equity's dive into the Gulf of Mexico.
The funding, announced Tuesday, will seed Venari Resources LLC--a company based in Dallas and Houston and run by Brian Reinsborough, who previously led the U.S. unit of Canadian explorer Nexen Inc. Mr. Reinsborough joined Warburg last year as an executive-in-residence.
The deal comes amid an uptick in interest from private-equity firms in the Gulf of Mexico's energy fields, where Warburg has long invested. Last month, Apollo Global Management LLC and Riverstone Holdings LLC said they would spend up to $600 million on start-up offshore explorer Talos Energy LLC.
Venari differs from many private-equity-backed Gulf explorers, including Talos, in that it will focus on deep-water drilling, a high-risk, high-reward business. Such wells are drilled miles beneath the ocean's surface and can cost between $100 million and $200 million apiece. The success rate for such wells hovers around 50%. But if the drilling hits its target, the well can yield hundreds of millions of barrels of oil.
"Given the expected discovery sizes, we believe this is an attractive opportunity to create a deep-water exploration company," said In Seon Hwang, managing director at Warburg Pincus.
Given the low success rate, deep-water explorers need a huge war chest so that they can withstand one or two dry holes--and can adequately fund extraction if they hit a gusher.
Venari, Latin for hunt, plans to pursue subsalt reservoirs, pockets of oil and gas that, until the advent of modern seismic-imaging technology, had been obscured by layers or salt. The company plans to buy minority stakes--typically 10% to 25%--in exploration blocks and provide technological expertise to operating partners, Mr. Reinsborough said in an interview.
Jolted by BP PLC's deadly Deepwater Horizon disaster, which killed 11 rig workers and touched off the largest offshore oil spill in U.S. history two years ago, the Gulf of Mexico's deep waters are a fertile deal market, with plenty of opportunities to buy into potentially lucrative prospects, Mr. Reinsborough said.
"We feel the time is perfect to enter the deep-water Gulf of Mexico," he said. "With the improved safety procedures and ramp-up in activity the timing is great."
Venari marks Warburg's sixth investment in a Gulf of Mexico-focused oil producer. It previously helped launch Newfield Exploration Co. and Spinnaker Exploration Co., which was acquired by Norway's Norsk Hydro ASA in 2005 for $2.6 billion and now is part of oil major Statoil ASA.
Joining Warburg in the Venari venture are New York private-equity firms Kelso & Co. and The Jordan Company and Singapore's state investment firm Temasek Holdings.
Corrections & Amplifications
Venari Resources LLC is a deep-water oil-and-gas exploration start-up. The name of the company was misspelled in one instance in an earlier edition of this story.
Credit: By Ryan Dezember
Subject: Petroleum industry; Acquisitions & mergers; Startups; Private equity
Location: United States--US Dallas Texas Gulf of Mexico New York
Company / organization: Name: Newfield Exploration Co; NAICS: 211111, 213111; Name: Nexen Inc; NAICS: 211111; Name: BP PLC; NAICS: 324110, 447110, 211111; Name: Warburg Pincus LLC; NAICS: 523910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 22, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1015165106
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1015165106?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Price Likely to Stay Buoyed by Marginal Costs
Author: Herron, James
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 May 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: The price of Brent crude fell to five-month lows last week, as fears rose about the health of the global economy and the world's largest oil exporter, Saudi Arabia, said it would overproduce in order to drive prices lower.
There are solid grounds to believe this trend will continue as the crisis in the euro zone deepens and tensions between Iran and the West ease, particularly after the International Atomic Energy Agency confirmed Tuesday that an accord had been reached over nuclear inspections.
However, many industry observers say the price of oil is unlikely to fall far below current levels for long, because the cost of producing every last barrel of oil needed to meet demand has risen so high.
"Costs are still at a very high level because of the complexity of marginal fields," said Pierre Sigonney, chief economist at French oil company Total SA. "We don't expect oil prices to go much below $100 a barrel."
The marginal cost of oil production, defined as the cost of pumping the last and most expensive barrel required to satisfy demand, is fundamentally linked to long-term oil prices. If the oil price falls below the marginal cost, there is no incentive to produce that last barrel of oil, so demand will remain unsatisfied until consumers are willing to pay more.
The close relationship between the two was demonstrated from 2001 to 2010, when the average annual price of international oil benchmark Brent crude rose 228%, while analysts at Bernstein Research estimate the marginal production cost of the world's 50 largest listed oil companies increased 229%.
In 2011, the marginal cost of oil production was $92.26 a barrel for the 50 largest listed oil and gas companies and will reach $100 a barrel next year if it continues to follow the long-term trend, said Bernstein in a research note.
Costs are rising because much of the extra oil added to world supply has come from more technically challenging areas such as deep water or the Arctic, Bernstein said. This has led to "a combination of higher material costs and reduced productivity per well," it said.
To be sure, these 50 companies aren't the whole picture.
A third of world oil production comes from members of the Organization of Petroleum Exporting Countries. In most of those countries, the marginal cost of production is far below $92 a barrel, although OPEC doesn't publish precise figures.
OPEC is pumping crude volumes at three-year highs, and some officials have been talking down oil prices. However, there is a limit to OPEC's largess.
Saudi Arabian Oil Minister Ali al-Naimi said he wants to see a price fall to $100 a barrel, which is higher than most consumers would like. If the oil price shows signs of falling significantly lower than that, "we would expect OPEC to start to trim output," to support it, said analysts at Barclays in a research note. The closing price of Brent in London on Tuesday was $108.41, down 40 cents, or 0.4%
Outside OPEC, virtually all oil-supply growth is coming from one area: shale oil deposits in the Bakken formation of North Dakota. New technology called hydraulic fracturing has released oil that previously was trapped in impermeable rock, allowing production there to quadruple in four years to 575,490 barrels a day in March, according to preliminary state data.
However, it isn't making a big dent in international prices because getting it to markets outside the U.S. Midwest has been difficult.
The speed of the boom means there aren't enough pipelines, and the oil has to be shipped expensively by train, said Eurasia Group analyst Nitzan Goldberger.
As production has increased, "rail transport costs have tripled over the last 2½ years because of rail-car shortage," she said.
Labor and equipment shortages, and tighter environmental regulations, also have raised drilling costs, Ms. Goldberger said. An average Bakken well's costs have increased to $10 million in 2011, up from about $6 million in 2010, she said.
The effect of the cost inflation can be seen in the price of Bakken crude, which sold at a discount of about $30 a barrel to U.S. crude benchmark, West Texas Intermediate, in the last four months, but has traded at a premium to WTI this month, Ms. Goldberger said.
Credit: By James Herron
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 22, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1015165110
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1015165110?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Putin Ally Is Named to Head Oil Giant
Author: Kolyandr, Alexander; Boudreaux, Richard
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 May 2012: n/a.
ProQuest document link
Abstract:
The appointment of Igor Sechin, who oversaw energy policy as Mr. Putin's deputy prime minister and favors a strong state role in the economy, raised doubts about government plans to sell a stake in the company, OAO Rosneft, of which 75% is state-owned.
Full text: MOSCOW--A powerful ally of President Vladimir Putin was named chief executive of Russia's state oil company on Tuesday, completing a realignment of senior positions in Mr. Putin's new administration and cementing his control of economic and security policy.
The appointment of Igor Sechin, who oversaw energy policy as Mr. Putin's deputy prime minister and favors a strong state role in the economy, raised doubts about government plans to sell a stake in the company, OAO Rosneft, of which 75% is state-owned.
Mr. Sechin had been removed as Rosneft's chairman last year as part of a Kremlin effort to attract private investment by taking government officials off the boards of big state companies.
His return to the company was announced on Tuesday by Prime Minister Dmitry Medvedev. Mr. Putin switched jobs with Mr. Medvedev this month and has been Russia's pre-eminent leader for 12 years.
On Monday, the president named a cabinet to work under Mr. Medvedev, removing all but a handful of long-serving ministers in what state television portrayed as an act of renewal. But on Tuesday, Mr. Putin named seven of the ex-ministers to advisory posts in his presidential administration, positioning them as counterweights to their cabinet successors.
Rashid Nurgaliyev, who lost his job as interior minister on Monday following scandals over police violence and corruption, landed a top job on Russia's Security Council.
The staffing announcements left the country's ruling elite largely intact, suggesting the government is unlikely to embark on political and economic overhauls.Investors pulled $42 billion out of the country in the first four months of this year, and a senior Central Bank official, Alexei Ulyukayev, said Tuesday that a reversal of that trend is unlikely this year.
Mr. Putin's reshuffling coincided with Parliament's initial approval of a bill that would sharply raise financial penalties for opposition activists involved in unruly street protests. It underscored Mr. Putin's dominance over his younger partner, in what for the past four years was called a ruling tandem.
Mr. Sechin, the new Rosneft CEO, is one of several officials who share Mr. Putin's background in the security apparatus of the former Soviet Union and a belief in strong central control of politics and the economy. He is considered the most influential person in Russia's energy industry.
The Russian government in mid-2010 put stakes in Rosneft on a list of assets slated for possible sale, but didn't set a deadline for the privatization. With Mr. Sechin's penchant for state control, the sale is unlikely to happen anytime soon, said Valery Nesterov, oil and gas analyst at Troika Dialog brokerage.
Rosneft declined to comment on the appointment or plans to sell off the state's stake.
Mr. Sechin initially became Rosneft chairman in 2004, the year it swallowed assets of Yukos, the giant private oil company founded by tycoon Mikhail Khodorkovsky, who had been arrested in 2003 on fraud charges and is still in prison. Mr. Sechin went on to negotiate multibillion-dollar partnerships between Rosneft and international oil companies to develop Russia's Arctic resources.
Mr. Khodorkovsky, whose latest appeal of a 13-year sentence was rejected last week, has accused Mr. Sechin of plotting to have him arrested and plundering his company. The government denied the accusations.
Mr. Sechin said Tuesday he would concentrate on raising Rosneft's oil production. Russia in March lost its position as world's largest oil producer to Saudi Arabia following production declines in Siberia.
Maxim Moshkov, an energy analyst at USB, said he believed Mr. Sechin wouldn't be involved in day-to-day management of the company but rather in setting long-term strategy and seeking international partners.
The appointment left unclear the role of Eduard Khudainatov, a technocrat who has been Rosneft CEO and president.
Share prices for Rosneft surged after the announcement in Moscow trading, and rose 1.7% on the day.
Ira Iosebashvili contributed to this article.
Write to Alexander Kolyandr at
Credit: By Alexander Kolyandr And Richard Boudreaux
Subject: Petroleum industry; Acquisitions & mergers; Energy industry; Prime ministers
Location: Russia
People: Medvedev, Dmitri Putin, Vladimir
Company / organization: Name: OAO Rosneft; NAICS: 324110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 23, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1015208637
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1015208637?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Putin Ally Named To Head Oil Giant
Author: Kolyandr, Alexander; Boudreaux, Richard
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]23 May 2012: A.11.
ProQuest document link
Abstract:
The appointment of Igor Sechin, who oversaw energy policy as Mr. Putin's deputy prime minister and favors a strong state role in the economy, raised doubts about government plans to sell a stake in the company, OAO Rosneft, of which 75% is state-owned.
Full text: MOSCOW -- A powerful ally of President Vladimir Putin was named chief executive of Russia's state oil company, completing a realignment of senior positions in Mr. Putin's new administration and cementing his control of economic and security policy.
The appointment of Igor Sechin, who oversaw energy policy as Mr. Putin's deputy prime minister and favors a strong state role in the economy, raised doubts about government plans to sell a stake in the company, OAO Rosneft, of which 75% is state-owned.
Mr. Sechin had been removed as Rosneft's chairman last year as part of a Kremlin effort to attract private investment by taking government officials off the boards of big state companies.
His return to the company was announced on Tuesday by Prime Minister Dmitry Medvedev. Mr. Putin switched jobs with Mr. Medvedev this month and has been Russia's pre-eminent leader for 12 years.
On Monday, the president named a cabinet to work under Mr. Medvedev, removing all but a handful of long-serving ministers in what state television portrayed as an act of renewal. But on Tuesday, Mr. Putin named seven of the ex-ministers to advisory posts in his presidential administration, positioning them as counterweights to their cabinet successors.
Rashid Nurgaliyev, who lost his job as interior minister on Monday following scandals over police violence and corruption, landed a top job on Russia's Security Council.
The staffing announcements left the country's ruling elite largely intact, suggesting the government is unlikely to embark on political and economic overhauls.
Mr. Putin's reshuffling coincided with Parliament's initial approval of a bill that would sharply raise financial penalties for opposition activists involved in unruly street protests. It underscored Mr. Putin's dominance over his younger partner, in what for the past four years was called a ruling tandem.
Mr. Sechin, the new Rosneft CEO, is one of several officials who share Mr. Putin's background in the security apparatus of the former Soviet Union and a belief in strong central control of politics and the economy. He is considered the most influential person in Russia's energy industry.
The Russian government in mid-2010 put stakes in Rosneft on a list of assets slated for possible sale, but didn't set a deadline for the privatization. With Mr. Sechin's penchant for state control, the sale is unlikely to happen anytime soon, said Valery Nesterov, oil and gas analyst at Troika Dialog brokerage.
Rosneft declined to comment on the appointment or plans to sell off the state's stake.
Mr. Sechin said Tuesday he would concentrate on raising Rosneft's oil production. Russia in March lost its position as world's largest oil producer to Saudi Arabia following production declines in Siberia.
Credit: By Alexander Kolyandr and Richard Boudreaux
Subject: Petroleum industry; Equity stake; Energy policy; Appointments & personnel changes; Chief executive officers
Location: Russia
People: Putin, Vladimir Sechin, Igor
Company / organization: Name: OAO Rosneft; NAICS: 324110
Classification: 9176: Eastern Europe; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.11
Publication year: 2012
Publication date: May 23, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1015218146
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1015218146?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Seoul Seeks Exemption for Iran Oil
Author: Min-Jeong, Lee
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]23 May 2012: A.7.
ProQuest document link
Abstract:
A South Korean official said media reports this week "aren't factual" that suggested South Korea would stop importing crude oil from Iran in the next couple of months regardless of whether cutting off such imports are requested by the U.S. and the European Union.
Full text: SEOUL -- A South Korean official said media reports this week "aren't factual" that suggested South Korea would stop importing crude oil from Iran in the next couple of months regardless of whether cutting off such imports are requested by the U.S. and the European Union.
South Korea is "doing its best" to obtain an exemption from Iran-related U.S. sanctions and to gain access to the EU's insurance services for oil shipments from Iran after July 1, when EU sanctions are due to start, the official said Tuesday. The U.S. has exempted nearly a dozen countries from sanctions on Iran in return for significant reductions in their imports of Iranian crude. South Korea would prefer to cut Iranian imports and receive an exemption from the U.S., as neighboring Japan has done, than to completely halt shipments of Iranian crude, which may be problematic given that Iran supplies around a tenth of South Korea's crude requirement.
South Korea expects the EU to decide in June whether it will be eligible for insurance coverage for Iranian shipments after July 1, the official said.
South Korea's imports of Iranian crude oil in the January-March period declined 22% compared with the same period in 2011, to 17.7 million barrels, while its imports from other major Middle East producers rose sharply.
Credit: By Min-Jeong Lee
Subject: Sanctions; International relations-US; Imports; Crude oil
Location: United States--US Iran South Korea
Company / organization: Name: European Union; NAICS: 926110, 928120
Classification: 9179: Asia & the Pacific; 9178: Middle East; 9190: United States; 1210: Politics & political behavior
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.7
Publication year: 2012
Publication date: May 23, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1015228540
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1015228540?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
India Not Looking at Direct Dollar Sales to Oil Firms
Author: Sahu, Prasanta; Jain, Sudeep
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 May 2012: n/a.
ProQuest document link
Abstract:
The Indian rupee has been in a furious downward spiral over the past week, with the dollar punching through key barriers every day to continue notching up all-time highs. Since the middle of March, the local unit has fallen more than 10% and is now more than 22% lower than a year ago.
Full text: NEW DELHI - The Indian government Wednesday dampened market expectations that the central bank would sell dollars directly to oil importers at a fixed daily rate, with a senior finance ministry official saying there are no such plans to support the battered rupee.
The comment could hurt the rupee because oil importers -- which account for about one of every $10 transacted in the market -- are a significant reason for the recent surge in demand for the greenback.
Most analysts believe that the direct selling of the greenback to oil importers -- a mechanism referred to as a "dollar window" -- would isolate a key source of demand from the broader market.
This would ease pressure on the rupee as India's oil companies alone buy $2 billion-$3 billion of the greenback every week.
The finance ministry official's comments to reporters were out of sync with a statement earlier Wednesday by C. Rangarajan, chairman of the influential Prime Minister's Economic Advisory Council. Mr. Rangarajan had said that selling dollars directly to oil companies could be an option to limit the rupee's fall.
The Indian rupee has been in a furious downward spiral over the past week, with the dollar punching through key barriers every day to continue notching up all-time highs.
Since the middle of March, the local unit has fallen more than 10% and is now more than 22% lower than a year ago. Wednesday afternoon in India, the dollar was trading at 56.08 rupees after touching a record high of 56.22 rupees.
The central bank is believed to have been in the market heavily in recent days -- including Wednesday -- but with little effect.
While a weak rupee helps India's exporters by making their products and services cheaper, it makes imports -- especially oil -- more expensive and drives up already high inflation.
The rupee's latest slide began after the federal budget in March shook investor confidence and led to a large outflow of cash.
The budget unveiled proposals that many believe are detrimental to foreign investor sentiment, including tax proposals giving authorities sweeping powers to examine deals they feel are structured solely to avoid taxes.
The pain is aggravated by India's yawning fiscal and current account deficits.
The rupee's fall picked up pace recently, with the dollar rising against most currencies in a flight to safety sparked by the possibility of Greece leaving the euro zone.
Asian markets and commodities fell across the region Wednesday after a former Greek prime minister said preparations for an exit from the euro zone are being considered.
The comments sent investors to the U.S. dollar in overnight trading, with the euro stabilizing in Asia at $1.2669.
The rush to the greenback symbolized a diminishing risk appetite, which has pushed down commodity prices as well.
Foreign exchange traders in India are refusing to stick their necks out and put a bottom to the rupee.
But they agree that a dollar window for oil companies would help.
"The impact would depend on how many dollars they [the RBI] provide, but it would be much more effective than direct intervention," said Vivek Rajpal, a strategist with Nomura India.
But the finance ministry official who said there are no plans for direct sales added that the oil companies have enough cash at the moment, and that global crude prices are falling anyway.
He also said reforms on foreign direct investment in multi-brand retail and civil aviation are expected soon, which will bring in overseas funds and provide support to the rupee.
Write to Prasanta Sahu at
Credit: By Prasanta Sahu And Sudeep Jain
Subject: Petroleum industry; Prime ministers; Central banks; Economic conditions; American dollar
Location: India
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 23, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1015272392
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Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Closes Below $90
Author: Bird, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 May 2012: n/a.
ProQuest document link
Abstract:
Ahead of the peak driving season, demand for gasoline, the most widely used petroleum product in the world's biggest oil consumer, hit a 12-year low for the week, at 8.6 million barrels a day, the EIA data show.
Full text: NEW YORK--Crude-oil futures prices settled at a fresh seven-month low, breaking below $90 a barrel Wednesday, as the latest U.S. weekly oil data showed stockpiles remaining at 22-year highs amid sluggish demand.
U.S. benchmark crude futures on the New York Mercantile Exchange have fallen by 15.3%, or $16.26 a barrel, since May 1, as crude oil inventories continued to grow and demand for key petroleum products, such as gasoline, has been weak.
Nymex light, sweet crude oil for July delivery fell $1.95, or 2.1%, to settle at $89.90 a barrel, the lowest price since Oct. 21, 2011. ICE North Sea Brent crude for July fell 2.6%, or $2.83 a barrel, to $105.56, the lowest level since Dec. 19.
Cracking the $90 level may set the stage for prices to fall to $85 a barrel or lower, several traders said.
"Can we touch $75? It's only another $15. That's not unreasonable in my opinion," said Kyle Cooper, managing partner at IAF Energy Advisors.
The Energy Information Administration said Wednesday crude oil stocks rose 883,000 barrels last week, to 382.5 million barrels, the most since Aug. 3, 1990. Stockpiles have gained by 10.5%, or 36.2 million barrels, over the past nine weeks. The surplus of crude stocks to the five-year average has ballooned to 8.4%, or 29.8 million barrels, from less than 6 million barrels since the build up began in mid-March.
Ahead of the peak driving season, demand for gasoline, the most widely used petroleum product in the world's biggest oil consumer, hit a 12-year low for the week, at 8.6 million barrels a day, the EIA data show.
"The bears are in control and keep wanting to drive it lower and we haven't seen any factor to shake them out of it," said Gene McGillian, broker and analyst at Tradition Energy.
The skidding euro--which fell to its weakest level against the dollar since July 2010--also inspired selling in oil and across many markets. Worries that Greece, in an effort to patch up its troubled economy, may exit the euro zone, lifted the dollar against the European common currency, giving traders further excuse to avoid dollar-denominated oil futures.
Strength in the dollar and the worries about a potential contagion effect of economic instability through the euro-zone nations stung oil futures as the market already is witnessing steady shrinkage in the "war premium" that has grown over the past several months amid an impasse with Iran and the world's major powers over Tehran's nuclear program.
United Nations nuclear officials said a tentative deal has been reached with Iran to open controversial sites for inspection as major international talks on the issue were about to get under way in Baghdad. The potential breakthrough comes as a July 1 European Union embargo on imports of Iranian crude looms and Saudi Arabia and others in the Organization of Petroleum Exporting Countries have boosted output sharply to cover potential lost oil supplies from Iran.
Past threats from Iran to block the key Strait of Hormuz, the export route for critical Persian Gulf oil supplies, has inflated prices by $15-$20 over the past several months, market participants said. OPEC's explicit efforts to pull prices down to around $100 by raising supply has contributed to an aggressive selloff.
"With weak equities, slow demand and Iran playing nice, why do you want to own crude?" said IAF Energy's Cooper.
Reformulated gasoline blendstock futures for June delivery were 6.47 cents lower, at $2.8723 a gallon, the lowest since Feb. 2. June heating oil settled 4.93 cents lower, at $2.8121 a gallon, the weakest since Dec. 19.
Write to David Bird at
Credit: By David Bird
Subject: American dollar; Petroleum industry; Oil sands; Crude oil prices
Location: Iran United States--US
Company / organization: Name: United Nations--UN; NAICS: 928120; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 23, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1015338959
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1015338959?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Why Oil Prices Will Keep Falling; New energy extraction technologies will overcome bad policies and geopolitical risks.
Author: Saleri, Nansen G
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 May 2012: n/a.
ProQuest document link
Abstract:
The sanctions choking off Iranian exports and the ever-present elephant in the room--a possible shutdown of the Strait of Hormuz, where 20% of global crude traffic occurs--were pushing prices up. The U.S. is on its way to becoming energy independent--a state that can be defined as, say, 90%-plus self-sufficiency--riding its advantage in unconventional oil and gas resources.
Full text: The recent retreat in crude prices has surprised many experts, who were predicting steeply higher levels. The sanctions choking off Iranian exports and the ever-present elephant in the room--a possible shutdown of the Strait of Hormuz, where 20% of global crude traffic occurs--were pushing prices up.
Recently, however, an ensemble of unrelated factors--the Greek economic bailout, shale-oil fracking in the U.S., and the resurgence of exports from Iraq and Libya--have combined to push prices down. Is this a temporary relief that will falter with the first stress test? The answer is no.
The trend derives as much from the fundamentals of supply and demand as it does from the psycho-speculative forces that generate risk premiums ranging from $20 to $30 extra per barrel. A case in point is the Greek bailout, which offsets the anxiety premium raised by Iranian war games in the Persian Gulf by suppressing demand projections.
The invisible hand steadying global energy markets is the growing influence of modern technologies. So a case can be made for a relatively stable crude-price window--$80 to $120 a barrel for the next several years.
Yes, there could be unforeseeable global events and a price-spike response to them at the pumps. For instance, the stoppage of crude exports through the Strait of Hormuz would be highly disruptive, and anxiety over it would add more than $30 to the price of oil. On the other hand, there are workarounds that would preclude a sustained blockage.
And even a price spike can have unintended consequences that ultimately lower prices. In the U.S., for instance, a price spike would give consumers an incentive to move toward non-crude alternatives, namely hybrid and electric vehicles. American transportation's slow transition to a more natural-gas-centric fuel will get a boost from supply disruptions.
Neither the Arab Spring nor the collapse of the Soviet Union was forecast by experts. Each simply happened. Who is to say when Iran or Venezuela will shed their handicapped status in petroleum production and produce more? The potential for more global supply to hold down prices is not insignificant.
Iran's current production capabilities are decades behind the rest of the oil industry. With their huge reserves of some 137 billion barrels, the Iranians have substantial room to increase production. Whether they do will depend on several factors, including U.S. sanctions and political change. Daily Iranian production capacity of five to seven million barrels (double the current level) appears achievable. Iraq increased its daily production by 50% after the 2003 war began--to three million barrels today compared with two million barrels prewar. Libya's quick recovery and resurgence in crude exports since the chaos that brought down the Gadhafi regime is not the result of political stability or democratic reforms.
Some may argue that burgeoning middle classes in China and India will cause a sea change in the demand for oil, with the competition for fuel driving prices up. Not so. Consumption efficiencies will likely offset demand pressures. One game-changer is electric cars, which in essence allow nuclear plants or unconventional gas to fuel future cars via power grids.
The growing influence of modern technologies is evident everywhere. Net daily U.S. imports of petroleum have dropped by 50% to eight million barrels over the last five years. Imports are likely to shrink further in the coming decade due to an upsurge in domestic oil and gas supplies.
U.S. energy policy is moving in the right direction. The Obama administration's early message of disengagement from fossil fuels was the wrong approach to an important subject. The "all-of-the-above" energy strategy being publicized now is not only a contrast but well suited to the nation's energy needs.
The U.S. is on its way to becoming energy independent--a state that can be defined as, say, 90%-plus self-sufficiency--riding its advantage in unconventional oil and gas resources. The question is how fast will this happen.
Equating shale oil and gas resources with fracking--today's technical solution to releasing the oil--is disingenuous at best. The U.S. has abundant oil and even more massive gas resources. Fracking does not have a monopoly over future exploitation techniques any more than rotary phones did over the making of long-distance calls. What fracking and next-generation technologies do provide is an orderly transition to the post-petroleum era.
In the new world order, the U.S. can lead but not control the planet's energy outlook. Fracking and horizontal wells have given the U.S. an unmistakable geopolitical advantage while moderating the market swings. Both presidential candidates have a chance to accelerate U.S. energy independence. Ambiguity, policy vacillation and an overreach on uneconomical options (ethanol, wind) act as suppressants. But technology and market forces trump politics. The march is on.
Mr. Saleri, president and CEO of Quantum Reservoir Impact in Houston, was formerly head of reservoir management for Saudi Aramco.
Credit: By Nansen G. Saleri
Subject: Energy policy; Petroleum industry; Oil sands; Production capacity; Energy economics; Bailouts; Exports; Energy industry
Location: United States--US Libya Strait of Hormuz Iraq
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 23, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1015397231
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1015397231?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Look Out Below, Analysts Say, as Oil Trips Below $90 --- Multi-Decade Supply High, Euro-Zone Tumult and Fading Iran 'War Premium' Put Bearish Traders in Control
Author: Bird, David
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]24 May 2012: C.9.
ProQuest document link
Abstract:
The potential breakthrough comes as a July 1 European Union embargo on imports of Iranian crude looms and Saudi Arabia and others in the Organization of Petroleum Exporting Countries have boosted output sharply to cover potential lost oil supplies from Iran.
Full text: Crude-oil futures settled at a seven-month low, breaking below $90 a barrel Wednesday, as the latest U.S. weekly oil data showed stockpiles at 22-year highs amid sluggish demand.
The next stop is anybody's guess, but some observers see few fundamental reasons to prevent a further sharp decline.
U.S. benchmark crude futures on the New York Mercantile Exchange have fallen by 15%, or $16.26 a barrel, since May 1, as crude-oil inventories continue to grow and demand for key petroleum products, such as gasoline, has been weak.
Nymex light, sweet crude for July delivery fell $1.95, or 2.1%, to settle at $89.90 a barrel, the lowest price since Oct. 21, 2011. ICE North Sea Brent crude for July delivery fell 2.6%, or $2.83 a barrel, to $105.56, the lowest level since Dec. 19.
"The bears are in control and keep wanting to drive it lower and we haven't seen any factor to shake them out of it," said Gene McGillian, broker and analyst at Tradition Energy.
Cracking the $90 level may set the stage for prices to fall to $85 a barrel or lower, several traders said. "Can we touch $75? It's only another $15. That's not unreasonable in my opinion," said Kyle Cooper, managing partner at IAF Energy Advisors.
The Energy Information Administration said Wednesday crude-oil stocks rose 883,000 barrels last week, to 382.5 million barrels, the most since Aug. 3, 1990. Stockpiles have gained by 11%, or 36.2 million barrels, over the past nine weeks. The surplus of crude stocks to the five-year average has ballooned to 8.4%, or 29.8 million barrels, from less than six million barrels since the buildup began in mid-March.
In addition, ahead of the peak summer driving season, demand for gasoline hit a 12-year low for the week at 8.6 million barrels a day, the EIA data show.
Meanwhile, strength in the dollar and the worries about a potential contagion effect of economic instability through the euro zone stung oil futures as the market already is witnessing steady shrinkage in the "war premium" that has grown over the past several months amid an impasse with Iran and the world's major powers over Tehran's nuclear program.
The skidding euro -- which fell to its weakest level against the dollar since July 2010 -- inspired selling in oil and across many markets. Worries that Greece may leave the euro zone in an effort to patch up its economy lifted the dollar against the European common currency, giving traders further excuse to avoid dollar-denominated oil futures.
United Nations nuclear officials said a tentative deal has been reached with Iran to open sites for inspection as major international talks on the issue were about to get under way in Baghdad. The potential breakthrough comes as a July 1 European Union embargo on imports of Iranian crude looms and Saudi Arabia and others in the Organization of Petroleum Exporting Countries have boosted output sharply to cover potential lost oil supplies from Iran.
Past threats from Iran to block the key Strait of Hormuz, the export route for critical Persian Gulf oil supplies, has inflated prices by $15 to $20 over the past several months, market participants said. OPEC's explicit efforts to pull prices down to around $100 by raising supply has contributed to an aggressive selloff.
"With . . . slow demand and Iran playing nice, why do you want to own crude?" IAF Energy's Mr. Cooper said.
Tony Rosado, a broker at GA Global Markets, noted that Saudi Arabia's aim of pushing the price of international crudes, like European benchmark Brent, down to around $100 a barrel "would make the case for $85" for the U.S. benchmark, given the recent spread.
Last October, when Nymex crude last traded near $90, it was "on a trampoline," rising sharply from around $75 a barrel, said Matt Smith, analyst at Summit Energy. Traders said that sharp rise of $15 in 15 days seven months ago suggests potential for an erratic move downward.
"The market is hunting for a bottom and it hasn't found it yet," Tradition Energy's Mr. McGillian said.
Reformulated gasoline blendstock futures for June delivery were 6.47 cents lower, at $2.8723 a gallon, the lowest since Feb. 2. June heating oil settled 4.93 cents lower, at $2.8121 a gallon, the weakest since Dec. 19.
Credit: By David Bird
Subject: American dollar; Petroleum industry; Oil sands; Crude oil prices; Commodity futures
Location: Iran United States--US
Company / organization: Name: United Nations--UN; NAICS: 928120; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: New York Mercantile Exchange; NAICS: 523210
Classification: 3400: Investment analysis & personal finance; 3500: Foreign exchange administration; 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.9
Publication year: 2012
Publication date: May 24, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1015451695
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1015451695?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-18
Database: The Wall Street Journal
RBI Hasn't Ruled Out Direct Dollar Sales to Oil Firms
Author: Kala, Anant Vijay
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 May 2012: n/a.
ProQuest document link
Abstract:
MUSSOORIE, India - India's central bank hasn't ruled out selling dollars directly to oil importers as part of efforts to ease pressure on the rupee, a top official said Thursday, raising hopes of such a move and boosting the local currency.
Full text: MUSSOORIE, India - India's central bank hasn't ruled out selling dollars directly to oil importers as part of efforts to ease pressure on the rupee, a top official said Thursday, raising hopes of such a move and boosting the local currency.
"I'm not ruling it out and I'm also not saying we are going to do it right now. It's an open issue," Reserve Bank of India Governor Duvvuri Subbarao said at a press conference.
The dollar fell after the comments. It had earlier touched 56.37 rupees, a record high for the seventh consecutive session.
Analysts says a move to directly sell dollars to oil importers would isolate a key source of dollar demand from the market and provided much-needed respite for the rupee.
When asked whether the central bank would consider a sovereign bond issue to increase dollar inflows, Mr. Subbarao was non-committal. "That was done in the past and it might be done in the future but it is not something that we are contemplating right now," he said.
Write to Anant Vijay Kala at
Credit: By Anant Vijay Kala
Subject: Central banks; Monetary policy
Location: India
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 24, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1015592002
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1015592002?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
A New Zealand Vineyard; A 99-acre property in New Zealand with a vineyard and olive oil operation is selling for $6.5 million.
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 May 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: A 6,458-square-foot home in New Zealand with four bedrooms and 2½ bathrooms on 99 acres is asking $6.5 million.
The property sits in the Marlborough region of New Zealand, near the top of the country's South Island. The owners say it was just pasture land when they first saw it and decided to turn it into a vineyard. They planted 55 acres of grapes and now produce their own Pinot Blanc, Pinot Gris, Pinot Noir, Chardonnay and Sauvignon Blanc.
The main house was designed to look like a "Dutch barn," though it includes all the modern conveniences such as an elevator, a sauna, a gym and a screening room. The family room has beamed ceilings and a stone fireplace.
Bruce and Joanne Kerner are the sellers. The Kerners are retired television producers.
The Kerners say they have spent more than $5 million on the land, which they bought in 1995, and the improvements.
Deedee Howard of The Agency and Mark Tschepp of First National Mark Stevenson Real Estate Limited share the listing.
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 24, 2012
Section: Real Estate
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 10156783 39
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1015678339?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Traders Face Pitfalls in Iran Sanctions
Author: Singh, Gurdeep
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 May 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: SINGAPORE--A European Union ban on Iran's oil could have major consequences for European oil companies in Asia, as little-understood provisions in the sanction law could see them facing investigation despite their best efforts to stay legal.
EU oil companies and their overseas units cannot buy, import into the EU or transport even tiny amounts of crude or refined oil of Iranian origin under rules coming into effect July 1.
However, the way many oil transactions are carried out in Asia mean they could inadvertently break the rules, and even their best efforts to comply will be further undermined by a widespread industry practice of blending fuel oil from several sources. A major component of Iran's oil exports is fuel oil, used to power ship engines or in power stations.
Some traders believe the ban applies only to oil that is 100% Iranian, as the issue of blended fuel isn't explicitly referred to in the embargo text.
But an EU official said: "Our experts have confirmed the interpretation that the prohibition should apply when there are reasonable grounds to suspect the inclusion of Iranian oil, in whatever proportion."
Even if trading and shipping companies using fuel oil managed to get watertight assurances from sellers that Iranian oil hadn't been blended into it, a widely used trading system in Asia's oil hub Singapore could make such assurances almost impossible to check.
Benchmark prices for many types of oil in Asia are assessed by Platts, a unit of McGraw Hill, using a daylong process called market-on-close that concludes with a 30-minute session in which many traders, ranging from European and U.S. major oil companies to small local traders, are active.
Known popularly as the "window," the session facilitates trading in a market where there is no formal exchange for many products, and helps the process of price discovery in what is a largely secretive business.
But as in a stock exchange, when a buyer submits a bid in the window, it has no control over who it is buying from, or the origin of the oil. Only the specifications of the product, like viscosity and sulfur content, are guaranteed.
Platts says its market-on-close process globally counts transactions of products that can be legally delivered and sold forward, and excludes embargoed material.
But Singapore has no embargo against Iranian oil, and once Iranian oil lands in any of the Platts-designated onshore or offshore storage sites in Singapore or Malaysia, its onward sale in the window will have Singapore as the source of origin, and not Iran.
"The standard for any free-on-board transaction requires the seller to provide documentation regarding the origin of the materials it delivers, and any FOB Singapore sale will have a bill of lading specifying Singapore as the origin," a Platts spokeswoman said.
A fuel oil trader with a major European company said the issue was very "subjective" and there didn't seem to be much clarity of the legal implications, while another said buying Iranian-blended fuel in the window was likely legal as Singapore would be considered the origin.
It is unclear if buying Iranian-blended fuel in the window would be considered a less serious offense by Brussels given the buyer has no control or knowledge of the source of the cargo. Similarly, it isn't clear if Platts might change its procedures.
The Platts spokeswoman didn't comment on questions on whether European buyers using the window could be in breach of the embargo if they end up buying Iran-blended fuel, or if Platts has any plans to ensure such oil isn't traded in the window.
The sanctions apply only to EU-based companies and their overseas branches, and although their non-EU-based units incorporated under another country's laws aren't forced to apply the embargo, "such subsidiaries must not be used to circumvent sanctions," the EU official explained. "To make that distinction, lawyers would check whether the subsidiary was acting independently or on behalf of the mother company."
The EU embargo is also causing difficulties for international shipping companies buying fuel for their vessels in Singapore--the world's largest bunkering, or ship refueling port--as blending is deeply entrenched there.
Their insurance cover may be invalid if they buy Iran-blended bunker fuel, as most are insured by the London-based International Group of P&I Clubs, which has to comply with the ban.
"Anyone anywhere who has a ship insured in the EU who takes such blended bunker fuel would be placing their insurer in breach," said Nigel Kushner, chief executive of London's Whale Rock Legal Ltd., a law firm that advises companies on sanctions.
Benoît Faucon in London contributed to this article.
Write to Gurdeep Singh at
Credit: By Gurdeep Singh
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 25, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1017526116
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1017526116?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Indian Oil Profit Triples on Subsidy
Author: Sharma, Rakesh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 May 2012: n/a.
ProQuest document link
Abstract:
Indian Oil Corp. said Monday fourth-quarter net profit tripled, beating analyst estimates, as a cash subsidy payment from the government helped the state-run company to offset losses on selling fuel products at below-market rates.
Full text: NEW DELHI -- Indian Oil Corp. said Monday fourth-quarter net profit tripled, beating analyst estimates, as a cash subsidy payment from the government helped the state-run company to offset losses on selling fuel products at below-market rates.
The profit growth will help India's largest refiner and fuel retailer by market size step up investment on capacity expansion and borrow less to meet expenses. Chairman R.S. Butola said last week the company needs an annual profit of 100 billion rupees ($1.8 billion) for meeting these needs.
Indian Oil and its two smaller state-run rivals--Bharat Petroleum Corp. and Hindustan Petroleum Corp.--sell diesel and cooking fuels at below-market rates to help the government control inflation. The government partly compensates them through direct cash subsidy while the state-run explorers sell crude at discounted rates. But, there is no fixed periodicity for government subsidy.
New Delhi-based Indian Oil, the country's largest listed company by sales, said net profit for the January-March quarter rose to 126.70 billion rupees from 39.05 billion rupees a year earlier. Profit topped the 85.08 billion rupees average of estimates in a poll of nine analysts.
Net sales grew 30% to 1.28 trillion rupees from 982.69 billion rupees.
Indian Oil didn't immediately provide quarterly subsidy it received from the government and discounts from the explorers. For the full year, the cash assistance from the government doubled to 454.86 billion rupees from 226.05 billion rupees the year before.
A 13% increase in benchmark Brent crude rates strained profits in the refining industry in the January-March quarter by hurting margins on converting a barrel of crude oil into products. Indian Oil's gross refining margin shrank to $4.25 a barrel from $7.56 a year earlier.
The three state-run fuel retailers are losing 5.09 billion rupees a day on discounted diesel and cooking fuel sales. The companies have been demanding a price hike but Oil Minister Jaipal Reddy said Monday the government will keep prices unchanged. The rates were last revised in June 2011.
The retailers last week raised gasoline rates, which the companies have freedom to revise every fortnight, at their steepest pace ever and for the first time in six months. This has led to nationwide protests by political parties, forcing the government to reconsider taxes on the fuel to lower rates.
Indian Oil, including its subsidiary Chennai Petroleum Corp., has a combined refining capacity of 1.31 million barrels a day. The group aims to raise capacity to 2.46 million barrels a day by March 2021.
Write to Rakesh Sharma at
Credit: By Rakesh Sharma
Subject: Petroleum industry; Corporate profits
Location: India
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 28, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1016700931
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1016700931?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Nations' Budgets to Put Floor Under Oil Price
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 May 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Oil-producing nations have watched from the sidelines or nodded in approval as crude prices have fallen in recent weeks, but if the trend continues it will only be a matter of time before they flex their muscles.
Rising government spending in many of these countries means they can't afford for prices to slip much below $100 a barrel, analysts say.
Bank of AmericaMerrill Lynch recommended earlier this month that consumers brace for a rebound should prices fall below this figure, citing the price needed to balance the spending of many oil producers.
In 2008, the Organization of Petroleum Exporting Countries--the world's largest oil-producers group--sharply cut production only after oil prices fell by more than half, to $65 a barrel from a peak of $147 a barrel.
At that time, countries such as OPEC kingpin Saudi Arabia were careful not to further harm a battered oil economy and took steps against falling oil prices only as a last resort.
Four years later, the balancing act between the needs of consumers and those of oil producers has become tighter. Unrest spread last year to large parts of the Middle-East and North Africa, home to more than half of the world's oil reserves. It also reached Russia and sub-Saharan African oil producers such as Angola and Nigeria.
The toppling of several long-term rulers in the Arab world has forced most oil-producing countries in the region to raise the bar when it comes to satisfying the needs of their citizens.
In Russia, where protesters have been disputing election results since December, an increase in government spending has raised the oil price needed to balance expenditures to $117 per barrel in 2012, the Fitch Ratings agency said in March, compared with $34 a barrel in 2007.
In March, newly elected President Vladimir Putin pledged to increase annual spending on the military and health care and to raise wages, for a hefty bill of $160 billion.
In the countries that have been on the front line of the Arab Spring, a drop in oil prices amid easing Iran tensions and euro-zone fears leaves little room to maneuver. For Algeria and Libya, the price of oil they need to cover their expenses has doubled recently to $100 a barrel.
Libya, in the wake of a civil war that toppled Moammar Gadhafi, is facing an uncertain political transition. Meanwhile Algeria, which was rocked by riots last year, would need $110 a barrel by 2016 if its oil production keeps declining at current rates, according to the International Monetary Fund.
To be sure, OPEC's wealthiest members in the Persian Gulf have, in recent weeks, acted to drive prices down to around $100 a barrel, the price the cartel sees as ideal, from a March spike to $127 a barrel. Saudi Arabia, concerned that high prices could kill demand, is pumping at levels not seen in three decades at about 10 million barrels a day.
On Monday, the July Brent contract on London's ICE futures exchange settled at $107.11, while light, sweet crude for July delivery was trading at $91.15 a barrel on the New York Mercantile Exchange.
The United Arab Emirates and Iran need $92 and $85 a barrel, respectively, to balance their spending, government and IMF figures show.
Even Saudi Arabia couldn't cope with the sort of decline witnessed in 2008. As it seeks to ward off the sort of unrest witnessed in the rest of the Arab world, Saudi Arabia is in the middle of a public-spending boom--$400 billion through 2013 for infrastructure, and more than $100 billion for jobs, housing, bonuses and other programs.
Last week, its finance minister, Ibrahim Al-Assaf, told Al Arabiya television that Arabia would tweak its spending plans if crude-oil prices were to drop below $80 a barrel. Two years ago, the kingdom needed about $60 a barrel to cover its spending.
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 28, 2012
column: Market Focus
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1016752788
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1016752788?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Shell to Expand Athabasca Oil-Sands Output
Author: Welsch, Edward
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 May 2012: n/a.
ProQuest document link
Abstract:
Shell is developing 43 million tons of LNG export capacity--with 12 million tons in Canada through a proposed terminal in Kitimat, British Columbia--in partnership with Japan's Mitsubishi Corp., China National Petroleum Corp. and Korea Gas Corp. Media outlets in Asia reported the cost of Shell's Kitimat project as US$12 billion, but Shell didn't release a cost estimate.
Full text: CALGARY--Royal Dutch Shell PLC will expand its Athabasca oil-sands project by a third by the end of the decade and Canada will make up a larger share of Shell's energy production over that period, Chief Executive Peter Voser said Tuesday.
Mr. Voser told reporters in an interview here that the energy giant will expand the Athabasca oil-sands project by 80,000 to 90,000 barrels a day by removing bottlenecks in its operations in three stages. That would bring the project, of which Shell owns 60%, to at least 335,000 barrels a day of production. Shell just finished a 100,000-barrel-a-day expansion of the project last year.
The Athabasca increase, combined with a planned 80,000-barrel-a-day expansion of Shell's Peace River oil-sands project, will push Canadian production to a larger share of Shell's portfolio, Mr. Voser said.
Canada produced 12% of Shell's 1.2 million barrels a day of oil, bitumen and natural-gas liquids produced last year, and 10% of the company's 5.9 billion cubic feet per day of natural gas, according to Shell's annual report. Shell is targeting a 25% increase in its global production by 2018.
"We expect Canada to play a very important role in our growth prospects," Mr. Voser said. "It will consume a sizable portion of the total group budget."
Between 10% and 15% of Shell's capital expenditures will go to Canada over the next several years, Mr. Voser said. That compares with 13.8% of Shell's capital expenditures that went to exploration and production in Canada and Greenland last year. Shell plans to spend US$32 billion in capital expenditures this year.
Mr. Voser said Shell would split spending on oil and natural-gas production in Canada roughly equally over the long term, but would shift slightly toward natural gas over the next five years as it pushes its British Columbia liquefied natural gas, or LNG, export terminal forward and develops the Groundbirch shale-gas project in the province.
He said that Canadian regulators are facing a deadline to get Canadian LNG exports approved, as competing projects in Australia and the Middle East are coming onstream over the next several years.
"If Canada wants to compete with those projects when they come into the Asia Pacific [region], there is a certain time window," Mr. Voser said.
Shell is developing 43 million tons of LNG export capacity--with 12 million tons in Canada through a proposed terminal in Kitimat, British Columbia--in partnership with Japan's Mitsubishi Corp., China National Petroleum Corp. and Korea Gas Corp.
Media outlets in Asia reported the cost of Shell's Kitimat project as US$12 billion, but Shell didn't release a cost estimate. The project is expected to begin shipping Canadian natural gas to Asia by the end of the decade.
Write to Edward Welsch at
Credit: By Edward Welsch
Subject: Oil sands; Natural gas; Petroleum industry; Cost estimates
Location: United States--US Canada Peace River
Company / organization: Name: China National Petroleum Corp; NAICS: 211111; Name: Mitsubishi Corp; NAICS: 551112; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Korea Gas Corp; NAICS: 221210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 30, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1017594434
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1017594434?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Plunges to $87.82, a 7-Month Low
Author: Strumpf, Dan; Pleven, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 May 2012: n/a.
ProQuest document link
Abstract:
Oil prices dropped below $90 a barrel, hitting a seven-month low amid concerns that Europe's problems could drag down the global economy and cut demand for energy. Since hitting a 52-week high in late February, prices have fallen 20%, the traditional definition of a bear market.
Full text: Oil prices dropped below $90 a barrel, hitting a seven-month low amid concerns that Europe's problems could drag down the global economy and cut demand for energy.
Since hitting a 52-week high in late February, prices have fallen 20%, the traditional definition of a bear market. Oil hasn't fallen that much that fast since it plummeted 24% from July to October of last year, amid concerns about European and U.S. debt problems.
Oil prices settled down $2.94, or 3.2%, to $87.82 a barrel on the New York Mercantile Exchange. U.S. oil prices hit a high of $109.77 on Feb. 24, at a time when tensions over Iran's nuclear program were running high. Weak oil demand in the U.S., easing tensions between Western powers and Iran, and strong output from Middle East producers such as Saudi Arabia and Libya are all playing a role in the recent selloff.
But the overriding factor recently, according to traders and analysts, has been fear that other countries could feel the effects of a slowdown in Europe if leaders there cannot contain the Continent's problems.
"It's all about Europe, this down move," said Peter Donovan, vice president at Vantage Trading. "This Spanish thing looks like a mess, and certainly Greece too."
Brent crude, the European benchmark, also dropped on Wednesday, down $3.21, or 3%, to $103.47. It is down 18% from its peak for the year in March.
Investors are continuing to flee the euro, the European common currency, in favor of the U.S. dollar. A stronger dollar tends to weigh on prices of oil and other dollar-denominated commodities by making them more expensive for holders of other currencies.
Cheaper oil is typically a boon to the U.S. economy, and oil's recent slide has helped push down average gasoline prices across the country. Gasoline futures on Wednesday fell 4.83 cents, or 1.7%, to $2.8582 a gallon, down 10% this month.
On Monday, the Energy Information Administration said prices at the pump for regular gasoline were $3.669 a gallon on average, a 4.5-cent decline from the prior week and the eighth consecutive week-over-week drop, the longest such streak since 2009.
But the U.S. economy also could be at risk from problems in Europe, particularly at a time when unemployment remains high and economic growth is tepid. The EIA said Wednesday that U.S. oil demand in the first quarter fell to its lowest level for that period in 15 years. Meanwhile, oil supplies remain ample, as Saudi Arabia, a member of the Organization of Petroleum Exporting Countries, keeps output elevated and production in Libya continues to rise.
"There are bearish fundamentals with oil, with OPEC production coming in consistently higher in April and May than anyone thought," said Andy Lebow, senior vice president of energy futures at Jefferies Bache.
Write to Dan Strumpf at
Credit: By Dan Strumpf And Liam Pleven
Subject: Petroleum industry; Oil prices; American dollar
Location: Libya United States--US Iran Europe Saudi Arabia Middle East
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 30, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1017669664
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1017669664?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Mobil, Raytheon: Money Flow Leaders (XOM, RTN)
Author: MARKET DATA STAFF
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 May 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Exxon Mobil Corp. topped the list in late trading for, which tracks stocks that fell in price but had the largest inflow of money. See the.
Raytheon Co. topped the list for, which tracks stocks that rose in price but had the largest outflow of money. See the.
Go to () for complete coverage.
Credit: By MARKET DATA STAFF
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 30, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1017695242
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1017695242?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Evaluating Gas Exports From Gulf, Canada
Author: Ordonez, Isabel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 May 2012: n/a.
ProQuest document link
Abstract:
HOUSTON--Exxon Mobil Corp. is studying the possibility of exporting natural gas from the U.S. Gulf Coast and Canada as new shale drilling has unlocked enough natural-gas reserves to meet domestic demand for years to come and allow exports, Chief Executive Rex Tillerson said Wednesday.
Full text: HOUSTON--Exxon Mobil Corp. is studying the possibility of exporting natural gas from the U.S. Gulf Coast and Canada as new shale drilling has unlocked enough natural-gas reserves to meet domestic demand for years to come and allow exports, Chief Executive Rex Tillerson said Wednesday.
Exports of natural gas will create jobs, increase tax revenues and help the U.S. trade balance, Mr. Tillerson said at the company's shareholder meeting in Dallas.
Exxon Mobil, the world's largest publicly traded oil company and the largest U.S. natural-gas producer, recently has said it was analyzing exports from domestically produced natural gas. Mr. Tillerson's remarks are the latest sign the company is following seriously the trend of smaller companies, such as Cheniere Energy Inc., which already have obtained necessary permits to export natural gas from the U.S.
Critics have said exports would raise the price of domestic natural gas and lead to increased use of hydraulic fracturing, a drilling method that environmentalists oppose because it pumps chemicals underground.
Separately, a shareholder proposal requiring greater disclosure by Exxon on the risk and impact of its hydraulic-fracturing practices was voted down by about 70.4% of the company's shareholders.
Last year, shareholder proposals to have Exxon prepare a report on the environmental impact of fracking was rejected by 71.75% of shareholders.
Influential proxy advisory firm ISS recommended Exxon's shareholders vote in favor of the fracking suggestion ahead of the meeting, saying shareholders would benefit from more-detailed information.
A proposal for an independent chairman at the company also failed to pass after receiving 35.2% of votes cast, up from 31.3% in 2010. Shareholder proposals require majority approval for passage. Mr. Tillerson is also chairman of the company.
A majority of shareholders approved Exxon's executive compensation.
Credit: By Isabel Ordonez
Subject: Petroleum industry; Natural gas; Shareholder voting; Exports; Hydraulic fracturing; Natural gas reserves
Location: Canada United States--US Dallas Texas
People: Tillerson, Rex W
Company / organization: Name: Cheniere Energy Inc; NAICS: 211111; Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: May 30, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1017695358
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1017695358?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Plunges to $87.82, Hits Seven-Month Low
Author: Strumpf, Dan; Pleven, Liam
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]31 May 2012: C.4.
ProQuest document link
Abstract:
Oil prices dropped below $90 a barrel, hitting a seven-month low amid concerns that Europe's problems could drag down the global economy and cut demand for energy. Since hitting a 52-week high in late February, prices have fallen 20%, the traditional definition of a bear market.
Full text: Oil prices dropped below $90 a barrel, hitting a seven-month low amid concerns that Europe's problems could drag down the global economy and cut demand for energy.
Since hitting a 52-week high in late February, prices have fallen 20%, the traditional definition of a bear market. Oil hasn't fallen that much that fast since it plummeted 24% from July to October of last year, amid concerns about European and U.S. debt problems.
Oil prices settled down $2.94, or 3.2%, to $87.82 a barrel on the New York Mercantile Exchange. U.S. oil prices hit a high of $109.77 on Feb. 24, at a time when tensions over Iran's nuclear program were running high. Weak oil demand in the U.S., easing tensions between Western powers and Iran, and strong output from Middle East producers such as Saudi Arabia and Libya are all playing a role in the recent selloff.
But the overriding factor recently, according to traders and analysts, has been fear that other countries could feel the effects of a slowdown in Europe if leaders there can't contain the Continent's problems.
"It's all about Europe, this down move," said Peter Donovan, vice president at Vantage Trading. "This Spanish thing looks like a mess, and certainly Greece, too."
Brent crude, the European benchmark, also dropped on Wednesday, down $3.21, or 3%, to $103.47. It is down 18% from its peak for the year in March.
Investors are continuing to flee the euro, the European common currency, in favor of the U.S. dollar. A stronger dollar tends to weigh on prices of oil and other dollar-denominated commodities by making them more expensive for holders of other currencies.
Cheaper oil is typically a boon to the U.S. economy, and oil's recent slide has helped push down average gasoline prices across the country. Gasoline futures on Wednesday fell 4.83 cents, or 1.7%, to $2.8582 a gallon, down 10% this month.
On Monday, the Energy Information Administration said prices at the pump for regular gasoline were $3.669 a gallon on average, a 4.5-cent decline from the prior week and the eighth consecutive week-over-week drop, the longest such streak since 2009.
The EIA said Wednesday that U.S. oil demand in the first quarter fell to its lowest level for that period in 15 years. Meanwhile, oil supplies remain ample, as Saudi Arabia, a member of the Organization of Petroleum Exporting Countries, keeps output elevated and production in Libya continues to rise.
Credit: By Dan Strumpf and Liam Pleven
Subject: Commodity prices; Crude oil
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: May 31, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1017745517
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1017745517?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Considers Chemical Plant Expansion Near Houston
Author: Gonzalez, Angel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]01 June 2012: n/a.
ProQuest document link
Abstract:
Companies such as Dow Chemical Co. and Royal Dutch Shell PLC have also recently undertaken petrochemical projects made profitable by low natural gas prices.
Full text: HOUSTON--Exxon Mobil Corp. said Thursday that it is considering a multibillion-dollar expansion at its petrochemical facility near Houston.
The project would involve building a new ethane cracker and other facilities at Exxon Mobil's huge Baytown refining and petrochemical complex, and would enable the company to "capitalize on abundant supplies of American natural gas," a spokeswoman said in an email. Start-up would be scheduled for 2016.
Exxon has filed permit applications with the U.S. Environmental Protection Agency and the Texas Commission on Environmental Quality and expects the approval process to last about a year. The company said it would make a financial decision on whether to build the facilities after the federal and state governments approve it.
The planned facilities would process up to 1.5 million tons of chemicals per year and provide feedstock for a nearby polyethylene plant, the company said. Polyethelene is a premium chemical in high demand world-wide, it said.
"ExxonMobil Chemical estimates exports [of chemicals] could increase significantly as a result of the expansion," and the investment reflects Exxon's "continued confidence in the natural gas-driven revitalization of the U.S. chemical industry," the company said.
The move is the latest by a major energy and petrochemical company to profit from booming natural gas production in the U.S., which has rejuvenated the chemical manufacturing sector and fostered exports. Companies such as Dow Chemical Co. and Royal Dutch Shell PLC have also recently undertaken petrochemical projects made profitable by low natural gas prices.
The project would create 10,000 construction jobs and 350 permanent jobs would be added to Exxon's 6,500-strong Baytown workforce, the company said.
Write to Angel Gonzalez at
Credit: By Angel Gonzalez
Subject: Petroleum industry; Chemical industry; Natural gas prices
Location: United States--US
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Dow Chemical Co; NAICS: 325188, 325199, 325211; Name: Environmental Protection Agency--EPA; NAICS: 924110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 1, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1017917725
Document URL: https://login.ezproxy.uta.edu/login?url=https://search .proquest.com/docview/1017917725?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Chesapeake Says Hogshooter Wells Yielding 'Significant' Oil
Author: Lefebvre, Ben
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]01 June 2012: n/a.
ProQuest document link
Abstract:
HOUSTON--Chesapeake Energy Corp. said two new wells that it drilled in an oil and natural-gas play in the U.S. Anadarko Basin are producing a significant amount of oil for the cash-strapped company.
Full text: HOUSTON--Chesapeake Energy Corp. said two new wells that it drilled in an oil and natural-gas play in the U.S. Anadarko Basin are producing a significant amount of oil for the cash-strapped company.
The wells, in the Hogshooter play in the Texas Panhandle and west Oklahoma, should help Chesapeake, the second-largest natural-gas producer in the U.S., as it shifts its production focus to more-profitable oil. Chesapeake's cash flow has taken a hit as the price of natural gas has collapsed during a production boom brought on by advances in drilling technology.
The two wells that Chesapeake completed in its 30,000 net acres in the play are producing a combined 8,400 barrels of oil equivalent a day, of which nearly 80% is oil, the company said.
"This new Hogshooter development area should further enhance our growing liquids production," Chesapeake Chief Executive Aubrey McClendon said.
With production still in early stages and considering the relatively small size of Chesapeake's position in the play, it is too early to decide how positive the discovery could be for the company, Argus Research analyst Phil Weiss said.
"It's positive results, but it's a little early to be telling us about it," Mr. Weiss said.
Chesapeake is in the midst of selling oil and natural-gas acreage that it deems outside of its core business as it tries to rein in its heavy debt. The Oklahoma City-based company is trying to pare its debt to $9.5 billion by the end of 2012. At the end of this year's first quarter, Chesapeake reported long-term debt of $13.1 billion.
Credit: By Ben Lefebvre
Subject: Petroleum industry; Financial performance; Oil sands; Natural gas
Location: United States--US Oklahoma
People: McClendon, Aubrey
Company / organization: Name: Chesapeake Energy Corp; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 1, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1018056302
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1018056302?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Raw Materials in a Free Fall --- Crude Oil, Copper, Cotton Sink on Demand Worries, but Gold Is a Bright Spot
Author: Strumpf, Dan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]02 June 2012: B.5.
ProQuest document link
Abstract:
With prices of industrial and agricultural commodities in free fall, investors flocked to gold, with the front-month contract for June delivery gaining $57.90, or 3.7%, to settle at $1,620.50 a troy ounce, its highest level in more than three weeks.
Full text: Most commodities tumbled after dismal economic news spurred fears that global growth is slowing and eroding demand for raw materials.
Brent crude, the European oil benchmark, plunged below $100 a barrel to its lowest level in almost 17 months, while U.S. crude neared $83 in the wake of weak manufacturing data from Asia and Europe and disappointing U.S. jobs data. Copper hit its lowest level in five months, while cotton fell to a 28-month low.
"Their prices are getting bushwhacked because everybody's afraid that these economies are going to slow down and the demand for all these commodities is going to be diminished substantially," said Mark Waggoner, president of Excel Futures, a commodities brokerage in Bend, Ore.
With prices of industrial and agricultural commodities in free fall, investors flocked to gold, with the front-month contract for June delivery gaining $57.90, or 3.7%, to settle at $1,620.50 a troy ounce, its highest level in more than three weeks. The yellow metal rose 3.3% on the week, its best weekly showing since January.
Prices for most commodities have slid in recent weeks on fears that a deepening of the euro-zone debt crisis could squelch demand from that region.
But the combination of weak manufacturing indicators and disappointing jobs data in the U.S. are the latest signs that slowing growth isn't isolated to Europe. The U.S. added 69,000 jobs last month, well short of expectations, the Labor Department said. The monthly jobs report is particularly relevant to commodities traders because it corresponds with appetite for raw materials. Fewer jobs added, for example, means fewer drivers fueling their vehicles on their way to work or vacation.
"This is one of the most critical measures in terms of economic activity and how it translates to energy demand and gasoline demand in particular," said John Kilduff, founding partner at Again Capital in New York.
Sluggish jobs growth also is tied to consumer spending on goods like clothes. July cotton futures fell 4.1%, to 68.59 cents a pound, the lowest settlement since February 2010.
Brent crude for July delivery fell $3.44, or 3.4%, to settle at $98.43 a barrel, its lowest finish since January 2011. Benchmark crude on the New York Mercantile Exchange dropped $3.30, or 3.8%, to $83.23 a barrel, its lowest since October. Brent crude and Nymex oil lost 7.9% and 8.4%, respectively, this week.
Front-month RBOB gasoline finished down 6.59 cents, or 2.4%, at $2.6568 a gallon. Gasoline futures have been sliding along with oil prices the past two months, and the drop should help consumers at the pump. A gallon of regular gasoline averaged $3.611, according to AAA, down 19 cents from a month ago.
Gold's rally bucked a trend in force since September.
"We're seeing gold trading once again as more of a safety instrument than anything else," said Matt Zeman, head of trading at Kingsview Financial.
Gold also got a boost from expectations that additional stimulus by the Federal Reserve could be on the way. Gold prices often rally on such stimulus as a hedge against inflation that might be touched off by the central-bank action.
"People feel that after this number, more money printing is coming," Mr. Zeman said.
June copper settled down 5.25 cents, or 1.6%, at $3.31 a pound, its lowest settlement in more than five months and 4% lower on the week. Arabica coffee settled down 2%, at $2.1570 a pound, its first finish under $1.60 since July 2010.
---
Leslie Josephs, Matt Day and Tatyana Shumsky contributed to this article.
Credit: By Dan Strumpf
Subject: Commodity prices; Gold; Crude oil
Classification: 3400: Investment analysis & personal finance; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.5
Publication year: 2012
Publication date: Jun 2, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1018133419
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1018133419?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Technically Speaking, Crude-Oil Prices in Trouble
Author: Bird, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 June 2012: n/a.
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Abstract:
Crude inventories rose by 2.2 million barrels to 384.7 million barrels for the week ending May 25, the last data available from the U.S. Energy Information Administration.
Full text: NEW YORK--If historical trading patterns are any indication, U.S. crude-oil prices should continue to fall after plunging 18% in May, traders and analysts said.
Oil prices dropped in 17 of 22 trading days last month on the New York Mercantile Exchange, the highest number of losing days in any month since January 1997. That month was the start of a nearly three-year price slide fueled by the Asian economic crisis and oversupply from members of the Organization of Petroleum Exporting Countries.
"To see a fall in 17 days in a month....You don't want to stand in front of it," said Phil Flynn, an analyst at Price Futures Group. "This is historic. It's ominous."
Forecasting the direction of prices by looking at trading patterns is the realm of technical analysis. Such analysis uses statistical charts, based on historical data, suggesting that the market will go up or down once certain price levels are hit--which traders use to decide whether to buy or sell. Many technical adherents are saying that U.S. crude's disastrous month of May indicates prices will fall further.
"Chart positions are looking really ugly," said Jim Ritterbusch, founder of Ritterbusch & Associates, a Galena, Ill., energy-advisory firm. "We've been in a near free fall, with this many days down over a month."
The last time U.S. crude prices fell on 17 days in a month--January 1997--the average of price for crude that month was $25.18 a barrel. The average monthly price didn't top that level again until December 1999.
Dominick Chirichella, an analyst at the Energy Management Institute, a New York-based energy advisory group, sees similarities between that period and now. "Much like last time, we have very high Organization of Petroleum Exporting Countries production," he said. "Last time we had a financial crisis in Asia, now we have the entire global economy slowing."
The euro-zone credit crisis has fueled fears for months about sputtering growth in the region and lower oil demand. Recent signs of tepid economic activity elsewhere have compounded those concerns. On Friday, the U.S., the world's leading oil consumer, released a dismal employment report. On the same day, China's purchasing managers' index fell, pointing to sagging manufacturing activity in the world's No. 2 oil consumer.
As in January 1997, OPEC has boosted its crude production. Its supplies outstripped demand by 7.7% in May, according to a Dow Jones Newswires survey.
No one is predicting a multiyear swoon for prices, but chart watchers said they see strong evidence of a downturn. And while the 17 days of declines last month wasn't the only sign of further declines, it did stand out for many technical analysts.
Anthony Rosado, a broker at GA Global Markets, echoing the others, said the major blow to prices for traders who track technicals came in mid-May, when crude fell below $95 a barrel. That was the 200-day-moving average price, and a break under the level flashed a strong bearish signal to the market.
"When that happened, I thought, technically it looks like the market is going to fall apart," he said.
Beyond technical analysis, the fundamental of supply and demand isn't looking any better. U.S. stockpiles are swelling as demand recedes and new drilling techniques unlock more oil from U.S. and Canadian shale formations. Crude inventories rose by 2.2 million barrels to 384.7 million barrels for the week ending May 25, the last data available from the U.S. Energy Information Administration. That's the highest in 22 years.
"We're looking at a weak, weak market, technically and fundamentally," Mr. Ritterbusch said.
Walter Zimmermann, chief technical analyst at United-ICAP, points to $80 a barrel as being the watershed price. U.S. crude prices closed down 3.8% at $83.23 a barrel on Friday.
He said if the price can stay above $80, chart patterns suggest crude may be completing a bull-market correction--or a sharp downward move that doesn't disrupt a longer-term trend higher in prices.
But "crude oil is in deep trouble if it can't hold $80," he said.
Such a breach would set up potential for unraveling down to $45 a barrel, Mr. Zimmermann said. That would be something of a re-enactment of the price collapse from a record intraday high of $147.27 a barrel in July 2008 to an intraday low of $32.40 in December 2008. He didn't offer an opinion whether the $80 price level would hold.
Write to David Bird at
Credit: By David Bird
Subject: Petroleum industry; Energy management; Oil prices; Crude oil prices
Location: United States--US
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: New York Mercantile Exchange; NAICS: 523210; Name: Dow Jones Newswires; NAICS: 519110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 3, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1018262617
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1018262617?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Kirchner's Oil Expropriation Backfires; Many Argentines fear the checks and balances restraining presidential power are gone.
Author: O'Grady, Mary Anastasia
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 June 2012: n/a.
ProQuest document link
Abstract:
By coming up with a collection of fines that would zero-out its obligations to Repsol, Argentina may figure it can dodge international condemnation and restore investor confidence while avoiding the need to tap its shrinking supply of international reserves.
Full text: Madrid
Repsol Chairman Antonio Brufau says he is confident that his company will prevail in its battle for just compensation after Argentina seized 51% of YPF, the Argentine oil company that Repsol owned. But in a recent interview here, he made it clear he doesn't expect that a settlement will come any time soon.
"Argentina wants to pay zero," Mr. Brufau told me at Repsol headquarters. To justify its position, he expects the government to try to assess "environmental penalties" equal to the value of what it owes.
Argentine planning minister, Julio De Vido, has suggested as much. "We are talking to the governors so that they apply--province by province--the environmental damages. We will be absolutely inflexible," he warned in April. On Friday vice minister of the economy Axel Kicillof accused Repsol of trying to "cannibalize" Argentina's oil for its own international expansion and said it "pillaged our environment." He has also said that Argentina has no intention of paying the $10 billion Repsol says it is owed.
By coming up with a collection of fines that would zero-out its obligations to Repsol, Argentina may figure it can dodge international condemnation and restore investor confidence while avoiding the need to tap its shrinking supply of international reserves. But it's likely to be a hard sell.
For one thing, Mr. Brufau says that in 12 years of operating in Argentina the company was never once cited for impacting the environment outside of what it had already reported and provisioned for. During that time Repsol says it has spent 680 million pesos ($152 million) in environmental remediation and provisioned another 483 million pesos for "environmental impact situations."
Repsol has taken its beef to the World Bank's International Court for Settlement of Investment Disputes in Washington. But even if it has the better case, there can be little doubt that President Cristina Kirchner is counting on a long, drawn-out process. In the meantime, she has the assets of the company which she is presumably counting on to give her greater control over what looks to be an economy on the verge of crisis.
But the YPF decision might make matters worse, even in the short run. That's because the nationalization was done in violation of Article 17 of the Argentine constitution, which says that an expropriation has to be carried out according to the law and not before the company is compensated.
The fact that neither the courts nor Congress (including the opposition) tried to stop what was clearly illegal under Argentine law confirms what many Argentines have feared: The checks and balances on executive power that the founders once envisioned are gone. The logical conclusion is that if the executive wants to run a police state, she will have no quarrel from other institutions.
Perhaps if the YPF action were an isolated event, Mrs. Kirchner could hope to salvage some credibility for Argentina's rule of law. It is not. From civil liberties--notably press freedom, which has been aggressively attacked by the executive--to economic freedom, Argentines and foreign investors have been losing their rights. The YPF expropriation has heightened their sense of foreboding.
The latest manifestation is the crackdown on the right to buy dollars. With accumulated inflation in 2010 and 2011 totaling almost 50% but the peso depreciating only about 15%, markets had been expecting that the government would be forced to let the exchange rate adjust more rapidly. Instead, Mrs. Kirchner's economic team moved earlier this year to stop the peso from falling by putting strict controls on its sale. Importers who need to be able to buy dollars are now hard-pressed.
The government also began to demand that exporters turn dollar revenues over to the central bank within 15 days of making a shipment abroad. When exports dropped, the deadline was moved to 30 days, which is still an unreasonable burden. Travelers who need dollars must apply to the government, explaining where they are going and why.
The net effect is increasing panic. Argentina's 2012 dollar-bond now yields 19%, the peso trades in the black market at a 40% premium over the official rate, and press reports say that Argentine banks have lost 10% of their dollar deposits in the past three weeks.
Last year YPF made a huge shale oil discovery in a region called Vaca Muerta. Will Mrs. Kirchner be able to raise the billions of dollars she'll need to exploit the find? Repsol has already said that any competitor that moves into the YPF acreage that it has explored will face legal action by the Spanish company. But even without that threat, Argentina is now an accident waiting to happen and a good place for investors to avoid.
Write to
Credit: By Mary Anastasia O'Grady
Subject: International finance; Fines & penalties
Location: Argentina
People: Kicillof, Axel Brufau, Antonio
Company / organization: Name: Congress; NAICS: 921120; Name: International Bank for Reconstruction & Development--World Bank; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 3, 2012
column: The Americas
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1018269518
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1018269518?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Argentina Says It Will Sue Falklands Oil Companies
Author: Parks, Ken
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]04 June 2012: n/a.
ProQuest document link
Abstract:
The ministry also said that it will notify the U.K.'s Financial Services Authority, the British Treasury, the International Organization of Securities Commissions, and the New York Stock Exchange of the legal measures Argentina is pursing against the oil companies.
Full text: BUENOS AIRES--Argentina's federal government said Monday it is taking legal action against five U.K.-listed oil companies operating in the waters surrounding the disputed Falkland Islands.
In a statement, the Foreign Ministry said the government will "immediately" file civil and criminal lawsuits against the companies, accusing them of violating tax and custom laws, among other charges.
The ministry also said that it will notify the U.K.'s Financial Services Authority, the British Treasury, the International Organization of Securities Commissions, and the New York Stock Exchange of the legal measures Argentina is pursing against the oil companies.
Earlier Monday, Argentina's Energy Secretariat declared as "illegal" the exploration activities by Desire Petroleum PLC , Rockhopper Exploration PLC, Argos Resources Ltd., Borders & Southern Petroleum PLC and Falkland Oil & Gas Ltd. in Argentine waters.
That paved the way for the Argentine government to take legal action against the firms.
The Falklands have been under U.K. control since the 1830s, when the U.K. removed a precarious Argentine settlement from the islands.
But Argentina has long claimed sovereignty over the Falkland, South Georgia and South Sandwich islands in the South Atlantic, basing its claims on the geographical proximity and its brief possession of the islands.
Tensions between the two nations have risen since 2010, when U.K.-listed oil companies started drilling for an estimated 8.3 billion barrels of crude believed to be under the waters surrounding the Falklands.
Earlier this year, the Argentine government notified stock exchanges in London and New York that it would pursue administrative, civil and criminal charges against those firms.
Argentina has also threatened similar measures against the shareholders of the companies and their bankers.
It isn't immediately clear what tangible impact if any the lawsuits and administrative proceedings will have on the oil companies, as none are believed to have assets in Argentina.
The U.K. government has said there is no chance of negotiating the sovereignty of the Falklands with Argentina unless the islanders ask for talks.
Credit: By Ken Parks
Subject: Petroleum industry; Sovereignty; Stock exchanges
Location: United Kingdom--UK Argentina Falkland Islands
Company / organization: Name: Falkland Oil & Gas Ltd; NAICS: 211111; Name: Rockhopper Exploration PLC; NAICS: 211111; Name: New York Stock Exchange--NYSE; NAICS: 523210; Name: Borders & Southern Petroleum PLC; NAICS: 211111; Name: International Organization of Securities Commissions; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 4, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1018416181
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1018416181?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Canada Oil Seen Doubling By 2030
Author: Welsch, Edward
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 June 2012: n/a.
ProQuest document link
Abstract:
According to CAPP's forecast of Canadian and global crude output, Canada will be the world's third or fourth biggest producer by 2030.
Full text: CALGARY, Alberta--Canadian crude-oil production will more than double to 6.2 million barrels a day by 2030, from 3 million a day in 2011, growing faster than previously expected, according to the 2012 production forecast by the Canadian Association of Petroleum Producers.
The forecast, if it bears out, would put Canada in the top echelons of global oil producers, and it reflects the country's quickly growing output in recent years. Foreign companies have flocked to Canada, which has encouraged investment from overseas to help develop its vast, but difficult-to-reach oil-sands reserves.
The new forecast predicts output from the oil-sands region in Alberta to more than triple by 2030, from 1.6 million barrels a day in 2011 to 5 million barrels a day in 2030, the energy industry trade group said. The deposits, essentially bitumen mixed with quartz sand, hold the world's third largest reserves of crude oil, behind Saudi Arabia and Venezuela. Canada, meanwhile, is the largest exporter of oil into the U.S., the world's biggest oil consumer.
Currently, Canada is the world's sixth largest oil producer, behind Iran and ahead of Mexico, according to the U.S. Energy Information Administration. According to CAPP's forecast of Canadian and global crude output, Canada will be the world's third or fourth biggest producer by 2030.
No matter where Canada ends up in the league tables, CAPP's latest forecast shows Canadian oil production accelerating faster than the group had forecast just a year ago. While CAPP is a group made up of energy producers, its production figures and forecasts are closely followed in the industry.
Last year's forecast had projected Canadian oil production just to 2025, reaching 4.7 million barrels a day. The new forecast predicts 5.6 million barrels a day by that time, a nearly 20% increase.
Oil-sands production will also accelerate faster than expected just a year ago, when CAPP predicted oil-sands output would grow to 3.7 million barrels a day by 2025. It now sees 4.2 million barrels a day of oil-sands production by that time, a 14% increase.
Write to Edward Welsch at
Credit: By Edward Welsch
Subject: Oil sands; Petroleum industry; Petroleum production
Location: Canada Venezuela United States--US Saudi Arabia
Company / organization: Name: Canadian Association of Petroleum Producers; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 5, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1018541845
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1018541845?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Sees Big Shale-Oil Potential in Siberia
Author: Hall, Simon
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 June 2012: n/a.
ProQuest document link
Abstract:
"Because of our global size and reach, we have businesses that are conducted in a wide range of currencies, and what we have found over the years is that we are mostly naturally hedged without having to do anything in the financial markets from a risk management standpoint.\n
Full text: KUALA LUMPUR--Exxon Mobil Corp. is starting work with Russia's OAO Rosneft in assessing what could be massive reserves of shale oil in Western Siberia, the U.S. oil giant's chief executive, Rex Tillerson, said Tuesday.
"There is huge shale potential in shale rocks in West Siberia...we just don't know what the quality is," Mr. Tillerson said in an interview.
The exploration work will take years to establish if the reserves are commercially viable and are part of a strategic agreement Exxon reached earlier this year with state-controlled Rosneft, Russia's largest oil producer.
"Rosneft wished to participate in some resource development opportunities outside of Russia and we have invited them to farm into some areas in Canada and in Texas, in tight oil," Mr. Tillerson said, adding the agreement also called for Exxon to also help evaluate similar tight resources opportunities in Western Siberia.
Tight oil is mostly, but not exclusively, oil trapped in shale-rock formations that requires advanced fracturing technology to release.
"The shales are basically the source rocks for conventional production in the region and anywhere you have large existing conventional production you are going to find source rocks," he said.
Mr. Tillerson also said he didn't rule out Exxon joining the Russia Barents Sea Shtokman natural-gas project.
"On the right terms," he said, when asked if Exxon might want to farm into the project, possibly by taking part of the stakes held by Statoil ASA or Total SA in the OAO Gazprom-led project.
"At this point, we don't have any discussions ongoing with them," Mr. Tillerson said.
"We were engaged in the early days on discussions to participate in that project; we weren't selected," he said. "We had put forward our views on how that resource might be developed over the long term."
Texas-based Exxon is also exploring shale-gas opportunities in China, he said, where shale could potentially have as big an impact as it had in the US.
"We are in discussions with a couple of the Chinese national oil companies," Mr. Tillerson said, without identifying them. "We are doing some joint studies. We haven't taken a position yet, we are still talking about that and the terms around that."
China's shale gas would have a slower lead-up process than in the U.S. as "they don't have the existing infrastructure as in the U.S., built over a 50- or 60-year period that is needed to facilitate rapid commercialization, such as pipelines, gathering systems, distribution systems. It will be significant for China eventually," Mr. Tillerson said.
Separately, Mr. Tillerson said Exxon is "comfortable" with its exposure to currency movements caused by the debt crisis and economic situation in the European Union.
"We are comfortable about how we are managing our cash situation and our exposure to currencies in Europe," he said.
"Because of our global size and reach, we have businesses that are conducted in a wide range of currencies, and what we have found over the years is that we are mostly naturally hedged without having to do anything in the financial markets from a risk management standpoint."
Write to Simon Hall at
Credit: By Simon Hall
Subject: Petroleum industry; Natural gas; Oil sands
Location: Russia United States--US China
People: Tillerson, Rex W
Company / organization: Name: OAO Rosneft; NAICS: 324110; Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: OAO Gazprom; NAICS: 211111, 221210; Name: Total SA; NAICS: 211111, 324110, 447190
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 5, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1018560880
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1018560880?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Invests in Australia Coal-Seam-Gas Venture
Author: Winning, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 June 2012: n/a.
ProQuest document link
Abstract:
More than 20 billion Australian dollars (US$19.5 billion) was spent in 2008 on coal-seam-gas deals in Australia's northeastern Queensland state alone by companies including Royal Dutch Shell PLC, ConocoPhillips and U.K.-based BG Group PLC. However, the coal-seam gas-industry has faced a backlash from some politicians and environmentalists in Australia due to leaks at wells in Queensland, some resources companies accessing private land without permission and worries regarding potential groundwater contamination and the safety of new drilling techniques.
Full text: MELBOURNE--Exxon Mobil Corp. is taking a 10% stake in a joint venture to explore for gas trapped in Australian coal seams, placing a bet on an unconventional fuel that has attracted billions of dollars of investment in Australia and become one of the world's hottest energy plays.
Exxon's Esso Ventures unit is teaming up with closely held Ignite Energy Resources Ltd. to explore and potentially develop reserves of methane gas occurring naturally in more than 16 billion metric tons of brown coal close to the surface in the Gippsland Basin of southeastern Victoria state, and more than 280 billion tons in deeper seams.
International energy companies like Exxon are tapping unconventional fuels such as coal-seam gas in Australia and shale gas in the U.S., after finding themselves increasingly locked out of easy-to-access oil and gas fields in countries like Russia, Saudi Arabia and Venezuela.
Australia's stable political system, transparent regulatory regime and proximity to fast-growing energy markets in Asia make the country appealing to investors.
More than 20 billion Australian dollars (US$19.5 billion) was spent in 2008 on coal-seam-gas deals in Australia's northeastern Queensland state alone by companies including Royal Dutch Shell PLC, ConocoPhillips and U.K.-based BG Group PLC.
However, the coal-seam gas-industry has faced a backlash from some politicians and environmentalists in Australia due to leaks at wells in Queensland, some resources companies accessing private land without permission and worries regarding potential groundwater contamination and the safety of new drilling techniques.
The Victorian state government this week committed to national rules covering unconventional-gas industries, designed to protect underground water sources used by farmers. The rules were formulated in February by the federal government and states with more mature industries, such as Queensland and New South Wales.
Texas-based Exxon is one of Australia's largest energy investors, owning a refinery in Victoria and several big conventional-oil-and-gas fields. These include a 25% stake in the A$43 billion Gorgon gas project, the country's largest gas resource.
Exxon's drilling for conventional oil and gas over nearly 50 years in the Bass Strait, a stretch of water between Victoria and the island state of Tasmania, enabled the company to build up a store of geological data that convinced it of the area's potential for coal-seam-gas output.
Roughly two-thirds of the Gippsland Basin is in the mainly shallow waters of the Bass Strait, with the remainder extending onshore in southeast Victoria.
"Over the next 12-18 months Exxon Mobil and Ignite Energy Resources will work together to evaluate and assess the natural gas potential in the deeper coal seams of the license and determine whether it can be commercially produced," the companies said in a joint written statement on Wednesday.
Ignite Energy Resources, which was advised by Citigroup Inc., will be the operator in the first phase of a program to explore an onshore area of about 3,800 square kilometers. The region is covered by Exploration License 4416.
Exxon's venture with Ignite Energy Resources is small compared with the billions of dollars spent by peers elsewhere in Australia. That is largely because coal-seam-gas exploration in Victoria is in its infancy, whereas Queensland's coal-seam-gas industry is well-established and accounts for 90% of the state's gas demand.
The biggest Queensland projects also involve the construction of liquefied-natural-gas terminals to feed Asia's gas demand.
Coal-seam-gas exploration might attract less opposition in Victoria compared with elsewhere in the country because the state lacks the resource wealth of Western Australia and Queensland, and few new conventional-gas discoveries are being made in its traditional supply hub of the Bass Strait.
Much of Victoria's power supply comes from burning dirty coal, so switching to gas has some environmental benefits.
Exploration in the Gippsland Basin is expected to involve minimal or no fracking--a controversial drilling technique that shatters rock to stimulate the flow of gas--while water contained in the coal seams has low levels of salinity.
Sydney-based Ignite Energy Resources also has interests in biofuels and mineral sands, and an agreement to supply TRUenergy, a unit of CLP Holdings Ltd., with upgraded energy products such as synthetic crude oil for use in the Yallourn power plant in Victoria. CLP is listed in Hong Kong.
Write to David Winning at
Credit: By David Winning
Subject: Petroleum industry; Oil sands; Pipelines; Contamination; Coal
Location: United States--US Asia Queensland Australia Western Australia Australia
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 6, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1018588291
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1018588291?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil and Gas Producers Enter Reset Mode
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 June 2012: n/a.
ProQuest document link
Abstract:
[...]Arun Jayaram at Credit Suisse reckons 2012 cash flow forecasts for large-cap E&P stocks using current commodity price consensus estimates are 15% too high relative to forecasts based on actual energy futures prices. The kicker is that falling energy price expectations will likely prompt E&P companies to adjust their budgets for capital expenditure, asset sales and, by extension, production growth.
Full text: When the world goes to hell, analysts go to Excel--and cut their forecasts. Oil and gas investors should beware.
The Wall Street consensus for average 2012 Brent and West Texas Intermediate crude prices is $112 and $100 per barrel, respectively, according to FactSet Research. U.S. natural gas is tipped at $2.78 per million British thermal units.
Those forecasts are starting to look optimistic. Brent must average $109 for the rest of the year to meet its forecast. That is 9% above today's price. WTI, meanwhile, needs to average just over $100 and that is 17% above today's price. Gas needs to average $3.02, or 22% higher. All these averages are also higher than energy futures prices.
In an eerie replay of last year, fears about global growth have hammered prices. Forecasts for yearly averages could follow soon. Further quantitative easing remains a wildcard that could push prices back up, but fundamental supply and demand doesn't look supportive of a big rebound.
This is a big problem for U.S. exploration and production, or E&P, companies. Expectations of lower prices impact valuations, cash flow forecasts and fund-raising capacity.
Take Chesapeake Energy. In financial projections given a month ago, the company saw 2012 operating cash flow at $3.15 billion if gas averaged $3 and WTI $100. At $2 gas, that figure drops to $2.56 billion. Such sensitivity may help explain why Chesapeake caved so quickly to activist Carl Icahn's demands.
Chesapeake stands out for its heavy weighting to gas. But gas has been weak for a while and the more pernicious element of the commodities correction concerns higher-priced oil and natural-gas liquids. E&P companies have spent like crazy to boost their liquids output. Similarly, investors have assuaged their gas anxiety with soothing oil.
Surveying 29 E&P companies on their projected 2013 cash flow, before hedging effects, ISI Group's Jonathan Wolff finds oil price sensitivity is greater. For example, at $100 oil and $2.50 gas, the group's cash flow totals $61.9 billion. Drop the gas price by 50 cents, or 20%, and that figure drops by $3 billion. But dropping the oil price by $10, or 10%, takes off $6.7 billion. This is compounded by steep drops in natural-gas liquids prices as logistical bottlenecks have eased.
E&P stocks have dropped 20% since the start of May. Even so, Arun Jayaram at Credit Suisse reckons 2012 cash flow forecasts for large-cap E&P stocks using current commodity price consensus estimates are 15% too high relative to forecasts based on actual energy futures prices. Estimate revisions on the back of cuts to energy price forecasts present a risk of further falls.
The kicker is that falling energy price expectations will likely prompt E&P companies to adjust their budgets for capital expenditure, asset sales and, by extension, production growth. Even at current consensus oil and gas price forecasts, the sector outspends its cash flow. Speaking at a conference last week, EOG Resources' chief executive said he might sell assets or cut capital spending next year if WTI averages $90.
Such moves can force investors to cut their expectations about cash flow and earnings suddenly. Stock prices suffer accordingly.
Write to Liam Denning at
Credit: By Liam Denning
Subject: Oil prices; Energy economics; Investments; Capital expenditures
Location: United States--US
People: Icahn, Carl C
Company / organization: Name: Credit Suisse Group; NAICS: 522110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 6, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1018691661
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1018691661?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Giants Launch Bribe Probes; Eni, Chevron, BG Group Investigating Whistleblower's Allegations of Payments to Kazakh Officials
Author: Matthews, Christopher M; Palazzolo, Joe
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 June 2012: n/a.
ProQuest document link
Abstract:
If the SEC gets involved and finds wrongdoing after a whistleblower complaint, a tipster stands to gain as much as 30% of any monetary sanction the agency recovers. Since 2009, Justice has entered into more than 40 settlements and plea deals under the Foreign Corrupt Practices Act with companies for a total of more than $2 billion in criminal penalties. According to a person familiar with the matter, KPO logistics officials ordered DHL representatives in Aksai in March 2011 to stop payments to customs officials.
Full text: Kazakhstan's Aksai City, a dusty outpost just across the border from Russia, is a key gateway for energy companies seeking to tap one of the country's richest oil and gas deposits, the Karachaganak field.
A nondescript office building in the heart of this 30,000-person town is now at the center of an unusual international investigation into allegations of bribery involving Eni SpA, Chevron Corp. and OAO Lukoil Holdings, among the world's biggest oil exploration companies, and Kazakh customs officials.
In March, members of Karachaganak Petroleum Operating BV and a logistics arm of Deutsche Post AG, which handles freight shipments for the group, received an anonymous email alleging improper payments for moving goods through the Aksai customs office.
In an unusual exchange, the tipster has continued to email details of payments, citing amounts, invoice numbers and manifest information in response to requests from the companies involved. Those emails allege that since 2004, Deutsche Post's DHL unit and KPO authorized regular cash payments to customs officials in Aksai, for paperwork errors as minor as including an extra box of steel nails in one shipment and two extra gaskets in another, according to the email.
Several of the companies launched separate investigations after receiving the first email in March from the tipster, spokeswomen said. That email, which has been reviewed by The Wall Street Journal, alleges that the KPO joint venture authorized DHL to bribe Kazakh customs officials to ignore paperwork irregularities that could have delayed the shipments. DHL employees characterized payments to customs officials, often the equivalent of $400, as "extra verification" payments, one of the emails said.
Legal experts say paperwork challenges and shipment delays are the type of troubles that companies operating in developing markets routinely face.
"KPO has begun a full investigation," said spokeswoman Gulnara Sharibayeva. The venture has hired outside lawyers and auditors to handle the internal probe. It "does not tolerate corruption in any form," she said.
DHL has hired an outside audit firm to assist in its internal investigation, said DHL spokeswoman Silje Skogstad. "You can assume that should the allegations prove true we will take any necessary action to sanction and stop the practice," she said.
Kazakhstan's Customs Control Committee, a branch of the country's finance ministry, is conducting an on-site audit of the customs post in Aksai, said committee chairman Mazhit Esenbayev. He declined to comment further.
A U.S.-based attorney said he has been hired to represent the person who sent the emails to KPO. It isn't clear if the Securities and Exchange Commission and the Justice Department, which jointly oversee allegations of bribery abroad, are investigating. The agencies declined to comment.
If the SEC gets involved and finds wrongdoing after a whistleblower complaint, a tipster stands to gain as much as 30% of any monetary sanction the agency recovers. Since 2009, Justice has entered into more than 40 settlements and plea deals under the Foreign Corrupt Practices Act with companies for a total of more than $2 billion in criminal penalties. In that same time, the SEC has brought more than 40 civil enforcement actions.
Details provided by the anonymous emails cast in sharp relief the difficult choices companies face operating in developing countries. According to a person familiar with the matter, KPO logistics officials ordered DHL representatives in Aksai in March 2011 to stop payments to customs officials. For the next three days, customs inspectors found problems with virtually every KPO shipment. Nothing was cleared to pass, according to this person, until DHL resumed the payments on the fourth day.
Customs officials in Kazakhstan can make a contraband finding for discrepancies between the description of goods in shipping documents and the actual contents of a shipment, triggering an administrative process that takes anywhere from days to months to resolve, legal experts said.
The former Soviet state is perceived to be among the most corrupt in the world, scoring 120 out of 183 countries on Transparency International's Corruption Perceptions Index.
Italy's Eni and U.K. natural gas company BG Group PLC are the venture's operators and Chevron and Lukoil are minority partners. The Karachaganak field is one of the region's richest in oil; it produced some 133.7 million barrels of oil and gas equivalent in 2010.
Representatives of Eni and BG Group said they had ensured that KPO began a full investigation. A spokeswoman for Chevron said the company was confident the probe would be thorough and that appropriate steps would be taken if wrongdoing was found. A Lukoil spokesman declined to comment.
Companies whose shipments are seized for irregularities by Kazakh customs inspectors may appeal to an administrative court. But the proceedings can take months to resolve and result in penalties, including confiscation, legal experts said.
The appeals process "can hold up a shipment from weeks to months, and sometimes companies can't afford that," said Andrew Mac, a Washington-based partner of Egorov Puginsky Afanasiev & Partners who specializes in corporate compliance and anticorruption issues in Eastern European states.
But "economic extortion is not a defense to the FCPA," said Martin Weinstein, a partner at Willkie Farr & Gallagher LLP who represents companies in FCPA matters.
The law contains an exception for "facilitation payments"--a nominal fee paid to officials to perform routine duties. A company that has to pay a foreign official extra just to do his job--whether it be hooking up a phone line or releasing a shipment--could argue that it is acting within the exception, Mr. Weinstein said.
But the legal line between a bribe and a facilitation payment is ill-defined, said John Kelly, a former federal prosecutor and now managing partner at Bass, Berry & Sims PLC's Washington, D.C., office.
"I don't think there's a magic number," Mr. Kelly said. "It's factually driven--the frequency of the payments, the value of the payments, the purpose of the payments. The government would look at all of that."
Nonna Fomenko contributed to this article.
Write to Christopher M. Matthews at and Joe Palazzolo at
Credit: By Christopher M. Matthews And Joe Palazzolo
Subject: Customs regulations; Petroleum industry; Shipping industry; Electronic mail systems; Criminal investigations; Corruption; Energy industry; Natural gas utilities
Location: Kazakhstan Russia
Company / organization: Name: Eni SpA; NAICS: 211111, 324110; Name: Securities & Exchange Commission; NAICS: 926150; Name: Deutsche Post AG; NAICS: 484110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 6, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1018751698
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1018751698?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Crude Oil Settles Above $85
Author: Strumpf, Dan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]07 June 2012: C.4.
ProQuest document link
Abstract:
Market participants watch the EIA's weekly report to gauge broader supply and demand for crude and fuels.
Full text: Oil futures rose Wednesday after Iran signaled potential trouble with upcoming talks about its nuclear program.
Prices also got a boost from expectations that central banks around the world could enact additional stimulus measures.
Light, sweet crude for July delivery settled 73 cents, or 0.9%, higher at $85.02 a barrel on the New York Mercantile Exchange. It was the third consecutive session of gains.
Brent crude on the ICE futures exchange was up $1.90, or 1.9%, to $100.74 a barrel in late trading.
Crude rallied after Iran warned the European Union that delays in holding preparatory meetings ahead of talks later this month in Moscow could jeopardize the talks' success. The warning was reported by state news agency IRNA.
The report turned the oil market's attention back to Iran. Tensions over the country's nuclear program helped spur prices to as high as $110 a barrel earlier this year, amid fears of a supply disruption or military conflict. Iran is the second-largest crude producer in the Organization of Petroleum Exporting Countries, behind Saudi Arabia.
Prices have since fallen toward $80 over the past month in large part because of Iran's willingness to negotiate.
"Iran's got such a track record of dishonesty and evasion, I have a difficult time seeing the whole Iran situation resolving itself smoothly," said Peter Donovan, vice president of Vantage Trading in New York.
Meanwhile, the head of the European Central Bank on Wednesday said markets are underestimating political leaders' commitment to addressing the euro crisis.
"Remember, the news is so bad [in Europe] that any kind of stability, it's an up move," said Jeffrey Grossman, president of BRG Brokerage in New York.
In the U.S., the president of the Atlanta Federal Reserve Bank said Wednesday that additional stimulus "needs to be considered."
The comments helped weaken the dollar versus the euro, which tends to boost the price of oil by making the dollar-denominated commodity more expensive for holders of other currencies. The euro was recently 0.8% higher at $1.25486.
Market participants largely looked past a report on U.S. oil inventories that showed stockpiles of crude were reduced at a lower-than-expected rate. Crude inventories last week fell 100,000 barrels, according to the Energy Information Administration, compared with analysts' forecasts of a 500,000-barrel drop.
Market participants watch the EIA's weekly report to gauge broader supply and demand for crude and fuels.
Gasoline stockpiles rose 3.3 million barrels, as supply outpaced demand. Analysts expected gasoline inventories to rise just 400,000 barrels.
Credit: By Dan Strumpf
Subject: Petroleum industry; Oil sands; Futures trading; Commodity prices; Crude oil
Location: Iran United States--US
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210; Name: European Central Bank; NAICS: 521110; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: European Union; NAICS: 926110, 928120
Classification: 3400: Investment analysis & personal finance; 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Jun 7, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1018850919
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1018850919?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Airlines' Profitability Under Pressure Amid High Oil Prices
Author: Chiu, Joanne
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 June 2012: n/a.
ProQuest document link
Abstract:
According to the IATA profitability from the sector will likely fall by more than half this year, from $7.9 billion in 2011.
Full text: BEIJING--The global airline industry will face a tough second half and profitability will remain under pressure amid high oil prices, a senior executive at the International Air Transport Association said Thursday, highlighting the challenges facing the industry this year amid the escalating European debt crisis and slower global economic growth.
But China remains a bright spot in the industry, the IATA said, because of strong domestic demand as well as government investment in infrastructure to boost air traffic.
"Certainly China's economy is under more pressure this year than we have seen in the recent years, but relative to the rest of the world it's still extremely healthy," Tony Tyler, director general of the IATA, said.
The IATA said China is playing a key role in global aviation with one-half of the industry's aggregate profits in 2011 coming from Chinese airlines.
Mr. Tyler also said demand for air freight, which typically contributes the bulk of airlines' earnings, is weak, weighed by softening international trade.
"Oil prices are high, although moderating somewhat from a recent peak," he said.
Mr. Tyler's comments come as softening air traffic demand as well as high fuel prices continue to weigh on the outlook of the global aviation industry.
According to the IATA profitability from the sector will likely fall by more than half this year, from $7.9 billion in 2011.
The IATA, an industry lobby group which represents about 240 airlines comprising 84% of scheduled international traffic, in March cut its forecast for airlines' net profit for this year by 14% to $3 billion from $3.5 billion, citing higher oil prices. This estimation represents a sharp fall from the record $15.8 billion net profit for the industry in 2010.
The IATA will deliver its latest forecasts for the global aviation industry early next week, as top airline executives gather in Beijing for the association's annual general meeting, with high oil prices, intensifying competition, as well as sluggish air cargo demand among the key issues they will need to tackle.
The annual general meeting comes as major airlines in the region, including Singapore Airlines, Cathay Pacific and Qantas have expressed concerns about soaring jet-fuel costs and downward pressure on demand created by Europe's debt crisis.
On Tuesday, Qantas warned that its full-year pre-tax earnings may sink up to 91% as deteriorating global economic conditions widen losses at its struggling international unit, while Emirates warned of a "perfect storm" in the industry that could force many airlines to downsize.
Cathay Pacific in May said it was considering speeding up the retirement of aging aircraft after it warned of "disappointing" first-half financial results.
Separately, Mr. Tyler said he expects the escalating row between the European Union and China over emission trading won't be resolved in the near term.
"I'd like to see good progress this year, but being realistic, it's going to take a while," he said.
The European Union's move to require all airlines to participate in the EU's Emissions Trading Scheme has prompted outcry and threats of a trade war. It said in May that a total of 10 airlines from China and India failed to meet a March 31 deadline to report their 2011 carbon dioxide emission data, raising the possibility of penalties or a ban from flying to Europe if they miss the next deadline in mid June.
China has banned its airlines from complying with the EU scheme, and is reported to have suspended orders said to be worth $14 billion from some of its airlines with European aircraft manufacturer Airbus.
"I think it's a good thing that China's response has been strong to the ETS, mandating its carriers not to be a part," Mr. Tyler said. "We hope Europe realizes that it's taking a wrong approach and it finds a way to reverse its position."
Yajun Zhang contributed to this article.
Write to Joanne Chiu at
Credit: By Joanne Chiu
Subject: Airlines; Profitability; Airline industry; Profits
Location: China Beijing China
Company / organization: Name: Cathay Pacific Airways Ltd; NAICS: 481111; Name: European Union; NAICS: 926110, 928120; Name: International Air Transport Association; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 7, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1018852692
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1018852692?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Exxon to Invest in Coal-Seam Gas Venture in Australia
Author: Winning, David
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]07 June 2012: B.6.
ProQuest document link
Abstract:
More than 20 billion Australian dollars (US$19.5 billion) was spent in 2008 on coal-seam-gas deals in Australia's northeastern Queensland state alone by companies including Royal Dutch Shell PLC, ConocoPhillips and U.K.-based BG Group PLC. However, the coal-seam-gas industry has faced a backlash from some politicians and environmentalists in Australia due to well leaks in Queensland; resources companies accessing private land without permission; and worries regarding the safety of new drilling techniques.
Full text: MELBOURNE-- Exxon Mobil Corp. is taking a 10% stake in a joint venture to explore for gas trapped in Australian coal seams, placing a bet on an unconventional fuel that has attracted billions of dollars of investment in Australia and become one of the world's hottest energy plays.
Exxon's Esso Ventures unit is teaming up with closely held Ignite Energy Resources Ltd. of Australia to explore and potentially develop reserves of methane gas occurring naturally in more than 16 billion metric tons of brown coal close to the surface in the Gippsland Basin of southeastern Victoria state, and more than 280 billion tons in deeper seams.
International energy companies like Exxon are tapping unconventional fuels such as coal-seam gas in Australia and shale gas in the U.S., after finding themselves increasingly locked out of easy-to-access oil and gas fields in countries including Russia, Saudi Arabia and Venezuela.
Australia's stable political system, transparent regulatory regime and proximity to fast-growing energy markets in Asia make the country appealing to investors.
More than 20 billion Australian dollars (US$19.5 billion) was spent in 2008 on coal-seam-gas deals in Australia's northeastern Queensland state alone by companies including Royal Dutch Shell PLC, ConocoPhillips and U.K.-based BG Group PLC.
However, the coal-seam-gas industry has faced a backlash from some politicians and environmentalists in Australia due to well leaks in Queensland; resources companies accessing private land without permission; and worries regarding the safety of new drilling techniques.
The Victoria state government this week committed to national rules covering unconventional-gas industries and designed to protect underground water sources used by farmers. The rules were formulated in February by Australia's federal government and states with more mature industries, such as Queensland and New South Wales.
Texas-based Exxon is one of Australia's largest energy investors, owning a refinery in Victoria and several big conventional-oil-and-gas fields. The company's interests include a 25% stake in the A$43 billion Gorgon gas project, the country's largest gas resource.
Exxon's drilling for conventional oil and gas over nearly 50 years in the Bass Strait, a stretch of water between Victoria and the island state of Tasmania, enabled the company to build up a store of geological data that convinced it of the area's potential for coal-seam-gas production.
Roughly two-thirds of the Gippsland Basin is in the mainly shallow waters of the Bass Strait, with the remainder extending onshore in southeast Victoria.
"Over the next 12-18 months Exxon Mobil and Ignite Energy Resources will work together to evaluate and assess the natural gas potential in the deeper coal seams of the license and determine whether it can be commercially produced," the companies said in a joint statement on Wednesday.
Ignite Energy Resources, which was advised by Citigroup Inc., will be the operator in the first phase of a program to explore an onshore area of1,460 square miles.
Exxon's venture with Ignite Energy Resources is small compared with the billions of dollars spent by peers elsewhere in Australia.
That is largely because coal-seam-gas exploration in Victoria is in its infancy, whereas Queensland's coal-seam-gas industry is well established and accounts for 90% of the state's gas demand.
Credit: By David Winning
Subject: Petroleum industry; Oil sands; Coal; Gas industry; Equity stake; Joint ventures; Coalbed methane
Location: United States--US Queensland Australia Australia
Company / organization: Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Esso Ventures Pty Ltd; NAICS: 211111; Name: Ignite Energy Resources Ltd; NAICS: 211111; Name: Exxon Mobil Corp; NAICS: 211111, 447110
Classification: 1300: International trade & foreign investment; 8510: Petroleum industry; 9179: Asia & the Pacific; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.6
Publication year: 2012
Publication date: Jun 7, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1018853622
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1018853622?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Giants Launch Bribe Probes --- Eni, Chevron, BG Group Investigating Whistleblower's Allegations of Payments to Kazakh Officials
Author: Matthews, Christopher M; Palazzolo, Joe
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]07 June 2012: B.1.
ProQuest document link
Abstract:
If the SEC gets involved and finds wrongdoing after a whistleblower complaint, a tipster stands to gain as much as 30% of any monetary sanction the agency recovers. Since 2009, Justice has entered into more than 40 settlements and plea deals under the Foreign Corrupt Practices Act with companies for a total of more than $2 billion in criminal penalties. According to a person familiar with the matter, KPO logistics officials ordered DHL representatives in Aksai in March 2011 to stop payments to customs officials.
Full text: Kazakhstan's Aksai City, a dusty outpost just across the border from Russia, is a key gateway for energy companies seeking to tap one of the country's richest oil and gas deposits, the Karachaganak field.
A nondescript office building in the heart of this 30,000-person town is now at the center of an unusual international investigation into allegations of bribery involving Eni SpA, Chevron Corp. and OAO Lukoil Holdings, among the world's biggest oil exploration companies, and Kazakh customs officials.
In March, members of Karachaganak Petroleum Operating BV and a logistics arm of Deutsche Post AG, which handles freight shipments for the group, received an anonymous email alleging improper payments for moving goods through the Aksai customs office.
In an unusual exchange, the tipster has continued to email details of payments, citing amounts, invoice numbers and manifest information in response to requests from the companies involved. Those emails allege that since 2004, Deutsche Post's DHL unit and KPO authorized regular cash payments to customs officials in Aksai, for paperwork errors as minor as including an extra box of steel nails in one shipment and two extra gaskets in another, according to the email.
Several of the companies launched separate investigations after receiving the first email in March from the tipster, spokeswomen said. That email, which has been reviewed by The Wall Street Journal, alleges that the KPO joint venture authorized DHL to bribe Kazakh customs officials to ignore paperwork irregularities that could have delayed the shipments. DHL employees characterized payments to customs officials, often the equivalent of $400, as "extra verification" payments, one of the emails said.
Legal experts say paperwork challenges and shipment delays are the type of troubles that companies operating in developing markets routinely face.
"KPO has begun a full investigation," said spokeswoman Gulnara Sharibayeva. The venture has hired outside lawyers and auditors to handle the internal probe. It "does not tolerate corruption in any form," she said.
DHL has hired an outside audit firm to assist in its internal investigation, said DHL spokeswoman Silje Skogstad. "You can assume that should the allegations prove true we will take any necessary action to sanction and stop the practice," she said.
Kazakhstan's Customs Control Committee, a branch of the country's finance ministry, is conducting an on-site audit of the customs post in Aksai, said committee chairman Mazhit Esenbayev. He declined to comment further.
A U.S.-based attorney said he has been hired to represent the person who sent the emails to KPO. It isn't clear if the Securities and Exchange Commission and the Justice Department, which jointly oversee allegations of bribery abroad, are investigating. The agencies declined to comment.
If the SEC gets involved and finds wrongdoing after a whistleblower complaint, a tipster stands to gain as much as 30% of any monetary sanction the agency recovers. Since 2009, Justice has entered into more than 40 settlements and plea deals under the Foreign Corrupt Practices Act with companies for a total of more than $2 billion in criminal penalties. In that same time, the SEC has brought more than 40 civil enforcement actions.
Details provided by the anonymous emails cast in sharp relief the difficult choices companies face operating in developing countries. According to a person familiar with the matter, KPO logistics officials ordered DHL representatives in Aksai in March 2011 to stop payments to customs officials. For the next three days, customs inspectors found problems with virtually every KPO shipment. Nothing was cleared to pass, according to this person, until DHL resumed the payments on the fourth day.
Customs officials in Kazakhstan can make a contraband finding for discrepancies between the description of goods in shipping documents and the actual contents of a shipment, triggering an administrative process that takes anywhere from days to months to resolve, legal experts said.
The former Soviet state is perceived to be among the most corrupt in the world, scoring 120 out of 183 countries on Transparency International's Corruption Perceptions Index.
Italy's Eni and U.K. natural gas company BG Group PLC are the venture's operators and Chevron and Lukoil are minority partners. The Karachaganak field is one of the region's richest in oil; it produced some 133.7 million barrels of oil and gas equivalent in 2010.
Representatives of Eni and BG Group said they had ensured that KPO began a full investigation. A spokeswoman for Chevron said the company was confident the probe would be thorough and that appropriate steps would be taken if wrongdoing was found. A Lukoil spokesman declined to comment.
Companies whose shipments are seized for irregularities by Kazakh customs inspectors may appeal to an administrative court. But the proceedings can take months to resolve and result in penalties, including confiscation, legal experts said.
The appeals process "can hold up a shipment from weeks to months, and sometimes companies can't afford that," said Andrew Mac, a Washington-based partner of Egorov Puginsky Afanasiev & Partners who specializes in corporate compliance and anticorruption issues in Eastern European states.
But "economic extortion is not a defense to the FCPA," said Martin Weinstein, a partner at Willkie Farr & Gallagher LLP who represents companies in FCPA matters.
The law contains an exception for "facilitation payments" -- a nominal fee paid to officials to perform routine duties. A company that has to pay a foreign official extra just to do his job -- whether it be hooking up a phone line or releasing a shipment -- could argue that it is acting within the exception, Mr. Weinstein said.
But the legal line between a bribe and a facilitation payment is ill-defined, said John Kelly, a former federal prosecutor and now managing partner at Bass, Berry & Sims.
"I don't think there's a magic number," Mr. Kelly said. "It's factually driven -- the frequency of the payments, the value of the payments, the purpose of the payments. The government would look at all of that."
---
Nonna Fomenko contributed to this article.
Credit: By Christopher M. Matthews and Joe Palazzolo
Subject: Customs regulations; Petroleum industry; Shipping industry; Electronic mail systems; Criminal investigations; Corruption; Energy industry; Natural gas utilities; Bribery
Location: Kazakhstan Russia
Company / organization: Name: Securities & Exchange Commission; NAICS: 926150; Name: Deutsche Post AG; NAICS: 484110; Name: Karachaganak Petroleum Organization; NAICS: 211111, 813910; Name: Eni SpA; NAICS: 211111, 324110; Name: Chevron Corp; NAICS: 211111, 324110; Name: OAO Lukoil Corp; NAICS: 211111, 324110, 447110
Classification: 4300: Law; 8510: Petroleum industry; 9176: Eastern Europe
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.1
Publication year: 2012
Publication date: Jun 7, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1018854278
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1018854278?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. Oil Output Tops Six Million Barrels in Quarter
Author: Bird, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 June 2012: n/a.
ProQuest document link
Abstract:
U.S. oil output in the first quarter of 2012 rose 12% from a year earlier and topped six million barrels a day for the first time in 13 years, the federal Energy Information Administration said Friday.
Full text: U.S. oil output in the first quarter of 2012 rose 12% from a year earlier and topped six million barrels a day for the first time in 13 years, the federal Energy Information Administration said Friday.
The rise came on higher output from North Dakota, Texas and from federal lease areas in the Gulf of Mexico.
The EIA said that North Dakota, which passed California in December to become the third-largest oil-producing state in the nation, moved ahead of Alaska in March to take the role of second-biggest oil producer on rising output from the Bakken shale oil region.
North Dakota pumped a record 575,000 barrels a day in March, narrowly ahead of Alaska's 567,000 barrels a day. North Dakota's March output set a record and was up 215,000 barrels a day, or 60% from a year earlier.
Texas, at 1.8 million barrels a day, remains the biggest U.S. producer by a wide margin.
After registering output of 5.5 million to 5.6 million barrels a day in each of the first three quarters of 2011, EIA estimates that U.S. average quarterly oil production climbed to more than 5.9 million barrels a day in the fourth quarter, then averaged 6.2 million barrels a day in the 2012 first quarter.
The EIA said the last time U.S. quarterly oil production was above six million barrels a day was in the fourth quarter 1998.
Write to David Bird at
Credit: By David Bird
Subject: Petroleum industry; Petroleum production
Location: California Texas Alaska United States--US Gulf of Mexico North Dakota
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 8, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business A nd Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1019244710
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1019244710?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Sinks Again, Approaches $84
Author: Strumpf, Dan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]09 June 2012: B.3.
ProQuest document link
Abstract:
[...]crude-oil futures came off their intraday lows late in the day, after reports that top European officials were exploring ways to shore up Spain's ailing banks, with light, sweet crude for July delivery finishing 72 cents, or 0.9%, lower at $84.10 a barrel on the New York Mercantile Exchange.
Full text: NEW YORK -- Oil prices neared eight-month lows Friday as concerns over global energy demand deepened amid worries over economic growth in the U.S. and Europe.
Disappointment over the U.S. Federal Reserve's apparent lack of commitment to immediate stimulus was the main driver of Friday's selloff, traders said. Elevated U.S. crude inventories and expectations that the world's biggest producers would keep output at a three-year high also weighed.
"The only thing that was going to save this market from collapsing was a bunch of stimulus," said Phil Flynn, analyst at Price Futures Group in Chicago. "We really didn't get the stimulus that the market was hoping for."
But crude-oil futures came off their intraday lows late in the day, after reports that top European officials were exploring ways to shore up Spain's ailing banks, with light, sweet crude for July delivery finishing 72 cents, or 0.9%, lower at $84.10 a barrel on the New York Mercantile Exchange. Nymex crude rose 87 cents on the week, after spending several days rising on expectations of a Fed move.
Brent crude on the ICE Futures Europe exchange fell 46 cents, or 0.5%, to $99.47.
The oil market has shown signs that it is increasingly well-supplied recently. In the U.S., stockpiles remain near their highest levels since 1990, and gasoline inventories surged 3.3 million barrels in the week ended June 1, according to the Energy Information Administration.
The EIA said Friday that U.S. oil output in the first quarter rose 11.6% from a year earlier, topping 6 million barrels a day for the first time in 14 years.
Meanwhile, the burden for motorists at the pump has been easing. July gasoline futures on Friday settled 0.02 cent higher at $2.6852 a gallon, and are off 21% from their 2012 highs reached in March. At the pump, a gallon of regular gasoline currently fetches $3.56 a gallon, according to auto club AAA, down 24 cents from a month ago.
Attention next week is likely to turn to Thursday's meeting of the Organization of Petroleum Exporting Countries in Vienna.
OPEC most recently said it was pumping 32.42 million barrels a day of oil, a level unseen since the summer of 2008, and has conceded that it is producing more than the market needs.
However, market observers said the bloc may choose to keep output high as tightening sanctions reduce oil output in Iran. The country is OPEC's second-largest producer behind Saudi Arabia, which has boosted output to account for the decline in Iranian exports.
In addition, despite the recent decline in prices, Brent crude, the European benchmark, is still trading around $100 a barrel, a level most OPEC members say is acceptable.
"Everybody is anticipating status quo" at the OPEC meeting, said Dominick Chirichella, analyst at the Energy Management Institute. "I don't think the Saudis are going to be willing to do anything other than what they're doing."
Separately, exchange-operator CME Group Inc. said it fined Morgan Stanley $50,000 for allegedly overstating its open interest in a crude-oil contract one day before the contract's expiration in November 2011. Morgan Stanley declined to comment.
It was the second penalty the bank has faced this week in commodities trading after regulators said they reached a $5 million settlement with the bank over allegedly improper trades of several off-exchange futures.
---
David Bird contributed to this article.
Credit: By Dan Strumpf
Subject: Futures trading; Commodity prices; Crude oil prices
Location: United States--US
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.3
Publication year: 2012
Publication date: Jun 9, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1019368808
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1019368808?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Saudi Arabia Defends Oil Output Jump
Author: Said, Summer; Faucon, Benoît; Hassan Hafidh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]11 June 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: VIENNA--Likening a recent increase in oil output to a stimulus measure for the global economy, Saudi Oil Minister Ali al-Naimi vowed Monday to continue to pump oil as needed and implied that he favors a higher production ceiling for the Organization of the Petroleum Exporting Countries.
Mr. Naimi's comments, ahead of an OPEC meeting later this week, provided a window into the thoughts of the organization's most influential power broker and came as other members publicly warned that the oil market is oversupplied.
Oil prices have recently dropped from $128 a barrel to around $100 as Saudi Arabia has raised its output to 10 million barrels a day in a series of gradual increases since the start of the year.
Saudi Arabia's "recent increase in production proved, yet again, that we stand ready to take action to ensure markets are supplied, whatever the reasons," Mr. Naimi said in remarks to the trade publication Gulf Oil Review.
The recent drop in prices has "acted as a type of stimulus to the European and world economy," he added.
Earlier Monday, Iraq's oil minister, Abdul Kareem Luaiby, said the oil market is oversupplied. Speaking in his capacity as president of OPEC, Mr. Luaiby said it is "pretty clear" that supplies exceed demand in world oil markets.
With their remarks, Mr. Naimi and Mr. Luaiby have staked out opposing positions ahead of a potentially contentious OPEC meeting Thursday. Iran and other countries have criticized Saudi Arabia's recent jump in output, which has come as global leaders look for alternative supplies as new sanctions on Iran are gradually implemented. Sanctions including a European Union embargo on Iranian oil take full effect in July.
Also Monday, Maria van der Hoeven, who represents some of the world's biggest oil importers as the executive director of the International Energy Agency, said OPEC has so far had an "intelligent" answer to the question of how to meet consumers' needs in light of the uncertainty over how much Iranian crude will be lost to the market.
Mr. Naimi said Saudi Arabia's analysis "suggests we will need a higher ceiling than currently exists," but that the Saudis will see how other OPEC members react to his view before taking an official position.
OPEC is currently pumping about 6% above the current production ceiling of 30 million barrels a day. Increasing the limit would make it clear to the market that the organization plans to keep producing at high levels, and would be controversial among OPEC members anxious over whether prices could fall further.
Mr. Naimi has said that a price of $100 a barrel strikes a balance between the needs of consumers and producers. He said Monday that as the cost of oil production goes up, as exploration efforts venture into ever more hostile terrain, a reasonable price is required to ensure exploration can continue throughout the world.
Saudi Arabia is currently producing 10 million barrels per day and has capacity to produce a further 2.5 million barrels per day if needed. But the kingdom doesn't see a case for further expanding its production capacity, Mr. Naimi said.
Geraldine Amiel in Paris contributed to this article.
Write to Summer Said at , Benoît Faucon at and Hassan Hafidh at
Credit: By Summer Said, Benoît Faucon and Hassan Hafidh
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 11, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1019807803
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1019807803?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Hard Nut to Crack: Beauty and Antioxidant Oil
Author: Johannes, Laura
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]11 June 2012: n/a.
ProQuest document link
Abstract:
At the end of the study period, blood samples were taken and both oils worked about equally to stimulate activity of an enzyme believed to protect against oxidative damage that can lead to heart disease.
Full text: In Morocco, argan oil is used to dip bread in at breakfast or to drizzle on couscous or pasta. World-wide, it's gaining a reputation both as an ingredient in high-end, personal-care products and as a heart-healthy gourmet product.
The golden-colored oil, extracted by hand from the fruit of a thorny tree that grows in southwest Morocco, soothes rough skin and gives hair a nice shine, dermatologists say. But while some argan-oil cosmetic products are marketed as anti-aging, there is no evidence it slows signs of growing older.
When ingested, preliminary studies suggest the nutty-flavored oil may have heart-health benefits comparable to olive oil. The data are "encouraging" says Michael Miller, director of the University of Maryland's Center for Preventive Cardiology in Baltimore, but "the jury is still out" on its health benefits.
To make argan oil, Moroccan workers--mostly women--peel the outer layer of the tree fruit then pound its inner nut with a rock to extract kernels, from which the oil is extracted. When the oil is destined for consumption, the kernels are roasted before pressing to add flavor, says Zoubida Charrouf, a professor of chemistry at Mohammed V University in Rabat, Morocco, and president of a nonprofit association that helps start women's cooperatives to make the oil.
Argan oil can be directly applied to the face, skin, hair and cuticles, or added to other products. The oil is named as an ingredient in 111 personal-care products introduced in the U.S. last year, compared with only two in 2007, according to market-research firm Datamonitor, a unit of Switzerland's Informa Group.
"It's a nice light oil that mixes well with cosmetics and has good aesthetics," says Zoe D. Draelos, a consulting professor of dermatology at Duke University School of Medicine in Durham, N.C.
Companies say argan oil's nutrient-rich composition--including vitamin E and an omega-6 fatty acid called linoleic acid that has anti-inflammatory properties--makes it healthy for the skin. LLC of Miami, which says it sources its oil from a women's cooperative in Morocco, adds that it takes one worker 45 minutes to crack enough nuts to make a four-ounce bottle of its cosmetic oil, which sells for $85 and lasts four to six months. Amal's website says the oil helps hydrate skin and "fight signs of aging" and "restore health to hair" and tame frizz.
It makes sense antioxidants could protect skin from sun and free-radical damage when absorbed by the skin, dermatologists say, but some argue it's unlikely antioxidants in argan oil will penetrate deeply enough into the skin to have a benefit.
"Oils don't get past the surface of the skin. They just sit there," says Yale University dermatologist Lisa M. Donofrio. Some formulations with argan oil may contain chemical "carriers," which help the oil penetrate, she adds. Amal Oils says argan oil penetrates the skin naturally.
The amount of oil used in personal-care products--ranging from face masks and shampoos to make-up and shaving creams--can vary from just a trace to a substantial amount. Giving Beauty LLC's Kahina face serum has 90% argan oil by volume, while its antioxidant face mask--made mainly of Moroccan clays--has only a small amount, the New York company says. The serum costs $90 for a one-ounce bottle, while the mask is $62 for a 1.6-ounce jar.
Consumers should look for 100% argan oil and avoid blends labeled "Moroccan oil," which may contain only a small amount of argan oil and are often "heavy, gooey and yellow," says Los Angeles dermatologist Susan Kallal, who sells Kahina products in her office. She says she recommends argan oil as moisturizer and to help treat acne.
A small but growing body of research suggests the oil may be heart healthy. A 152-woman study by Mohammed V University's Dr. Charrouf and colleagues found statistically significant increases in vitamin E blood levels in subjects who consumed five teaspoons of argan oil daily for two months. Cholesterol levels also dropped, but the effect wasn't statistically significant, according to the study, which was presented at a scientific conference in Rabat in February.
In another study, published in 2005 in the journal Nutrition, Metabolism and Cardiovascular Diseases, Moroccan researchers fed 60 male student nurses either olive oil or argan oil with toast for breakfast for three weeks. At the end of the study period, blood samples were taken and both oils worked about equally to stimulate activity of an enzyme believed to protect against oxidative damage that can lead to heart disease.
The study provides initial evidence that argan oil is "in the same ballpark" as olive oil for heart health, but there is no proof it's any better, says the University of Maryland's Dr. Miller.
Road Test
In an informal taste test, Zamouri Spices culinary argan oil, which has 40 calories a teaspoon, had a rich, pleasant nutty flavor. The oil from Elbertai Co. in Olathe, Kan., sells for $30 for a 5.1-ounce bottle.
I also tried both Amal's pure argan oil on my skin and the Kahina brand from Giving Beauty, which costs $36 for a one-ounce bottle. Both oils felt non-greasy and left my skin feeling softer. A control test with extra-virgin olive oil also resulted in softer skin but it felt heavy and greasy.
Email
Credit: By Laura Johannes
Subject: Cosmetics industry; Skin; Hair; Women
Location: Morocco
Company / organization: Name: Datamonitor; NAICS: 541910; Name: University of Maryland; NAICS: 611310
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 11, 2012
Section: Health and Wellness
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1019814156
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1019814156?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: 7 Buyers Of Iran Oil Will Avoid Sanctions
Author: Tracy, Tennille
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]12 June 2012: A.7.
ProQuest document link
Abstract:
Under the new U.S. sanctions, foreign financial institutions doing business with Iran's central bank for the purpose of energy purchases stand to be barred from U.S. financial markets.
Full text: WASHINGTON -- Most major buyers of Iranian oil have agreed to reduce their imports of the country's crude, earning them exemptions from new U.S. sanctions, but China isn't on the list, the Obama administration said.
The U.S. decision, announced Monday, to add seven countries to its exemption list leaves Beijing potentially facing financial penalties after sanctions spelled out in a 2011 law go into effect at the end of June.
Administration officials said talks are continuing with China, which is one of the international group of countries negotiating to roll back Iran's nuclear program.
Under the new U.S. sanctions, foreign financial institutions doing business with Iran's central bank for the purpose of energy purchases stand to be barred from U.S. financial markets.
The U.S. still hasn't said how it would apply sanctions to China, which received 22% of Iran's exports in the first half of 2011, according to the U.S. Energy Information Administration. Iranian exports to China subsequently fell because of a pricing dispute, but the Obama administration said Beijing hasn't yet agreed to formal cuts.
A spokesman at the Chinese Embassy in the U.S. wasn't available for comment.
Exemptions are given to countries that the administration determines have sufficiently reduced, or agreed to reduce, their consumption of Iranian oil. Exemptions were granted on Monday to India, South Korea, Turkey, Taiwan, South Africa, Sri Lanka and Malaysia.
They joined 11 countries, including Japan, another significant buyer of Iran's oil, that previously received exemptions.
Senior administration officials said the sanctions were having a significant impact on Iran. Iranian exports have dropped from 2.5 million barrels a day in 2011 to between 1.2 million and 1.8 million barrels a day, the officials said, a decrease of at least 28%. An oil embargo by the European Union that takes effect on July 1 has also diminished Iran's oil exports.
The goal of the punitive measures is to pressure Iran into agreeing in international talks to curtail its nuclear program. The U.S. and its European allies fear Iran is pursuing a nuclear weapon, although Iran insists its goals are peaceful.
Iran meets an international group for talks next week in Moscow amid signs that the country's leaders are backing away from a cooperative stance.
Some experts question whether the sanctions have been effective in forcing Iran's hand in the multilateral talks.
"I don't think we're there yet, which is why I'm not an optimist about these negotiations," said Elliott Abrams, a former national-security official in the George W. Bush administration.
The Obama administration has been watching global oil prices and supplies as it rolls out the sanctions. The White House said Monday it determined there was enough oil in global markets to replace lost Iranian supply.
---
Keith Johnson contributed to this article.
Credit: By Tennille Tracy
Subject: Oil sands; Exemptions; International relations-US -- Iran; Sanctions; Petroleum industry
Location: United States--US China Iran
Company / organization: Name: European Union; NAICS: 926110, 928120
Classification: 9180: International; 8510: Petroleum industry; 1300: International trade & foreign investment; 1210: Politics & political behavior
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.7
Publication year: 2012
Publication date: Jun 12, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1019867507
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1019867507?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Gains, Bucking Signs of Ample Supplies
Author: DiColo, Jerry A
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 June 2012: n/a.
ProQuest document link
Abstract:
Rising stock markets along with gains in the euro against the dollar and a reversal in the bond market helped buoy U.S. crude-oil futures, which have suffered along with other riskier assets amid Europe's debt crisis.
Full text: NEW YORK--U.S. crude-oil futures settled higher Tuesday after three consecutive losing sessions, boosted by broader markets despite signs of high supplies in the global oil market.
Light, sweet crude-oil for July delivery rose 62 cents, or 0.7%, to settle at $83.32 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange for July delivery traded 86 cents lower at $97.14 a barrel.
Rising stock markets along with gains in the euro against the dollar and a reversal in the bond market helped buoy U.S. crude-oil futures, which have suffered along with other riskier assets amid Europe's debt crisis.
On Tuesday, investors paused after days spent running from any assets that could suffer in the event of further weakening in the euro zone. The European Central Bank called for closer ties among euro-zone countries through a banking union, though it cautioned that any initiative could require changes to national laws.
Still, for oil markets, any optimism was tempered by reports ahead of Thursday's meeting of the Organization of Petroleum Exporting Countries that Saudi Arabia would push to keep current output unchanged despite a market with plenty of supplies. The Saudi stance helped keep Europe's Brent crude in the red on Tuesday.
"We're still very much in sync with what is going in Europe. Today there was a reversal in the euro and in the bond market, and that has propelled crude-oil up here," said Dominick Chirichella, an oil analyst at the Energy Management Institute. "We'll see where we go tomorrow when OPEC gets closer to their decision."
OPEC said its members are pumping oil at the highest level since 2008, with crude production rising to 32.964 million barrels a day in April, keeping the market well supplied amid a tenuous economic picture.
The group estimates global demand at just over 30 million barrels a day, indicating that OPEC believes it is pumping more than the market needs. In its own report released Tuesday, the U.S. Energy Information Administration said OPEC production fell to 30.91 million barrels a day in May, down from 31.24 million barrels a day in April.
"It looks like production is going to stay high, and at these levels, in this economy, there is plenty of oil," said Carl Larry, head of trading advisor Oil Outlooks and Opinions.
Crude-oil prices have suffered from the fallout of Europe's debt crisis in recent weeks. U.S. crude futures tumbled from above $105 a barrel in early May to an eight-month low of $82.70 on Monday, while Brent crude fell to a 17-month low Tuesday.
Investors are concerned that a bailout of Spain's banks passed over the weekend won't do enough to halt the debt crisis that has spread from Greece to larger European states. The outcome of Greek elections Sunday could decide whether the country leaves the euro zone, potentially sparking a broader crisis in financial markets.
Further deterioration in the euro zone's economic growth could weigh on global oil demand, and some analysts say the supply-and-demand picture in the physical market is already weak. Olivier Jakob, managing director of Swiss consultancy Petromatrix, said light, sweet crude-oil grades in the Atlantic Basic are being pressured along with oil from the Mediterranean.
Lower prices in these physical markets, due to comfortable supply conditions, are spilling over into Brent crude prices, Mr. Jakob said.
In the U.S., analysts expect weekly government stockpile data due Wednesday to show a 1.6-million-barrel decline in U.S. oil inventories. The American Petroleum Institute, an industry group, will release its own weekly stockpile data late Tuesday.
Front-month July reformulated gasoline blendstock, or RBOB, settled 0.64 cent lower at $2.6502 a gallon. July heating oil settled 1.42 cents lower at $2.6215 a gallon.
Write to Jerry A. DiColo at jerry.dicolo@dowjones.com
Credit: By Jerry A. DiColo
Subject: Petroleum industry; Oil prices; Crude oil prices; Energy management; Investments; Futures
Location: United States--US Europe
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: New York Mercantile Exchange; NAICS: 523210; Name: European Central Bank; NAICS: 521110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 12, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1019939172
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1019939172?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
BP Starts Galapagos Oil, Gas Project in Gulf
Author: González, Ángel; Flynn, Alexis
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 June 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: HOUSTON--BP PLC said Tuesday that it began the start-up process of Galapagos, one of its major oil-and-gas projects in the deep-water U.S. Gulf of Mexico.
The development, which ties three new deep-water fields to the already-producing Na Kika platform, will reach a peak production rate of 60,000 barrels of oil per day, the London-based company said.
Galapagos is BP's first major project start-up in the Gulf since 2009, the year before the deadly Deepwater Horizon explosion and oil spill.
The Na Kika facility, which can handle up to 130,000 barrels per day of crude, has been modified to process the production from the three fields, one of which is operated by BP and two by Noble Energy Inc. Start-up work began June 3 and is expected to conclude within four to six weeks, with three wells being brought online one at a time. Another well will be drilled and completed in 2013.
BP, whose overall interest in the three Galapagos fields amounts to 56%, expects to see its share of the fields' production initially average 15,000 barrels of oil per day in the near term, with longer-term net production of 26,000 barrels of oil per day. BP's partners in the development are Noble, Red Willow Production Co. and Houston Energy Inc.
The news comes as companies flock back to the U.S. Gulf after the lull that resulted from the Deepwater Horizon oil spill in 2010. The massive spill, which followed a deadly blast aboard a Transocean Ltd. rig drilling for BP, resulted in an overhaul of offshore-drilling regulations and a moratorium on deep-water drilling. But since work resumed in earnest starting last year, higher output from the area helped raise average U.S. oil production in the first quarter to its highest level in 14 years, topping six million barrels of oil a day, according to the U.S. Energy Information Administration.
One of the three initial wells in the Galapagos project, at the Santiago field, was the first deep-water well drilled in the Gulf by any oil company after the moratorium was lifted last year. The other fields are dubbed Isabela and Santa Cruz.
Galapagos is one of six major milestone oil-and-gas projects BP plans to start this year. The others are located in Angola, the North Sea and Norway.
BP said it plans to invest at least $4 billion a year on oil and gas development in the Gulf of Mexico over the next 10 years. The company, which still faces billions of dollars in fines for its part in the Deepwater Horizon spill, has said it will concentrate on investing in profitable oil production from basins in the U.S., Angola and Brazil.
Credit: By Ángel González and Alexis Flynn
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 12, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1019939225
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1019939225?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Traders Strap In for Slide; Push by Saudi Arabia to Boost Production Could Add to Existing Price Pressures
Author: Strumpf, Dan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 June 2012: n/a.
ProQuest document link
Abstract:
Every $10 drop in crude-oil prices roughly correlates to an increase of 0.2-0.3 percentage point in economic growth, according to Bank of AmericaMerrill Lynch.
Full text: Oil prices have plummeted more than 20% from their peaks earlier this year, but some investors are betting they have further to fall.
The magnitude of the decline puts oil in a bear market that investors and analysts say shows few signs of letting up.
The Organization of Petroleum Exporting Countries, a group of some of the world's biggest oil producers, is set to gather Thursday in Vienna as some members criticize the group for pumping too much oil. Saudi Arabia, the world's biggest exporter, favors keeping output high. This week, the country's oil minister said falling oil prices have boosted the global economy.
Those comments added to the already intense pressures on prices. Forecasts for demand from the U.S. and Europe, the world's biggest oil users, have been reduced in light of slowing economic growth. Meanwhile, production has been rising in countries such as Libya and Iraq, which until recently had been excluded from world oil markets. Even the U.S. has been pumping out oil at a steady clip.
The European benchmark, known as Brent, used to price much of the world's oil fell Tuesday 0.9% to $97.14 a barrel, its lowest level since January 2011. U.S. oil futures on the New York Mercantile Exchange rose 0.8% to $83.32 a barrel after dropping to an eight-month low on Monday.
What is bad news for oil bulls, though, is good news for consumers. Falling crude prices have trickled down to gasoline prices at the pump. A gallon of regular gasoline averaged $3.572, down 9.4% from early April, according to the latest data from the Energy Information Administration released Monday. Every $10 drop in crude-oil prices roughly correlates to an increase of 0.2-0.3 percentage point in economic growth, according to Bank of AmericaMerrill Lynch.
John Brynjolfsson, manager of the $300 million Eaton Vance Commodity Strategy fund, said he has gradually decreased his fund's exposure to oil in favor of precious metals, which he expects to hold up better amid the chaos in Europe. He is wagering $3 million on a fall in Brent crude prices.
"We've got a relatively weak economy, and you've got all the conventional forms of oil production still on line, plus a huge surge" in supplies of oil in the U.S. that had been too expensive to tap, said Mr. Brynjolfsson.
Money managers such as hedge funds and pension funds also have sharply curtailed wagers on rising prices, suggesting a lack of faith that oil will rally soon. Adjusting for offsetting positions, the number of bets that profit from higher prices declined by 39% over the last two months to the lowest level since September 2010, according to the Commodity Futures Trading Commission. In Brent, bullish bets have plummeted by 58% over the last month to the lowest since November.
To be sure, any shift in the factors weighing on prices could spark a rebound. Prices could rise if Europe finds a solution to its financial crisis, which would lead investors to pile back into oil on expectations that demand would improve, said James Zhang, commodity strategist at Standard Bank in London.
"The scenario I see is more of a muddle-through scenario, where euro-zone politicians come to an agreement to resolve the current crisis," Mr. Zhang said. That means oil prices are more likely to rise in the near term than fall, he added.
But with the combination of rising supply and weakening demand, U.S. oil prices are unlikely to recapture their post-financial crisis high of nearly $115 a barrel, said Michael Shaoul, chairman of Marketfield Asset Management, which oversees $1.7 billion in assets.
"That peak in 2011 increasingly looks like an important peak, and a peak that might not be surpassed for a long period of time," Mr. Shaoul said.
Credit: By Dan Strumpf
Subject: Petroleum industry; Oil prices; Petroleum production; Investments; Economic crisis
Location: United States--US Europe Saudi Arabia
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 12, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1019991361
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Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Energy: Oil Traders Strap in for Slide
Author: Strumpf, Dan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]13 June 2012: C.4.
ProQuest document link
Abstract:
Every $10 drop in crude-oil prices roughly correlates to an increase of 0.2-0.3 percentage point in economic growth, according to Bank of AmericaMerrill Lynch.
Full text: Oil prices have plummeted more than 20% from their peaks earlier this year, but some investors are betting they have further to fall.
The magnitude of the decline puts oil in a bear market that investors and analysts say shows few signs of letting up.
The Organization of Petroleum Exporting Countries, a group of some of the world's biggest oil producers, is set to gather Thursday in Vienna as some members criticize the group for pumping too much oil. Saudi Arabia, the world's biggest exporter, favors keeping output high. This week, the country's oil minister said falling oil prices have boosted the global economy.
Those comments added to the already intense pressures on prices. Forecasts for demand from the U.S. and Europe, the world's biggest oil users, have been reduced in light of slowing economic growth. Meanwhile, production has been rising in countries such as Libya and Iraq, which until recently had been excluded from world oil markets. Even the U.S. have been pumping out oil at a steady clip.
The European benchmark, known as Brent, used to price much of the world's oil fell Tuesday 0.9% to $97.14 a barrel, its lowest level since January 2011. U.S. oil futures on the New York Mercantile Exchange rose 0.8% to $83.32 a barrel after dropping to an eight-month low on Monday.
What is bad news for oil bulls, though, is good news for consumers. Falling crude prices have trickled down to gasoline prices at the pump. A gallon of regular gasoline averaged $3.572, down 9.4% from early April, according to the latest data from the Energy Information Administration released Monday. Every $10 drop in crude-oil prices roughly correlates to an increase of 0.2-0.3 percentage point in economic growth, according to Bank of AmericaMerrill Lynch.
John Brynjolfsson, manager of the $300 million Eaton Vance Commodity Strategy fund, said he has gradually decreased his fund's exposure to oil in favor of precious metals, which he expects to hold up better amid the chaos in Europe. He is wagering $3 million on a fall in Brent crude prices.
"We've got a relatively weak economy, and you've got all the conventional forms of oil production still on line, plus a huge surge" in supplies of oil in the U.S. that had been too expensive to tap, said Mr. Brynjolfsson.
Money managers such as hedge funds and pension funds also have sharply curtailed wagers on rising prices, suggesting a lack of faith that oil will rally soon. Adjusting for offsetting positions, the number of bets that profit from higher prices declined by 39% over the last two months to the lowest level since September 2010, according to the Commodity Futures Trading Commission. In Brent, bullish bets have plummeted by 58% over the last month to the lowest since November.
To be sure, any shift in the factors weighing on prices could spark a rebound. Prices could rise if Europe finds a solution to its financial crisis, which would lead investors to pile back into oil on expectations that demand would improve, said James Zhang, commodity strategist at Standard Bank in London.
"The scenario I see is more of a muddle-through scenario, where euro-zone politicians come to an agreement to resolve the current crisis," Mr. Zhang said. That means oil prices are more likely to rise in the near term than fall, he added.
But with the combination of rising supply and weakening demand, U.S. oil prices are unlikely to recapture their post-financial crisis high of nearly $115 a barrel, said Michael Shaoul, chairman of Marketfield Asset Management, which oversees $1.7 billion in assets.
"That peak in 2011 increasingly looks like an important peak, and a peak that might not be surpassed for a long period of time," Mr. Shaoul said.
Credit: By Dan Strumpf
Subject: Crude oil; Commodity prices
Classification: 3400: Investment analysis & personal finance; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Jun 13, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1020040802
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1020040802?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Malaysian Palm-Oil Firm Felda Raises $3.13 Billion
Author: Ng, Jason
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 June 2012: n/a.
ProQuest document link
Abstract:
KUALA LUMPUR, Malaysia--Palm-oil company Felda Global Ventures Holdings Bhd. raised US$3.13 billion in the world's second-largest initial public offering this year, a rare lucrative deal amid volatile global markets.
Full text: KUALA LUMPUR, Malaysia--Palm-oil company Felda Global Ventures Holdings Bhd. raised US$3.13 billion in the world's second-largest initial public offering this year, a rare lucrative deal amid volatile global markets.
Felda Global priced the institutional portion of the offering at 4.55 ringgit (US$1.43) a share, near the top end of the indicated range of four ringgit to 4.65 ringgit, a person involved with the deal said Wednesday. The Felda follows Facebook Inc.'s US$16 billion IPO, defying a market downturn that has led to the delay of other offerings in Asia.
Retail investors in Felda will pay a 2% discount to institutional investors, the person said.
The sale attracted bids from institutional investors for more than 30 times the available shares, another person involved in the deal said.
The heavy demand came even as worries about the euro-zone debt crisis have soured investor sentiment. Declines in Facebook's stock have added to investor wariness about IPOs. U.K.-based jeweler Graff Diamond Corp. scrapped its US$1 billion IPO in Hong Kong because of weak demand.
Felda Global sold a total of 2.19 billion shares, comprising of 1.92 billion shares for institutional investors at 4.55 ringgit a share and 273.6 million for retail investors at 4.46 ringgit a share, two people with direct knowledge of the deal said. The sale valued the company at more than US$5 billion.
The listing of little-known, state-run Felda, scheduled for June 28 on the Malaysian Stock Exchange, is aimed at creating a new global powerhouse in the lucrative business of palm oil, an ingredient in a wide range of goods, including lipstick, potato chips and biodiesel fuel.
Write To Jason Ng at jason.ng@dowjones.com.
Credit: By Jason Ng
Subject: Initial public offerings; Stock offerings; Institutional investments; International finance
Location: Malaysia United States--US Asia
Company / organization: Name: Facebook Inc; NAICS: 518210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 13, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1020110454
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1020110454?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Paris Suspends Oil Drilling Off French Guyana
Author: Amiel, Geraldine; Flynn, Alexis
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 June 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Citing environmental concerns, France Wednesday suspended offshore-oil exploratory-drilling permits in its overseas district of Guyana, a move that surprised oil majors that have been eyeing a possibly rich new geological play.
The French environment minister, Nicole Bricq, a member of President Francois Hollande newly established administration, confirmed the decision, citing concerns for the local marine fauna. The permits will be suspended until the mining code has been reviewed. The current code wouldn't allow the local population and local stakeholders to be consulted on drilling, she said.
"The government doesn't call into question exploration on the Guyanese reserves but wishes to deeply reform the mining code to restore the national sovereignty in terms of the exploitation of its own resources and better protect the environment," the minister said in a statement.
The move, which was cheered by environmentalists, underscores the difficulty major oil companies face in getting access to choice reserves. Oil majors around the world have embarked upon a global race to find new reserves and replace their current production.
Although located at the northeastern tip of South America, French Guyana is a French department and considered French soil.
A spokesman for Royal Dutch Shell PLC, the operator of an offshore project there, said he had no information on the French government's move. "We have not been officially informed of this action and have no comment at this time," he said.
Shell, along with partners Tullow Oil PLC and Total SA, has made significant discoveries in its license areas in the region, which geologists believe contains oil reservoirs that mirror those off the coast of western Africa.
Total wasn't immediately available to comment, while Tullow referred all questions to Shell as the project operator.
The move comes a few days before the drilling operations were expected to start.
Ms. Bricq's move was praised by environmental-protection association Guyane Nature Environnement. "We hail this decision," association representative Christian Roudgé said in a telephone interview. "These are risky industrial activities, and they should be properly framed, which was not the case with the current mining code," he added.
The local environmental group called upon the French government last week to end the exploratory-drilling process, claiming that the project was weak in terms of plans to address potential pollution.
Credit: By Geraldine Amiel And Alexis Flynn
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 13, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1020124533
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1020124533?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Expanded Oil Refinery Idles; After $10 Billion Upgrade at Shell-Saudi Plant, Glitch Puts New Section on Ice
Author: Lefebvre, Ben
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 June 2012: n/a.
ProQuest document link
Abstract:
HOUSTON--Two weeks ago, the top brass of Royal Dutch Shell PLC and Saudi Arabia's national oil company met in Texas to celebrate a $10 billion expansion that made their joint-venture refinery the largest in the U.S. Today, the new sections of the Motiva Enterprises LLC refinery in Port Arthur are sitting idle, victims of a mechanical failure last weekend that is costing an estimated $1 million a day in lost revenue and helping to drive up gasoline prices.
Full text: HOUSTON--Two weeks ago, the top brass of Royal Dutch Shell PLC and Saudi Arabia's national oil company met in Texas to celebrate a $10 billion expansion that made their joint-venture refinery the largest in the U.S.
Today, the new sections of the Motiva Enterprises LLC refinery in Port Arthur are sitting idle, victims of a mechanical failure last weekend that is costing an estimated $1 million a day in lost revenue and helping to drive up gasoline prices. The new facilities could remain shut for several months, bringing down the refinery's capacity to process crude from 600,000 barrels a day to its pre-expansion level of about 275,000 barrels a day.
The mishap comes in the midst of the U.S. summer driving season, when drivers' demand for fuel is at its peak. And it adds costs to a project that was already more than $3 billion over budget and years behind schedule.
"The project cost $10 billion, and it's not earning any money right now, at the most advantageous point of the year," said Sam Margolin, an analyst at Dahlman Rose & Co.
Motiva, a joint venture between Shell and state-controlled Saudi Arabian Oil Co., known as Saudi Aramco, revamped the refinery to make it one of the largest in the world. The expanded facility was designed to be a hub for the production of fuel for U.S. drivers and Latin American economies, and a strategic investment strengthening Saudi Arabia's energy ties with the U.S., its most important ally. One of the refinery's towers, 32 stories tall, dwarfs every other structure in Port Arthur, a small Gulf Coast town.
Starting up new capacity can lead to shutdowns, but early reports of the severity of the mechanical failure at Motiva indicate the breakdown might be especially burdensome.
Motiva's newly installed crude-distillation unit--a device that separates incoming oil into streams to make different types of fuel--caught fire as fuel production was being increased at the refinery. Repair crews later found corrosion, a person familiar with the refinery's operations said, adding that it could take months to repair the unit, one of two at the refinery.
Assuming the expanded refinery was going to run at 80% of capacity, Motiva can expect $1 million a day in lost revenue, said Fadel Gheit, an analyst at Oppenheimer & Co. And repairs are likely to be expensive, Mr. Gheit said. "They are not going to patch it up with scotch tape."
Motiva is investigating the cause and extent of the mechanical problem, said spokeswoman Emily Oberton, who added: "We will resume normal operations as soon as it is appropriate to do so."
Representatives for Shell and Saudi Aramco didn't respond to requests to comment.
The outage helped spur Gulf Coast spot-market prices for wholesale regular gasoline to $2.73 a gallon on Wednesday, up five cents from Friday. It also added support to gasoline prices at the New York Mercantile Exchange, which closed at $2.66 a gallon Wednesday, down from $2.69 Friday amid economic worries but on the rebound since Monday because of signs U.S. fuel demand is increasing, said Gene McGillian, a broker at Tradition Energy.
Meanwhile, Saudi Aramco is reviewing what to do with the huge amounts of so-called sour crude oil it has shipped to the refinery, said a person familiar with the company. The Saudis had agreed to supply Motiva with all the sour crude it needed for several months while it tested its expansion, because using only one type of oil made the start-up easier. Now the specter of millions of barrels of excess unrefined crude is having an impact on local oil prices in the U.S. Gulf Coast, one trader said.
On Wednesday, prices for Mars crude, a sour crude variety produced in the deep-water Gulf of Mexico, sold at about $91.97 a barrel, down $4.23 per barrel from Friday.
Write to Ben Lefebvre at
Credit: By Ben Lefebvre
Subject: Petroleum refineries; Petroleum industry; Oil prices; Gasoline prices
Location: United States--US Texas Saudi Arabia
Company / organization: Name: Saudi Arabian Oil Co; NAICS: 211111; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Dahlman Rose & Co LLC; NAICS: 523110; Name: Motiva Enterprises LLC; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 13, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1020133080
Document URL: https://login.ezproxy.uta.edu/login?url=h ttps://search.proquest.com/docview/1020133080?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
OPEC Agrees to Keep Oil-Production Ceiling Unchanged
Author: Said, Summer; Faucon, Benoit; Hassan Hafidh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]14 June 2012: n/a.
ProQuest document link
Abstract:
Because of this excess supply, "We are worried about the stabilization of the price.
Full text: VIENNA--OPEC Thursday agreed to maintain its existing oil-production agreement, said people familiar with the matter, but several members signaled that the group could meet again soon if oil prices retreat much more.
The Organization of Petroleum Exporting Countries kept its combined production ceiling for its 12 members at 30 million barrels a day, an outcome that had been telegraphed earlier this week following a bilateral meeting between ministers from Saudi Arabia and Iran, who lead rival factions within OPEC.
The group remained in a closed-door meeting to discuss other matters after members decided to keep the production ceiling unchanged, people familiar with the matter said.
"They have agreed to keep the ceiling at 30 million barrels a day," a non-Gulf delegate said.
But several members, before the meeting, pointed Thursday to the possibility of an emergency meeting should oil prices, which have fallen more than 20% in recent weeks amid concerns about weak global economic growth, retreat much more.
Kuwait oil minister Hani Abdulaziz Hussain, who is considered one of the group's more consumer-friendly members, told reporters prior to the meeting that oil prices around $100 a barrel are "acceptable and reasonable" and that the group could meet again if oil prices slip below $90 a barrel.
Iranian oil minister Rostam Ghasemi said he was satisfied with oil prices between $100 and $120 a barrel. "If prices go down further, definitely we will have a meeting," he said.
As is often the case at OPEC meetings, Thursday's agreement to maintain current output comes against a backdrop of uncertainty in the oil market. This time, the key questions concern the effect of economic weakness on oil demand and the issue of just how much Iranian oil will leave the oil market due to international sanctions on the Islamic Republic.
In recent months, OPEC members have been pumping well above the production ceiling of 30 million barrels a day set at the group's last meeting in December. OPEC members in May pumped close to 31.6 million barrels a day, according to the OPEC monthly report this week, citing secondary sources. Those figures include Saudi output of around 9.9 million barrels a day, an extremely high level.
The lofty Saudi output follows lobbying of Saudi Arabia by the U.S., the European Union and others to raise output in anticipation of sanctions on Iran.
Other OPEC members this week expressed criticism of Gulf countries for boosting output so aggressively despite the weakening economy.
Credit Suisse this week warned that oil prices could fall steeply if the euro-zone crisis instigates a severe credit crunch.
In the bank's worst-case scenario, which sees a repeat of the 2008 recession, the price of oil would tumble to $50 a barrel and would fail to recover much beyond $80 a barrel for the next few years, it said in a note released Wednesday.
Venezuelan oil minister Rafael Ramirez earlier this week vowed to press Gulf countries on their "overproduction."
"It will have to be reduced," Mr. Ramirez said Tuesday.
Because of this excess supply, "We are worried about the stabilization of the price. The price has lost $30 in two months. We believe that the price has to be over $100 a barrel," Mr. Ramirez said.
James Herron and Nicole Lundeen contributed to this article.
Write to Summer Said at summer.said@dowjones.com, Benoit Faucon at benoit.faucon@dowjones.com and Hassan Hafidh at hassan.hafidh@dowjones.com
Credit: By Summer Said, Benoit Faucon and Hassan Hafidh
Subject: Petroleum industry; Petroleum production; Meetings; Recessions; Crude oil prices
Location: Iran Saudi Arabia
Company / organization: Name: Credit Suisse Group; NAICS: 522110; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 14, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1020327513
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1020327513?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Prices Fall But Airlines Not Benefiting
Author: Chiu, Joanne; Ng, Jeffrey
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 June 2012: n/a.
ProQuest document link
Abstract:
[...]the flag carrier doesn't immediately benefit from favorable movements in the spot fuel market.
Full text: BEIJING--Falling oil prices are typically good news for airlines as fuel accounts for more than a third of their operating costs, but not all carriers are benefiting from the recent decline in prices just yet.
Most airlines, ranging from Hong Kong's Cathay Pacific Airways Ltd. to Air New Zealand Ltd., manage their exposure to volatile fuel prices by locking in a proportion of their planned fuel consumption at certain prices through forward contracts, a process known as fuel hedging. Such arrangement is now preventing them from any immediate respite to their cost pressures from the recent decline in oil prices.
Even as fuel prices are coming down, airlines aren't really rushing to cut down their hedging positions because of volatility, with some executives noting that the oil price declines appear unsustainable.
"The airlines that do best in their hedging strategy are the airlines that hedge consistently through the cycle and don't try to modify their hedging to gamble depending where the oil prices happen to be today," said Air New Zealand Ltd. Chief Executive Rob Fyfe.
His airline hedges up to 85% of its oil consumption in any three-month period, though the proportion of hedged fuel is lower over a longer time horizon. Consequently, the flag carrier doesn't immediately benefit from favorable movements in the spot fuel market.
Airlines were badly burnt in 2008 when surging oil prices sent them quickly changing their hedging positions to protect against more expensive fuel, but only to see prices later collapse, falling as much as 76% in the midst of the ensuing financial crisis. Such wrong bets on the direction of oil prices cost airlines substantially in the form of hedging losses. That year, Cathay Pacific recorded a loss of $7.6 billion Hong Kong dollars (US$974.4 million) on its fuel hedging contracts, and Chinese flag carrier Air China Ltd. booked over 7 billion Chinese yuan dollars (US$1.1 billion) in such losses.
In the aftermath of the 2008 crisis, airlines became more conservative in their hedging plans. Cathay Pacific added certain financial tools aimed at better risk-management, with the result being that the carrier now has to pay net premiums for hedging.
Brent crude oil prices have registered continued gains since bottoming out in late 2008, and has hovered above US$100 for much of the last year, climbing to a peak of around US$125 a barrel in March. However, prices have since come down significantly, reaching around US$97.03 a barrel Friday, spurred by fresh worries over a deepening European debt crisis and slower global economic growth.
Dubai-based Emirates Airline was among the airlines hurt by the significant fuel price volatility in 2008, though Chief Executive Tim Clark said the carrier has since cut down significantly on fuel hedging because of the risks associated with it. As a result, Emirates would stand to benefit more from the recent price decline.
"You can't win at [hedging]," said Mr. Clark in an interview. "It's a casino," Mr. Clark said the airline only has some "insurance" positions if oil prices went above US$120 or US$130 a barrel. He declined to give more specifics.
While the recent weakening in oil prices could help could ease pressure on some airlines' operating costs in the coming months, company executives believe the trend can't be sustained given the volatility.
"It could easily be back to where it was in two to three months' time, so we're certainly not relying on improving oil prices to achieve our financial outcomes," Air New Zealand's Mr. Fyfe said.
Cathay Pacific Chief Executive John Slosar has also noted that he saw no evidence to suggest a sustained drop in fuel prices. But for many airlines, especially those with a large proportion of long-haul routes, the fuel bill remains hefty even at the current lower prices.
Nonetheless, some carriers are beginning to respond to the weakening oil prices. All Nippon Airways Co. Chief Executive Shinichiro Ito said the carrier has reduced its oil hedging to around 40% this fiscal year from 60% in the last fiscal year in a bid to capture the lower spot prices.
Write to Joanne Chiu at and Jeffrey Ng at
Credit: By Joanne Chiu And Jeffrey Ng
Subject: Airlines; Petroleum industry; Operating costs; Executives; Volatility; Losses; Crude oil prices
Location: United States--US Hong Kong
People: Clark, Tim
Company / organization: Name: Air New Zealand Ltd; NAICS: 481111, 488190; Name: Air China; NAICS: 481111; Name: Cathay Pacific Airways Ltd; NAICS: 481111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 15, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1020559268
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1020559268?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Expands Rosneft Alliance to Siberian Shale
Author: Ordonez, Isabel; Stilwell, Victoria
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 June 2012: n/a.
ProQuest document link
Abstract:
Exxon Mobil Corp. said Friday it agreed to develop so-called tight oil reserves in Western Siberia with Russian partner OAO Rosneft, in the Texas energy giant's latest effort to replicate the U.S. shale boom globally.
Full text: Exxon Mobil Corp. said Friday it agreed to develop so-called tight oil reserves in Western Siberia with Russian partner OAO Rosneft, in the Texas energy giant's latest effort to replicate the U.S. shale boom globally.
Exxon and state-controlled Rosneft will use technology that the U.S. oil company already employs in unconventional oil and gas formations in North America. The agreement is the latest chapter in a strategic deal between the two oil companies that includes offshore exploration of massive energy reserves in Russia's Arctic Sea and the Black Sea.
Exxon and Rosneft said they expect to soon approve geological studies and drilling for selected Rosneft license blocks in Western Siberia, including the Bazhenov and Achimov reservoirs. Exxon, the world's largest publicly traded oil company by market value, will finance the studies and exploratory drilling, which is expected to begin in 2013.
The Bazhenov Shale is believed to hold many times more oil than the prolific Bakken Shale in North Dakota, and it has the potential to be one of the world's largest sources of shale oil, Oswald Clint, an analyst at Bernstein Research, wrote in a recent note to clients.
The venture comes at a time when Exxon has been increasing its foothold on unconventional oil and gas development, not only in North America, but all over the globe. The company, which is exploring for shale oil and gas in Germany and Argentina, recently revealed it will also develop tight oil in Colombia and that it was evaluating the potential of shale oil and gas in China. Exxon has said a key component of its $25 billion acquisition of shale producer XTO Energy in 2010 was transferring the know-how that allowed the company to unlock vast new reserves of natural gas in the U.S. through hydraulic fracturing, or fracking.
The agreement is also an indicator of a re-emerging symbiosis between international oil companies and Russia, which needs to replace its declining oil production with an ever-larger amount of hard-to-exploit crude if it is to remain one of the world's energy powers. In recent months Eni SpA and Statoil ASA have also signed deals with Russian companies to develop Arctic fields.
One of the main challenges of developing Western Siberia's unconventional oil resources will be contracting enough rigs to perform the intense drilling required in shale exploration, Bernstein's Mr. Clint said. Rigs there would be able to drill half the annual number of wells as rigs in the U.S., due to the Western Siberian weather, he said.
Exxon and Rosneft also agreed to establish a joint Arctic Research Center for Offshore Developments. The center will provide services to support all stages of oil and gas development on the Arctic shelf, including the design of ice-resistant offshore vessels, structures and Arctic pipelines.
The work to start tapping Western Siberia's tight oil reserves was mentioned by Exxon Chief Executive Rex Tillerson in an interview earlier this month. At the time, Mr. Tillerson said "there is huge shale potential in shale rocks in West Siberia...we just don't know what the quality is."
Simon Hall contributed to this article.
Credit: By Isabel Ordonez And Victoria Stilwell
Subject: Oil reserves; Petroleum industry; Energy policy; Hydraulic fracturing; Oil shale
Location: Arctic region Russia United States--US Texas Black Sea North America
People: Tillerson, Rex W
Company / organization: Name: OAO Rosneft; NAICS: 324110; Name: Eni SpA; NAICS: 211111, 324110; Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 15, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1020571213
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1020571213?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Texas Oil Man Finds a New Groove
Author: Dezember, Ryan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 June 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: The day after Floyd Wilson walked away from Petrohawk Energy Corp., an oil-and-gas explorer he sold last year for $12.1 billion, he went shopping. Destination: the oil patch.
Fresh off the deal of a lifetime, turning a $60 million investment into $12.1 billion in seven years, Mr. Wilson began buying up drilling leases. Eight months later, Mr. Wilson's new energy company, Halcón Resources Corp., has several thousand acres of oil-producing property, a market capitalization of $1.5 billion and a pending $1 billion acquisition of a rival.
"We rush down the stairs and we just hope we don't fall," Mr. Wilson, a tall 65-year-old Texan, said in an interview. "We're hitting on all cylinders."
A serial deal maker as versed in Wall Street's ways as he is in geology and engineering, Mr. Wilson is following a script with Halcón similar to his earlier days at Petrohawk and 3TEC Energy Corp.
"This is the same song, second verse," said Mike Mitchell, a Dallas investment banker who has worked with Mr. Wilson on deals for two decades.
Only with Halcón, the stakes are greater. Mr. Wilson and his management team personally have invested $55 million, nearly equal to all of Petrohawk's seed money. In all, Mr. Wilson and his investors, which include private-equity firm EnCap Investments LP and an energy-investment vehicle owned by Liberty Mutual Holding Company Inc., have invested $550 million in Halcón, according to securities filings.
Land costs in shale regions are much higher now since the time that Petrohawk got started in 2004, and the number of economically viable shale prospects has been reduced amid slumping U.S. natural-gas prices, which are down 43% over the past year. There is also a risk that global macroeconomic issues, such as euro-zone woes, could sink oil prices and reduce Halcón's earnings. The price of U.S. crude oil is down nearly 10% in the past year.
Halcón's formation comes in an era of unprecedented private-equity investment in the oil patch. In the first quarter of 2012, U.S. private-equity oil-and-gas deals reached their highest level in at least 20 years, with more than $11.5 billion in transactions, according to PricewaterhouseCoopers. But while private equity brings capital, it also raises competition for untapped basins and helps bid up prices for drilling land.
Last month, Marathon Oil Corp. said it would buy a private-equity-backed explorer in a deal that equates to paying about $44,000 an acre for drilling leases in the prolific Eagle Ford Shale in southern Texas. Four years ago, Petrohawk, which is credited with discovering two of the most productive Eagle Ford fields, leased land in Eagle Ford for $400 an acre.
Petrohawk's success was due in part to Wall Street funding. The company hit pay dirt in northern Louisiana in June 2008, drilling into a deeply buried rock layer called the Haynesville Shale. The well spewed enough natural gas in a single day to power 84,000 typical U.S. homes, marking the discovery of one of the largest natural-gas fields in the world.
"We had never seen something like that," Mr. Wilson said.
Petrohawk mounted a multibillion-dollar drilling campaign to lock up that land with producing wells, many of which cost more than $10 million apiece. Mr. Wilson went to Wall Street repeatedly to raise the money through debt and stock offerings.
"It was painful to be in the marketplace five times in a year during the recession," Mr. Wilson said. "People would say, 'We're going to participate, but my God, what are you doing?' "
In the end, Petrohawk's investors were rewarded when it was bought by BHP Billiton Ltd.
For Mr. Wilson, the sale of Petrohawk closed one chapter and opened another. Days before Christmas last year, he reached a deal to invest $550 million in RAM Energy Resources Inc., a Tulsa, Okla., oil-and-gas producer in danger of being delisted from the Nasdaq Stock Market because its shares were trading below $1.
Mr. Wilson renamed the company Halcón, Spanish for hawk, and reclaimed Petrohawk's ticker symbol, HK. To jolt shares from their penny-stock range, he initiated a 3-to-1 stock split effective in February. He moved the company's listing to the New York Stock Exchange from Nasdaq and its headquarters to Houston, to which Mr. Wilson commutes from his Austin home.
Since the recapitalization, Halcón's shares have more than tripled, closing at $10.60, up 11 cents, or 1%, in 4 p.m. NYSE composite trading Friday. Analysts refer to the stock as carrying a "Floyd Wilson premium," meaning that shares have surged on Mr. Wilson's reputation.
By mid-April at a conference in New York, Mr. Wilson told analysts and investors he wouldn't be afraid to shop beyond Halcón's budget for something he liked.
"However painful it is, we'll come to New York to get the money, be it debt or equity," he said. "Even though it's not always popular, it's always worked out."
A week later, Halcón agreed to buy Houston explorer GeoResources Inc. in a deal valued at about $1 billion. Since then, Halcón has announced two more deals, to acquire oil-and-gas properties from private sellers for a total of about $570 million in cash and stock.
Born on a U.S. Army base in Georgia, Mr. Wilson graduated from the University of Houston and began his career as an oil-field engineer in 1970 in Texas before moving to Wichita, Kan., to go into business for himself. In 1994, he took his Hugoton Energy Corp. public, eventually selling it to Chesapeake Energy Corp. He founded 3TEC Energy in 1999 and sold it four years later to Plains Exploration & Production Co.
He is the father of nine children. His youngest, a two-year-old daughter, had a cameo in the Petrohawk sale. When Greg Pipkin, a Barclays banker in Houston, approached Mr. Wilson on BHP's behalf last May, Mr. Wilson told him he wanted two things: a large premium to Petrohawk's stock-market value and a deal he could announce in about two months. He didn't want negotiations to delay a trip he planned to the east African nation of Tanzania that summer for an adoption hearing.
Write to Ryan Dezember at
Credit: By Ryan Dezember
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 15, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1020572281
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1020572281?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
OPEC Members Agreed to Oil Output Ceiling
Author: Herron, James
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 June 2012: n/a.
ProQuest document link
Abstract:
VIENNA--All members of the Organization of Petroleum Exporting Countries have agreed to abide by the 30 million barrel a day oil production ceiling, with all but two members aiming to reduce their output in line with the level in November 2011, said Secretary General Abdalla Salem el-Badri Friday.
Full text: VIENNA--All members of the Organization of Petroleum Exporting Countries have agreed to abide by the 30 million barrel a day oil production ceiling, with all but two members aiming to reduce their output in line with the level in November 2011, said Secretary General Abdalla Salem el-Badri Friday.
"It's not really a quota," Mr. el-Badri told reporters at a briefing in Vienna. It is a looser production allocation for each member, but will result in compliance with the agreed output ceiling and the removal of a surplus of around 1.6 million barrels a day of oil from the market, he said.
These cuts will probably begin some time in July, and OPEC will monitor on a monthly basis whether countries are supplying oil in accordance with their production allocations, Mr. el-Badri said.
"Every country has its number and they can watch it," he said.
Libya will not be required to adhere to its November production, because at that time its output was still recovering from the shutdown during the war, he said. Iraq is still not subject to any individual quota, he said.
It was unclear how these two exemptions correlate with the collective 30 million barrel a day ceiling, because the production of Libya and Iraq has increased substantially since then.
By May Libya's output was 889,000 barrels a day more than in November and Iraq's had risen by 266,000 barrels a day over the same period, according to OPEC estimates based on secondary sources.
If other OPEC members were to return to their November production of 27.402 million barrels a day, and Iraq and Libya maintain their May output levels, OPEC's total production would be 31.806 million barrels a day, according to OPEC data.
This is 224,000 barrels a day above the group's production in May, according to OPEC's most recent monthly report.
The news briefing ended before Mr. el-Badri was asked to clarify this.
Write to James Herron at james.herron@dowjones.com
Credit: By James Herron
Subject: Petroleum production; Petroleum industry
Location: Libya Iraq
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Ju n 15, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1020594585
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1020594585?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Texas Oil Man Finds a New Groove
Author: Dezember, Ryan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]16 June 2012: B.1.
ProQuest document link
Abstract:
Since the recapitalization, Halcon's shares have more than tripled, closing at $10.60, up 11 cents, or 1%, in 4 p.m. NYSE composite trading Friday.
Full text: The day after Floyd Wilson walked away from Petrohawk Energy Corp., an oil-and-gas explorer he sold last year for $12.1 billion, he went shopping. Destination: the oil patch.
Fresh off the deal of a lifetime, turning a $60 million investment into $12.1 billion in seven years, Mr. Wilson began buying up drilling leases. Eight months later, Mr. Wilson's new energy company, Halcon Resources Corp., has several thousand acres of oil-producing property, a market capitalization of $1.5 billion and a pending $1 billion acquisition of a rival.
"We rush down the stairs and we just hope we don't fall," Mr. Wilson, a tall 65-year-old Texan, said in an interview. "We're hitting on all cylinders."
A serial deal maker as versed in Wall Street's ways as he is in geology and engineering, Mr. Wilson is following a script with Halcon similar to his earlier days at Petrohawk and 3TEC Energy Corp.
"This is the same song, second verse," said Mike Mitchell, a Dallas investment banker who has worked with Mr. Wilson on deals for two decades.
Only with Halcon, the stakes are greater. Mr. Wilson and his management team personally have invested $55 million, nearly equal to all of Petrohawk's seed money. In all, Mr. Wilson and his investors, which include private-equity firm EnCap Investments LP and an energy-investment vehicle owned by Liberty Mutual Holding Company Inc., have invested $550 million in Halcon, according to securities filings.
Land costs in shale regions are much higher now since the time that Petrohawk got started in 2004, and the number of economically viable shale prospects has been reduced amid slumping U.S. natural-gas prices, which are down 43% over the past year. There is also a risk that global macroeconomic issues, such as euro-zone woes, could sink oil prices and reduce Halcon's earnings. The price of U.S. crude oil is down nearly 10% in the past year.
Halcon's formation comes in an era of unprecedented private-equity investment in the oil patch. In the first quarter of 2012, U.S. private-equity oil-and-gas deals reached their highest level in at least 20 years, with more than $11.5 billion in transactions, according to PricewaterhouseCoopers. But while private equity brings capital, it also raises competition for untapped basins and helps bid up prices for drilling land.
Last month, Marathon Oil Corp. said it would buy a private-equity-backed explorer in a deal that equates to paying about $44,000 an acre for drilling leases in the prolific Eagle Ford Shale in southern Texas. Four years ago, Petrohawk, which is credited with discovering two of the most productive Eagle Ford fields, leased land in Eagle Ford for $400 an acre.
Petrohawk's success was due in part to Wall Street funding. The company hit pay dirt in northern Louisiana in June 2008, drilling into a deeply buried rock layer called the Haynesville Shale. The well spewed enough natural gas in a single day to power 84,000 typical U.S. homes, marking the discovery of one of the largest natural-gas fields in the world.
"We had never seen something like that," Mr. Wilson said.
Petrohawk mounted a multibillion-dollar drilling campaign to lock up that land with producing wells, many of which cost more than $10 million apiece. Mr. Wilson went to Wall Street repeatedly to raise the money through debt and stock offerings.
"It was painful to be in the marketplace five times in a year during the recession," Mr. Wilson said. "People would say, 'We're going to participate, but my God, what are you doing?' "
In the end, Petrohawk's investors were rewarded when it was bought by BHP Billiton Ltd.
For Mr. Wilson, the sale of Petrohawk closed one chapter and opened another. Days before Christmas last year, he reached a deal to invest $550 million in RAM Energy Resources Inc., a Tulsa, Okla., oil-and-gas producer in danger of being delisted from the Nasdaq Stock Market because its shares were trading below $1.
Mr. Wilson renamed the company Halcon, Spanish for hawk, and reclaimed Petrohawk's ticker symbol, HK. To jolt shares from their penny-stock range, he initiated a 3-to-1 stock split effective in February. He moved the company's listing to the New York Stock Exchange from Nasdaq and its headquarters to Houston, to which Mr. Wilson commutes from his Austin home.
Since the recapitalization, Halcon's shares have more than tripled, closing at $10.60, up 11 cents, or 1%, in 4 p.m. NYSE composite trading Friday. Analysts refer to the stock as carrying a "Floyd Wilson premium," meaning that shares have surged on Mr. Wilson's reputation.
By mid-April at a conference in New York, Mr. Wilson told analysts and investors he wouldn't be afraid to shop beyond Halcon's budget for something he liked.
"However painful it is, we'll come to New York to get the money, be it debt or equity," he said. "Even though it's not always popular, it's always worked out."
A week later, Halcon agreed to buy Houston explorer GeoResources Inc. in a deal valued at about $1 billion. Since then, Halcon has announced two more deals, to acquire oil-and-gas properties from private sellers for a total of about $570 million in cash and stock.
Born on a U.S. Army base in Georgia, Mr. Wilson graduated from the University of Houston and began his career as an oil-field engineer in 1970 in Texas before moving to Wichita, Kan., to go into business for himself. In 1994, he took his Hugoton Energy Corp. public, eventually selling it to Chesapeake Energy Corp. He founded 3TEC Energy in 1999 and sold it four years later to Plains Exploration & Production Co.
He is the father of nine children. His youngest, a two-year-old daughter, had a cameo in the Petrohawk sale. When Greg Pipkin, a Barclays banker in Houston, approached Mr. Wilson on BHP's behalf last May, Mr. Wilson told him he wanted two things: a large premium to Petrohawk's stock-market value and a deal he could announce in about two months. He didn't want negotiations to delay a trip he planned to the east African nation of Tanzania that summer for an adoption hearing.
Credit: By Ryan Dezember
Subject: Personal profiles; Petroleum industry
Location: United States--US
People: Wilson, Floyd
Company / organization: Name: Petrohawk Energy Corp; NAICS: 211111; Name: Halcon Resources Corp; NAICS: 211111
Classification: 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.1
Publication year: 2012
Publication date: Jun 16, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: Feature
ProQuest document ID: 1020651872
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1020651872?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Hyundai Heavy Wins Orders for Oil and Gas Rigs
Author: Nam, In-Soo
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 June 2012: n/a.
ProQuest document link
Abstract:
SEOUL--Hyundai Heavy Industries, the world's largest shipbuilder, said Sunday it has won three orders valued at a combined $600 million to build oil and gas rigs.
Full text: SEOUL--Hyundai Heavy Industries, the world's largest shipbuilder, said Sunday it has won three orders valued at a combined $600 million to build oil and gas rigs.
In a statement, Hyundai Heavy said it received a $400 million order for a 35,000-ton offshore oil platform, which will be delivered by August 2015. The company didn't identify the oil company that placed the order or the region where the platform will be deployed.
Hyundai Heavy also said it won two separate orders worth $100 million each.
One is to build six "land plant modules" capable of producing 200 million cubic feet of natural gas and 10,000 barrels of oil a day for an unidentified U.S. oil major, with scheduled delivery in June 2015, Hyundai said.
The other is to build a semisubmersible drilling rig for LLOG Exploration of the U.S., which has an option to order an additional structure, according to Hyundai.
Credit: By In-Soo Nam
Subject: Natural gas; Petroleum industry
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 17, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1020776900
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1020776900?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Drops Shale Plans in Poland
Author: Ordonez, Isabel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 June 2012: n/a.
ProQuest document link
Abstract:
Exxon Mobil Corp. said Monday it has dropped further shale exploration in Poland after two wells failed to yield commercial quantities of natural gas, a hit for the country's efforts to reduce its dependence on imports from Russia.
Full text: Exxon Mobil Corp. said Monday it has dropped further shale exploration in Poland after two wells failed to yield commercial quantities of natural gas, a hit for the country's efforts to reduce its dependence on imports from Russia.
"We have completed exploration operations in Poland," said company spokesman Patrick McGinn. "There have been no demonstrated sustained commercial hydrocarbon flow rates in our two wells in the Lublin and Podlasie basins."
Oil majors such as Exxon, ConocoPhillips and Marathon Oil Corp. flocked to Poland in recent years after the country put in place incentives designed to lure international oil companies. The energy companies are seeking to replicate there the shale boom that revolutionized North American natural-gas markets in the last decade.
The bid by Poland, Germany and other European countries to produce more natural gas domestically was part of an effort to reduce their dependence on Russia's vast natural-gas resources.
But Exxon's exit is likely to raise questions about the viability of the effort, at least in Poland. Exxon, which acquired rights to explore for shale in Poland in late 2008, announced early last year that it was looking for buyers for stakes in four shale-gas concessions there.
Analysts have said that Poland and other Eastern European countries faced a big challenge for developing unconventional energy resources, owing to a lack of infrastructure and manpower. Unlike the U.S. and Canada, Poland doesn't have a well-developed pipeline system to move gas from the fields where it is produced, nor the strong drilling-services industry needed to tap shale reservoirs.
Credit: By Isabel Ordonez
Subject: Petroleum industry; Natural gas
Location: Germany Poland Russia
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: Marathon Oil Corp; NAICS: 211111, 213112, 324110, 486110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 18, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1020888859
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1020888859?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Exxon Ends Drilling For Poland Shale Gas
Author: Ordonez, Isabel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]19 June 2012: B.2.
ProQuest document link
Abstract:
The future of shale development in Poland received an earlier setback in March after Poland's national geological institute estimated the country's recoverable reserves of shale gas were as much as 10 times lower than earlier estimates by the U.S. Energy Information Administration.
Full text: Exxon Mobil Corp. will stop exploring for natural gas in shale formations in Poland, dealing a blow to hopes the country could replicate the shale-drilling boom that revolutionized gas production in North America.
Major companies including Exxon, Chevron Corp., ConocoPhillips and Marathon Oil Corp. flocked to Poland in recent years after the country started offering incentives to lure international firms. Poland is hoping to reduce its long-term dependence on gas imports from Russia.
But Exxon said Monday it is pulling the plug on additional exploration in Poland, after two early gas wells failed to yield commercial quantities. The company said last year that it was looking to sell stakes in four shale-gas concessions there. It acquired rights to explore for shale gas in Poland in 2008.
"We have completed exploration operations in Poland," spokesman Patrick McGinn said. "There have been no demonstrated sustained commercial hydrocarbon flow rates in our two wells in the Lublin and Podlasie basins."
Exxon wasn't the first company to report disappointing early well results in Poland. Oil-and-gas explorer BNK Petroleum Inc. said in October that results of a well drilled in the Cambrian and Ordovician shale, in north Poland, were inconclusive and delayed testing in another area in the country.
Leslie Palti-Guzman, an analyst at consultancy Eurasia, said Exxon's exit from Poland is "clearly not a positive signal" for shale exploration there. However, she said it is too early to extrapolate Exxon's results to other areas in Poland where rival companies are drilling wells.
Chevron said it "remains committed" to its current exploration program in the country. Its acreage is in southeast Poland, while Exxon's properties were in the country's center.
ConocoPhillips said it is "still in the early stages of exploration in Poland" and that it has "no plans to exit at this time." Its acreage is in northern Poland.
Marathon said it "continues to explore and evaluate the potential of our holdings in Poland." The company has drilled two exploration wells, begun work on a third and plans to drill more in the country by the end of the year.
The future of shale development in Poland received an earlier setback in March after Poland's national geological institute estimated the country's recoverable reserves of shale gas were as much as 10 times lower than earlier estimates by the U.S. Energy Information Administration.
The EIA estimates the U.S. has 2,214 trillion cubic feet of technically recoverable natural-gas resources. Poland's geological institute's most optimistic estimate of shale-gas deposits is 67.1 trillion cubic feet.
Poland's government said in March that oil companies needed to drill more test wells to determine the country's resources with more precision.
Credit: By Isabel Ordonez
Subject: Petroleum industry; Oil shale; Natural gas exploration
Location: Russia North America Poland
Company / organization: Name: Chevron Corp; NAICS: 211111, 324110; Name: ConocoPhillips Co; NAICS: 211111; Name: Exxon Mobil Corp; NAICS: 211111, 447110
Classification: 8510: Petroleum industry; 9175: Western Europe
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.2
Publication year: 2012
Publication date: Jun 19, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1020946003
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1020946003?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Sanctions for Iran as Talks Fail; Penalties to Target Oil Exports; Tehran Remains Defiant on Enrichment Program
Author: Cullison, Alan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 June 2012: n/a.
ProQuest document link
Abstract:
Western officials had expressed hope that the talks Monday and Tuesday would bear fruit, in part because heightened pressure from the Kremlin, which has traditionally maintained a closer relationship with Iran than most of the other Security Council members that are pressuring Tehran to scale back its nuclear program.
Full text: MOSCOW--Sanctions aimed at punishing Iran will begin in two weeks after another round of talks with world powers ended without an agreement by Tehran to curb its nuclear program.
The lead negotiators for both sides said the ball was in the other's court after the end of talks here. Catherine Ashton, the European Union's foreign policy chief, and Saeed Jalili, the lead Iranian negotiator, used similar words, saying that the other had "a choice" to make to get negotiations restarted.
Iran had hoped the talks might forestall the looming sanctions. With new penalties now a certainty, the long-running international dispute has entered an unpredictable new phase that will test past Iranian threats to retaliate, including a vow to choke off a key global oil channel, the Strait of Hormuz.
In the absence of talks, sanctions also may be the last barrier to a possible Israeli strike on Iran's nuclear facilities, a step U.S. officials fear could spark a wider conflict.
Iran's economy already is suffering shocks because of a combination of government mismanagement and sanctions that have driven up the cost of staple goods by as much as 50%.
Upcoming penalties will up the ante by targeting Iranian oil exports, its main source of revenue. A European Union embargo on all Iranian oil sales takes effect July 1, a move that could endanger as much as a third of Iran's revenue.
Before that, the White House will impose sanctions on firms doing business with Iran's central bank beginning June 28, another tool to drain Tehran of its oil revenue.
The U.S. Congress is likewise poised to push for more sanctions after the failure of talks in the past two months in Istanbul, Baghdad and now Moscow.
U.S. officials underscored their determination to enforce sanctions with a warning to Venezuela on Tuesday over a plan to cooperate with Iran to develop surveillance drones.
"All countries, including Venezuela, have an obligation to comply with international sanctions against Iran," said State Department spokeswoman Victoria Nuland. "We're committed to ensuring that if we see violations of Iran sanctions, that we will call them out and that we will seek appropriate action."
Iran and the world powers agreed to extend the negotiations by planning some lower-level technical meetings on July 3 in Istanbul.
No higher-level meetings are yet scheduled.
Compounding the setback, Iran recently backed out of a tentative deal with the United Nations' nuclear watchdog to provide its inspectors with greater access to scientists, sites and documents believed to be tied to Tehran's nuclear work.
Underscoring the rising stakes, the U.S. House Armed Services Committee will hold a hearing Wednesday on military options for addressing Iran's nuclear program.
Under the new U.S. sanctions, any foreign state bank processing oil transactions through Iran's central bank, called Bank Markazi, could be punished. Non-state institutions doing business with Bank Markazi could also be hit.
The State Department has granted waivers in recent months from these sanctions to countries that have shown a willingness to reduce their Iran oil purchases.
But China and Singapore could still be targeted after June 28, U.S. officials said.
Additional U.S. sanctions could further target Iranian energy and financial sectors as well as its shipping and insurance businesses, said Sen. Mark Kirk (R., Ill.), who has advanced new sanctions legislation.
"After three rounds of meetings, Iran remains in violation of multiple U.N. Security Council resolutions ordering it to halt all its uranium enrichment activities," Mr. Kirk said.
Diplomats called the two days of talks in Moscow "intense and tough" but said that the two sides remained far apart on how to unwind Iran's uranium enrichment program, which Tehran again Tuesday called an "inalienable right" of the Iranian people.
Western officials had expressed hope that the talks Monday and Tuesday would bear fruit, in part because heightened pressure from the Kremlin, which has traditionally maintained a closer relationship with Iran than most of the other Security Council members that are pressuring Tehran to scale back its nuclear program.
Russian officials dined with the Iranian delegation, and met with members in an effort to push along negotiations.
But U.S. and European officials said the talks remained deadlocked over Iran's program.
As in previous talks in Baghdad last month and in Istanbul before that, Iran demanded a lifting of sanctions before it would back off on its enrichment of uranium to 20% purity, which Western officials call perilously close to weapons grade.
But world powers have insisted that Iran take the first conciliatory step and have been proposing a step-by-step program in which Iran will be rewarded for putting a halt to its high-grade nuclear enrichment, ship out the highly-enriched fuel that it has amassed, and shut down a nuclear facility situated deep in a mountain that is impervious to an airstrike.
Ms. Ashton, the lead negotiator for the six powers in talks, said at the end of two days of meeting Tuesday that "significant gaps" remain between the two sides.
U.S. officials insisted that neither they nor their partners changed their demands in Moscow, or offered any sanctions relief before Iran takes steps to start meeting the international community's demands. In fact, the timing of the July 3 meeting, two days after a ban on Iranian oil purchases goes into effect in Europe, is a sign that Iran hasn't won any easing or postponing of sanctions, they said.
In the weeks leading to the talks, Iran likewise took a tough stance, with Iranian officials reiterating the Islamic Republic's position that enriching uranium is an "absolute right" under the Non-Proliferation Treaty.
Mr. Jalili, the Iranian chief negotiator, told Iranian reporters before entering the talks on Monday that this round of talks was really " a test on whether the West is for or against Iran's scientific progress."
Iran's Supreme Leader Ayatollah Ali Khamenei, who has the last word on all state matters, indirectly made a reference to the nuclear talks in a speech on Monday making it clear where Iran stands on compromise.
"Our enemies should know that arrogance and un-substantiated demands from Iran will lead to nowhere," Mr.Khamenei said, according to official media. He also said Iran's resistance and progress stands as an example of standing up to injustice in the world.
Farnaz Fassihi and Jay Solomon contributed to this article.
Write to Alan Cullison at
Credit: By Alan Cullison
Subject: International relations-US; Meetings; Fines & penalties; Central banks
Location: Iran United States--US Istanbul Turkey
People: Jalili, Saeed Ashton, Catherine (Baroness)
Company / organization: Name: Central Bank-Iran; NAICS: 521110; Name: European Union; NAICS : 926110, 928120; Name: United Nations--UN; NAICS: 928120; Name: Congress; NAICS: 921120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 19, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021171168
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021171168?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Firms in China And India Pull Closer
Author: Sharma, Rakesh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 June 2012: n/a.
ProQuest document link
Abstract:
According to an initial pact signed on Monday between state-run Oil & Natural Gas Corp. of India and China National Petroleum Corp., the companies will jointly explore assets in other countries, cementing existing partnerships in Myanmar, Syria and Sudan.
Full text: NEW DELHI--India and China's largest oil companies have agreed to jointly explore for oil and natural gas world-wide, in an attempt to put aside a long-standing rivalry and better use their combined financial resources and expertise to secure energy supplies for their fast-growing economies.
While the two energy-deficient countries already work together on several international oil projects, they also have a history of bad relations, and of proposing cost-reducing alliances to jointly buy foreign energy assets and crude oil that mostly have come to nothing.
According to an initial pact signed on Monday between state-run Oil & Natural Gas Corp. of India and China National Petroleum Corp., the companies will jointly explore assets in other countries, cementing existing partnerships in Myanmar, Syria and Sudan. ONGC said in a written statement that the companies also agreed to expand cooperation in refining and processing of crude oil and natural gas, marketing and distribution of petroleum products, and construction and operation of oil and gas pipelines.
"We think it is better to cooperate than compete," said Dinesh Sarraf, managing director of ONGC Videsh Ltd., ONGC's overseas investment arm.
ONGC Chairman Sudhir Vasudeva said last month that the company wants to grow through partnerships, and intends to secure alliances for areas and resource types including deep-water exploration as well as natural gas that is trapped in shale-rock formations.
China has been more successful than India in getting oil and gas equity stakes across the globe, often providing large loans and funding for infrastructure projects in developing nations to tie up deals signed by its four state-owned energy companies, the largest of which is CNPC and its listed unit, PetroChina Co.
Tensions between India and China stem from a long-simmering border dispute in the Himalayas; India's hosting of the Tibetan spiritual leader, the Dalai Lama; and Chinese support for Pakistan. Relations worsened last year because of a sovereignty row in the South China Sea, much of which is claimed by Beijing.
ONGC, which had been exploring Block 128 offshore Vietnam, was sharply criticized by China last year for violating Chinese sovereignty--a charge Hanoi vehemently rejected. Last month, India's junior oil minister, R.P.N. Singh, said the company will return the block to Vietnam. Whether that decision figured in the agreement on a new pact is unclear.
In January 2006, India's oil ministry and China's economic-planning agency, the National Reform and Development Commission, signed an initial pact for bilateral oil cooperation, including possible joint crude purchases. But five years later, Mr. Singh conceded that progress had been slow as "there has been no sharing of information on crude purchases by the oil companies of the two sides."
India hasn't been very open to Chinese companies investing in either its energy or telecommunications sectors, citing security concerns, although Chinese power-generation-equipment companies have been successful in the Indian market.
Among projects that ONGC Videsh is working on with CNPC is a pipeline to transport Myanmar gas from the Bay of Bengal across India into southwestern China. The pipeline is due for completion next year.
The two also work together in Syria, where they jointly hold stakes in 36 producing fields, as well as in Sudan, although oil output there has been largely halted due to military clashes between North and South Sudan.
Both CNPC and ONGC are among companies that have expressed interest in building an oil pipeline from South Sudan to Kenya's East African coast, to bypass the traditional export route through the north.
Mirae Asset analyst Nipun Sharma, in Hong Kong, said the latest agreement seems to be merely a renewal of an existing exploration pact.
"The previous pact only resulted in a handful of projects, including one in Sudan," Mr. Sharma said. "This time around, if the two nations are able to better align their economic and political interests, we could see more joint exploration projects ahead.
"This would be a definite positive for ONGC, which needs to accelerate its internationalization program in order to increase production and reduce its exposure to domestic oil-pricing risks."
Indian exploration companies have been seeking partnerships with other overseas oil and gas majors to gain access to technology that will help them increase output and widen their geographical footprint.
ONGC signed an initial agreement with ConocoPhillips in March to look for opportunities for jointly exploring and developing shale-gas reserves in India and North America and deepwater blocks along India's eastern coast.
Simon Hall in Beijing contributed to this article.
Write to Rakesh Sharma at
Credit: By Rakesh Sharma
Subject: Pipelines; Petroleum industry; Oil prices; Natural gas
Location: India China Myanmar (Burma) Sudan Syria
People: Dalai Lama XIV
Company / organization: Name: ONGC Videsh Ltd; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 20, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021083098
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021083098?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Overheard: Make Oil, Not Carbon
Author: Anonymous
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]20 June 2012: C.14.
ProQuest document link
Abstract:
[Financial Analysis and Commentary] If you had to describe the perfect nightmare for solar- and wind-power enthusiasts, a fossil-fuel-burning power plant that cuts its carbon emissions and helps produce more oil would probably be it.
Full text: [Financial Analysis and Commentary]
If you had to describe the perfect nightmare for solar- and wind-power enthusiasts, a fossil-fuel-burning power plant that cuts its carbon emissions and helps produce more oil would probably be it.
And a new partnership announced Tuesday promises exactly that. General Electric is marrying its natural-gas-fired turbines with carbon-capture technology provided by Norway's Sargas. The captured carbon dioxide can then be sold for injection into old oil fields to boost output. Such "enhanced oil recovery" is projected by the Department of Energy to account for 11% of U.S. oil output between 2010 and 2035. Selling the carbon dioxide helps reduce the electricity generator's overall costs for the equipment.
Carbon capture has tended to focus on coal-fired plants. But GE and Sargas are trying a different tack, in part because shale development has boosted U.S. gas reserves and reduced prices. For a renewable-energy industry struggling to compete on cost, this is one more threat from the shale-gas boom.
Subject: Oil sands; Coal-fired power plants; Petroleum industry; Natural gas
Location: Norway United States--US
Company / organization: Name: General Electric Co; NAICS: 332510, 334290, 334512, 334518; Name: Department of Energy; NAICS: 926130
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.14
Publication year: 2012
Publication date: Jun 20, 2012
column: Heard on the Street
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021111419
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021111419?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Oil Firms In China And India Pull Closer
Author: Sharma, Rakesh
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]20 June 2012: B.3.
ProQuest document link
Abstract:
According to an initial pact signed on Monday between state-run Oil & Natural Gas Corp. of India and China National Petroleum Corp., the companies will jointly explore assets in other countries, cementing existing partnerships in Myanmar, Syria and Sudan.
Full text: NEW DELHI -- India and China's largest oil companies have agreed to jointly explore for oil and natural gas world-wide, in an attempt to put aside a long-standing rivalry and better use their combined financial resources and expertise to secure energy supplies for their fast-growing economies.
While the two energy-deficient countries already work together on several international oil projects, they also have a history of bad relations, and of proposing cost-reducing alliances to jointly buy foreign energy assets and crude oil that mostly have come to nothing.
According to an initial pact signed on Monday between state-run Oil & Natural Gas Corp. of India and China National Petroleum Corp., the companies will jointly explore assets in other countries, cementing existing partnerships in Myanmar, Syria and Sudan. ONGC said in a written statement that the companies also agreed to expand cooperation in refining and processing of crude oil and natural gas, marketing and distribution of petroleum products, and construction and operation of oil and gas pipelines.
"We think it is better to cooperate than compete," said Dinesh Sarraf, managing director of ONGC Videsh Ltd., ONGC's overseas investment arm.
ONGC Chairman Sudhir Vasudeva said last month that the company wants to grow through partnerships, and intends to secure alliances for areas and resource types including deep-water exploration as well as natural gas that is trapped in shale-rock formations.
China has been more successful than India in getting oil and gas equity stakes across the globe, often providing large loans and funding for infrastructure projects in developing nations to tie up deals signed by its four state-owned energy companies, the largest of which is CNPC and its listed unit, PetroChina Co.
Tensions between India and China stem from a long-simmering border dispute in the Himalayas; India's hosting of the Tibetan spiritual leader, the Dalai Lama; and Chinese support for Pakistan. Relations worsened last year because of a sovereignty row in the South China Sea, much of which is claimed by Beijing.
ONGC, which had been exploring Block 128 offshore Vietnam, was sharply criticized by China last year for violating Chinese sovereignty -- a charge Hanoi vehemently rejected. Last month, India's junior oil minister, R.P.N. Singh, said the company will return the block to Vietnam. Whether that decision figured in the agreement on a new pact is unclear.
---
Simon Hall in Beijing contributed to this article.
Credit: By Rakesh Sharma
Subject: Petroleum industry; Oil sands; Energy policy; Pipelines; Sovereignty; Crude oil; International relations; Natural gas exploration; Joint ventures
Location: Syria Sudan Myanmar (Burma) India China
People: Dalai Lama XIV
Company / organization: Name: ONGC Videsh Ltd; NAICS: 211111; Name: China National Petroleum Corp; NAICS: 211111
Classification: 9180: International; 8510: Petroleum industry; 1300: International trade & foreign investment
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.3
Publication year: 2012
Publication date: Jun 20, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021111712
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021111712?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Sanctions for Iran as Talks Fail --- Penalties to Target Oil Exports; Tehran Remains Defiant on Enrichment Program
Author: Cullison, Alan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]20 June 2012: A.1.
ProQuest document link
Abstract:
Western officials had expressed hope that the talks Monday and Tuesday would bear fruit, in part because heightened pressure from the Kremlin, which has traditionally maintained a closer relationship with Iran than most of the other Security Council members that are pressuring Tehran to scale back its nuclear program.
Full text: MOSCOW -- Sanctions aimed at punishing Iran will begin in two weeks after another round of talks with world powers ended without an agreement by Tehran to curb its nuclear program.
The lead negotiators for both sides said the ball was in the other's court after the end of talks here. Catherine Ashton, the European Union's foreign policy chief, and Saeed Jalili, the lead Iranian negotiator, used similar words, saying that the other had "a choice" to make to get negotiations restarted.
Iran had hoped the talks might forestall the looming sanctions. With new penalties now a certainty, the long-running international dispute has entered an unpredictable new phase that will test past Iranian threats to retaliate, including a vow to choke off a key global oil channel, the Strait of Hormuz.
In the absence of talks, sanctions also may be the last barrier to a possible Israeli strike on Iran's nuclear facilities, a step U.S. officials fear could spark a wider conflict.
Iran's economy already is suffering shocks because of a combination of government mismanagement and sanctions that have driven up the cost of staple goods by as much as 50%.
Upcoming penalties will up the ante by targeting Iranian oil exports, its main source of revenue. A European Union embargo on all Iranian oil sales takes effect July 1, a move that could endanger as much as a third of Iran's revenue.
Before that, the White House will impose sanctions on firms doing business with Iran's central bank beginning June 28, another tool to drain Tehran of its oil revenue.
The U.S. Congress is likewise poised to push for more sanctions after the failure of talks in the past two months in Istanbul, Baghdad and now Moscow.
U.S. officials underscored their determination to enforce sanctions with a warning to Venezuela on Tuesday over a plan to cooperate with Iran to develop surveillance drones.
"All countries, including Venezuela, have an obligation to comply with international sanctions against Iran," said State Department spokeswoman Victoria Nuland. "We're committed to ensuring that if we see violations of Iran sanctions, that we will call them out and that we will seek appropriate action."
Iran and the world powers agreed to extend the negotiations by planning some lower-level technical meetings on July 3 in Istanbul.
No higher-level meetings are yet scheduled.
Compounding the setback, Iran recently backed out of a tentative deal with the United Nations' nuclear watchdog to provide its inspectors with greater access to scientists, sites and documents believed to be tied to Tehran's nuclear work.
Underscoring the rising stakes, the U.S. House Armed Services Committee will hold a hearing Wednesday on military options for addressing Iran's nuclear program.
Under the new U.S. sanctions, any foreign state bank processing oil transactions through Iran's central bank, called Bank Markazi, could be punished. Nonstate institutions doing business with Bank Markazi could also be hit.
The State Department has granted waivers in recent months from these sanctions to countries that have shown a willingness to reduce their Iran oil purchases.
But China and Singapore could still be targeted after June 28, U.S. officials said.
Additional U.S. sanctions could further target Iranian energy and financial sectors as well as its shipping and insurance businesses, said Sen. Mark Kirk (R., Ill.), who has advanced new sanctions legislation.
"After three rounds of meetings, Iran remains in violation of multiple U.N. Security Council resolutions ordering it to halt all its uranium enrichment activities," Mr. Kirk said.
Diplomats called the two days of talks in Moscow "intense and tough" but said that the two sides remained far apart on how to unwind Iran's uranium enrichment program, which Tehran again Tuesday called an "inalienable right" of the Iranian people.
Western officials had expressed hope that the talks Monday and Tuesday would bear fruit, in part because heightened pressure from the Kremlin, which has traditionally maintained a closer relationship with Iran than most of the other Security Council members that are pressuring Tehran to scale back its nuclear program.
Russian officials dined with the Iranian delegation, and met with members in an effort to push along negotiations.
But U.S. and European officials said the talks remained deadlocked over Iran's program.
As in previous talks in Baghdad last month and in Istanbul before that, Iran demanded a lifting of sanctions before it would back off on its enrichment of uranium to 20% purity, which Western officials call perilously close to weapons grade.
But world powers have insisted that Iran take the first conciliatory move and have been proposing a step-by-step program in which Iran will be rewarded for putting a halt to its high-grade nuclear enrichment, ship out the highly-enriched fuel that it has amassed, and shut down a nuclear facility situated deep in a mountain that is impervious to an airstrike.
Ms. Ashton, the lead negotiator for the six powers in talks, said at the end of two days of meeting Tuesday that "significant gaps" remain between the two sides.
U.S. officials insisted that neither they nor their partners changed their demands in Moscow, or offered any sanctions relief before Iran takes steps to start meeting the international community's demands. In fact, the timing of the July 3 meeting, two days after a ban on Iranian oil purchases goes into effect in Europe, is a sign that Iran hasn't won any easing or postponing of sanctions, they said.
In the weeks leading to the talks, Iran likewise took a tough stance, with Iranian officials reiterating the Islamic Republic's position that enriching uranium is an "absolute right" under the Non-Proliferation Treaty.
Mr. Jalili, the Iranian chief negotiator, told Iranian reporters before entering the talks on Monday that this round of talks was really "a test on whether the West is for or against Iran's scientific progress."
---
Farnaz Fassihi and Jay Solomon contributed to this article.
Credit: By Alan Cullison
Subject: Fines & penalties; Central banks; International relations-US -- Iran; Sanctions; Nuclear weapons
Location: Iran
Classification: 1210: Politics & political behavior; 9180: International
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.1
Publication year: 2012
Publication date: Jun 20, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021111879
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021111879?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Chevron Joins Kosmos to Look for Oil Off Suriname
Author: González, Ángel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 June 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Chevron Corp. said it will join with Kosmos Energy Ltd. to explore for oil off the coast of Suriname, as the oil giant seeks an entry into what could be a prolific new oil basin.
Chevron said it agreed to buy a 50% stake in two Kosmos deep-water leases located about 155 miles from Suriname's capital, Paramaribo. Kosmos, a private-equity-backed oil company based in Dallas, will retain the other 50% and remain the operator during the exploration phase. But if any oil is found, Chevron will take the lead in developing the field. Financial terms weren't disclosed.
The move came as the coast off South America garners increasing attention of oil prospectors seeking to tap oil riches buried deep beneath the ocean floor. Experts believe that giant oil fields, such as those found offshore Sierra Leone and Ghana in West Africa, could also be present offshore Suriname and the Guyanas, which lie right across the Atlantic Ocean. Both areas interlocked when the continents were united hundreds of millions of years ago.
Last year, Tullow Oil PL and partners Royal Dutch Shell PLC and Total SA reported finding a good quality reservoir offshore French Guyana. A wide range of oil companies--from Exxon Mobil Corp., the world's largest publicly traded oil company, to small Canadian oil company CGX Energy Inc.--are also looking for oil in the vicinity. But efforts to develop the area face challenges; last week, the French government suspended offshore oil exploration in its South American territory for environmental reasons.
Pioneering an emerging oil region also has its own risks, as shown by the difficulties faced by Petroleo Brasileiro SA and other oil companies at finding oil offshore Brazil, where the richest reservoirs lie buried beneath thick domes of salt that make readings difficult. "Suriname is a textbook frontier-exploration play," research firm Raymond James said in an analyst note. "Exploration results thus far have been choppy."
Kosmos became known for discovering the Jubilee field, off the coast of Ghana, one of the largest oil finds in West Africa in recent history. It acquired the license to explore the two deep-water blocks off Suriname in 2011.
For Chevron, the second-largest U.S. oil company after Exxon Mobil, the move is another bet on a new frontier area in the Atlantic basin. The San Ramon, Calif., company is already looking for oil off Liberia. It also has developed massive fields in more established production areas off Angola, Nigeria and Brazil.
"This agreement enables us to explore for new resources in this frontier basin," said George Kirkland, vice chairman of Chevron, in a statement.
The blocks are located at depths between 650 and 8,500 feet. First drilling is planned for 2014.
Kristin Jones and Daniel Gilbert contributed to this article.
Credit: By Ángel González
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 20, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021192908
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021192908?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil-Lease Sale Draws $1.7 Billion in Winning Bids
Author: Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 June 2012: n/a.
ProQuest document link
Abstract:
The auction attracted winning bids from Royal Dutch Shell PLC, BP PLC and Statoil ASA, among others, showing the industry's eagerness to explore in the offshore area after months of squabbling with the U.S. over strengthened drilling rules.
Full text: HOUSTON--The first oil- and gas-lease auction for the central Gulf of Mexico since the Deepwater Horizon spill collected $1.7 billion from energy companies, Interior Secretary Ken Salazar said on Wednesday.
The central Gulf of Mexico is widely considered the region's most promising drilling location, but sales of new offshore leases were stalled after the 2010 rig accident, which killed 11 and caused the worst offshore oil spill in U.S. history.
The auction attracted winning bids from Royal Dutch Shell PLC, BP PLC and Statoil ASA, among others, showing the industry's eagerness to explore in the offshore area after months of squabbling with the U.S. over strengthened drilling rules.
Still, analysts with Simmons & Co. International characterized the sale as "less than robust," noting that just 6% of the tracts available for lease received bids. That compared with 7% in a 2010 central Gulf lease sale, and an average of 9% over the previous five central Gulf sales.
If fully developed, the U.S. government estimates that the leases for sale Wednesday could result in the production of up to 1.6 billion barrels of oil and six trillion cubic feet of natural gas.
Mr. Salazar said the interest is "proof positive" that the oil-and-gas industry is confident it can meet new drilling rules put in place following the 2010 accident.
The total raised by the winning bids was the fourth-largest for a lease sale in the central Gulf, which includes the waters off the coast of Louisiana, Mississippi and western Alabama.
It was just the second lease sale in the Gulf of Mexico overall since the Deepwater Horizon accident; the prior one last December in the less-developed western Gulf raised $337 million.
Statoil offered the highest single bid, $157 million, for a block in the Mississippi Canyon area, the largest single bid since 1983. Shell made the highest sum of winning bids, $406.5 million. In all, 56 companies made 593 bids on 454 locations. There were 7,250 tracts up for lease, comprising 39 million acres.
After making the upfront payment to win the leases, the companies later make royalty payments to the government based on oil and gas they produce from the tracts.
Environmental groups filed suit in federal court seeking to block Wednesday's sale, including Oceana, the Center for Biological Diversity, Defenders of Wildlife and the Southern Environmental Law Center.
"It's premature to increase drilling in the Gulf before we know how much damage has already been done to the ecosystem," said Jacqueline Savitz, vice president for North America at Oceana.
A spokeswoman for the Bureau of Ocean Energy Management declined to comment on the lawsuit.
Write to Tom Fowler at
Credit: By Tom Fowler
Subject: Oil fields; Leases; Petroleum industry; Energy management; Biological diversity; Natural gas; Energy industry
Location: Mississippi United States--US Gulf of Mexico
People: Salazar, Ken
Company / organization: Name: Statoil; NAICS: 324110; Name: BP PLC; NAICS: 324110, 447110, 211111; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Defenders of Wildlife; NAICS: 813312; Name: Center for Biological Diversity; NAICS: 813312
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 20, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021193051
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021193051?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Canadian Spills Fuel Worries; Three Recent Leaks Ratchet Up Debate Over Plans for New Oil Pipeline Projects
Author: Welsch, Edward
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 June 2012: n/a.
ProQuest document link
Abstract:
CALGARY, Alberta--Three large Canadian oil spills over the past 30 days have increased concern over pipeline safety here, just as the government and the Canadian petroleum industry are trying to drum up support for a series of new pipeline projects.
Full text: CALGARY, Alberta--Three large Canadian oil spills over the past 30 days have increased concern over pipeline safety here, just as the government and the Canadian petroleum industry are trying to drum up support for a series of new pipeline projects.
Enbridge Inc. said late Tuesday that one of its pipelines, carrying heavy oil-sands crude, spilled some 1,450 barrels in eastern Alberta earlier in the week. Earlier this month, Plains All American Pipeline LP spilled up to 3,000 barrels into a reservoir near the small resort town of Sundre, Alberta. And last month, Pace Oil & Gas Ltd. spilled some 5,000 barrels from a well in a remote corner of northwestern Alberta.
More pipelines cross the oil-rich province of Alberta than anywhere else in Canada, and the province's economy relies heavily on oil and natural-gas production. That has all helped to raise tolerance for minor spills among many residents. But amid a spate of big spills this year and last year, environmental groups have stepped up calls for more regulation.
That has coincided with an effort by Canadian officials and the industry to push a series of ambitious new projects--from a proposed Enbridge pipeline that will take oil from Alberta to the Canadian west coast to a series of plans aimed at reversing or expanding pipeline flows, including a controversial proposed expansion of TransCanada Corp.'s Keystone pipeline in Canada and the U.S. The projects are being undertaken to redirect oil or gas to account for new production areas, particularly in the U.S.
Canada's federal government is speeding up the review of big energy infrastructure projects, including for pipelines. On Monday, the Conservative government of Prime Minister Stephen Harper passed legislation that changes some environmental laws in order to help streamline the process.
This week's oil spill in Alberta has become a lightning rod for critics of those changes.
"It's ironic that the day that the House passed the budget bill that significantly rolls back environmental laws there was a major spill in Alberta," said Nathan Lemphers, senior policy analyst for the environmental think tank the Pembina Institute, referring to the Enbridge incident on Monday.
Mr. Lemphers and other critics say the government's ability to monitor pipelines and enforce regulations hasn't kept up with the growth of the industry.
The industry defends its record of pipeline safety. Canadian Energy Pipeline Association spokesman Philippe Reicher said there have been between zero and five spills a year of 50 barrels-plus of oil over the past 10 years. In 2011, about 30,000 barrels were spilled out of 1.2 billion barrels transported, with most coming from a large Plains All American pipeline spill. "We have absolutely not seen an increased trend [in spills]," he said. "When you think of the amount we transport compared to the amount that gets spilled, our reliability factor is 99.99%."
Alberta's provincial energy regulator, the Energy Resources Conservation Board, said pipeline-safety regulations are strong.
"Yes, there have been three major leaks in the past short while, but remember there are 400,000 kilometers [about 250,000 miles] of pipelines in this province and we are shipping millions of barrels a day through those pipelines," ERCB spokesman Darin Barter said.
Last year, Alberta suffered its largest pipeline spill in 36 years, when Plains' Rainbow pipeline spilled about 28,000 barrels of oil into boreal forest near the town of Little Buffalo, Alberta.
In the U.S., an Enbridge line spilled nearly 20,000 barrels into Michigan's Kalamazoo River in 2010, triggering a political firestorm in Washington.
Also last year, TransCanada's Keystone pipeline, which connects Alberta to refineries in Illinois and the storage depot in Cushing, Okla., suffered 14 small leaks during its first year of operation. The company recently reapplied for a U.S. permit to expand that line, after the White House rejected its original proposal, in part, to allow more time to review the environmental impact.
Credit: By Edward Welsch
Subject: Pipelines; Petroleum industry; Oil sands; Natural gas
Location: United States--US Canada
People: Harper, Stephen
Company / organization: Name: TransCanada Corp; NAICS: 486210; Name: Enbridge Inc; NAICS: 486110; Name: Energy Resources Conservation Board; NAICS: 924120; Name: Plains All American Pipeline LP; NAICS: 486110; Name: Canadian Energy Pipeline Association; NAICS: 813910; Name: Pace Oil & Gas Ltd; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 20, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021193131
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021193131?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Regulators Back Off Tougher Curbs on Oil
Author: Cui, Carolyn
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 June 2012: n/a.
ProQuest document link
Abstract:
In an interim report to the G-20, ahead of final recommendations later this year, the International Organization of Securities Commissions, an association of global financial-markets regulators such as the Securities and Exchange Commission, retreated from an earlier proposal to set up a regulatory body to oversee the so-called physical oil market--where oil on tankers and in pipelines is traded between major oil producers and refiners such as Exxon Mobil Corp. and Royal Dutch Shell PLC. This week's report was seen as a reprieve for a group of pricing services such as Platts, a unit of McGraw-Hill Cos., and Argus Media Inc., which collect and publish prices used by the world's oil traders.
Full text: Europe and Syria took center stage at the Group of 20 meeting in Los Cabos, Mexico, this week. But in the oil industry, all eyes were on a report that signaled regulators are backing away from efforts to ratchet up scrutiny of the $2 trillion-a-year market.
In an interim report to the G-20, ahead of final recommendations later this year, the International Organization of Securities Commissions, an association of global financial-markets regulators such as the Securities and Exchange Commission, retreated from an earlier proposal to set up a regulatory body to oversee the so-called physical oil market--where oil on tankers and in pipelines is traded between major oil producers and refiners such as Exxon Mobil Corp. and Royal Dutch Shell PLC.
This week's report was seen as a reprieve for a group of pricing services such as Platts, a unit of McGraw-Hill Cos., and Argus Media Inc., which collect and publish prices used by the world's oil traders. It also demonstrates the difficulty financial regulators have found coming up with ways to extend their reach throughout the murky world of commodities trading.
Trading in physical oil has been of particular concern to regulators, who worry that it has caused volatility and pushed up oil prices globally. Physical oil prices often act as a benchmark for the larger and more actively traded commodities-futures market, including more than 800 exchange-traded energy contracts in the U.S. alone.
"That is what much of the oil market is like right now," said Craig Pirrong, a professor of finance at the University of Houston. The international nature and the lack of liquidity in many markets make it "extremely challenging" to regulate.
In the physical oil market, companies need only report their trades voluntarily. Those deals are reported to companies such as Platts and Argus, which in turn use the information, along with other data, to calculate a fair value for a certain type of oil, which is often posted at the end of the day.
Critics have complained that the system of reporting trades isn't infallible: Companies aren't obliged to report and can influence prices based on what deals they report. Platts and Argus rely on human judgment to produce prices when deals are scarce.
"Even if this situation is not currently being abused, the potential for abuse is obvious," said Liz Bossley, chief executive of Consilience Energy Advisory Group Ltd., a London-based consultancy, in her submission to the international regulatory organization.
Others are concerned about the growing influence Platts and others have on the oil industry. These companies, "which are currently unregulated, are expected to be honest photographers of what they see is going on, not actors or arrangers themselves," said Paul Newman, managing director of ICAP Energy Ltd., a commodities brokerage.
Platts and Argus argue that the system has been functioning well for decades, helping shed light on what would otherwise be an opaque market. They have resisted the push toward extended regulation, arguing that they will lose credibility if regulators can overrule or second-guess them.
"The areas of concern that they raise mirror our own views and we've addressed them in the way we do business," said Adrian Binks, chairman and chief executive of Argus.
Instead, Platts, Argus and ICIS, a London-based pricing service owned by Reed Business Information Ltd., drew up a code of conduct they agreed to abide by that would improve procedures to handle complaints and beef up external auditing.
The industry probe has been going on since 2010, when leaders of the world's biggest economies pushed the regulatory organization to investigate whether the market needed more scrutiny. A final report is expected in November.
In an initial report in March, the organization said it was concerned prices could be manipulated if traders submit false prices or volumes. Among a list of proposals, the organization said it was considering establishing an industry regulator as well as requiring mandatory reporting of trades.
But while the updated report repeated those concerns, it contained fewer recommendations and dropped some of the toughest, including the idea of a regulator. It retained the prospect of requiring that all trades be reported, as well as requirements for better bookkeeping for all price-reporting agencies.
For Platts and Argus, business is booming as producers and consumers demand better information to manage their price risk.
Platts generated $419 million in revenue last year, a 22% surge from a year earlier, according to the company's financial results. Argus, a privately owned U.K. company, is on track for about $115 million in revenue for the fiscal year ending June 30, up from about $90 million a year earlier, Mr. Binks said.
"What fundamentally drives the business are the integrity and reliability of the price assessments," said Larry Neal, president of Platts, the world's largest publisher of commodities data. "We're cautious of anything that would reduce editorial independence and market transparency."
Some traders have been accused in the past of abusing the pricing system, but the number of cases has dropped significantly in recent years. In 2000, U.S. refiner Tosco Corp. sued Arcadia Petroleum, a London-based oil-trading firm, accusing it of manipulating oil prices. Arcadia later settled the suit for an undisclosed sum.
In 2007, Marathon Oil Corp. agreed to pay $1 million to settle oil-manipulation charges by the Commodity Futures Trading Commission.
Arcadia and Marathon neither admitted nor denied wrongdoing.
Platts and Argus say they have safeguards to weed out questionable transactions and minimize manipulation. For example, both say they confirm reported deals with the parties involved.
While the CFTC has no oversight over the physical market, some officials have expressed concern that it could be used to manipulate futures trading.
"We want to make sure the transparency in the trading behavior along with these indexes is completely above board and they are not subject to manipulation," Scott O'Malia, a CFTC commissioner, said in an interview.
Dan Strumpf contributed to this article.
Write to Carolyn Cui at
Credit: By Carolyn Cui
Subject: Petroleum industry; Reporting requirements; Prices; Regulation of financial institutions
Location: Mexico Syria Europe
Company / organization: Name: Platts; NAICS: 511140, 541613; Name: Argus Media Inc; NAICS: 511199; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: McGraw-Hill Cos Inc; NAICS: 511120, 511130, 551112; Name: Group of Twenty; NAICS: 926110; Name: University of Houston; NAICS: 611310; Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: Securities & Exchange Commission; NAICS: 926150; Name: International Organization of Securities Commissions; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 20, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021198828
Document URL: https://login.ezproxy.uta.edu/login?url=https://searc h.proquest.com/docview/1021198828?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Sanctions for Iran as Talks Fail; Penalties to Target Oil Exports; Tehran Remains Defiant on Enrichment Program
Author: Cullison, Alan; Solomon, Jay; Fassihi, Farnaz
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 June 2012: n/a.
ProQuest document link
Abstract:
Western officials had expressed hope that the talks Monday and Tuesday would bear fruit, in part because heightened pressure from the Kremlin, which has traditionally maintained a closer relationship with Iran than most of the other Security Council members that are pressuring Tehran to scale back its nuclear program.
Full text: Sanctions aimed at punishing Iran will begin in two weeks after another round of talks with world powers ended without an agreement by Tehran to curb its nuclear program.
The lead negotiators for both sides said the ball was in the other's court after the end of talks here. Catherine Ashton, the European Union's foreign policy chief, and Saeed Jalili, the lead Iranian negotiator, used similar words, saying that the other had "a choice" to make to get negotiations restarted.
Iran had hoped the talks might forestall the looming sanctions. With new penalties now a certainty, the long-running international dispute has entered an unpredictable phase that will test past Iranian threats to retaliate, including a vow to choke off a key global oil channel, the Strait of Hormuz.
In the absence of talks, sanctions also may be the last barrier to a possible Israeli strike on Iran's nuclear facilities, a step U.S. officials fear could spark a wider conflict.
Iran's economy already is suffering shocks because of a combination of government mismanagement and sanctions that have driven up the cost of staple goods by as much as 50%. Upcoming penalties will up the ante by targeting Iranian oil exports, its main source of revenue. A European Union embargo on all Iranian oil sales takes effect July 1, a move that could endanger as much as a third of Iran's revenue.
Before that, the White House will impose sanctions on firms doing business with Iran's central bank beginning June 28, another tool to drain Tehran of its oil revenue.
The U.S. Congress is likewise poised to push for more sanctions after the failure of talks in the past two months in Istanbul, Baghdad and now Moscow.
U.S. officials underscored their determination to enforce sanctions with a warning to Venezuela on Tuesday over a plan to cooperate with Iran to develop surveillance drones.
"All countries, including Venezuela, have an obligation to comply with international sanctions against Iran," said State Department spokeswoman Victoria Nuland. "We're committed to ensuring that if we see violations of Iran sanctions, that we will call them out and that we will seek appropriate action."
Iran and the world powers agreed to extend the negotiations by planning some lower-level technical meetings on July 3 in Istanbul.
No higher-level meetings are yet scheduled.
Compounding the setback, Iran recently backed out of a tentative deal with the United Nations' nuclear watchdog to provide its inspectors with greater access to scientists, sites and documents believed to be tied to Tehran's nuclear work.
Underscoring the rising stakes, the U.S. House Armed Services Committee will hold a hearing Wednesday on military options for addressing Iran's nuclear program.
Under the new U.S. sanctions, any foreign state bank processing oil transactions through Iran's central bank, called Bank Markazi, could be punished. Nonstate institutions doing business with Bank Markazi could also be hit.
The State Department has granted waivers in recent months from these sanctions to countries that have shown a willingness to reduce their Iran oil purchases.
But China and Singapore could still be targeted after June 28, U.S. officials said.
Additional U.S. sanctions could further target Iranian energy and financial sectors as well as its shipping and insurance businesses, said Sen. Mark Kirk (R., Ill.), who has advanced new sanctions legislation.
"After three rounds of meetings, Iran remains in violation of multiple U.N. Security Council resolutions ordering it to halt all its uranium enrichment activities," Mr. Kirk said.
Diplomats called the two days of talks in Moscow "intense and tough" but said that the two sides remained far apart on how to unwind Iran's uranium enrichment program, which Tehran again Tuesday called an "inalienable right" of the Iranian people.
Western officials had expressed hope that the talks Monday and Tuesday would bear fruit, in part because heightened pressure from the Kremlin, which has traditionally maintained a closer relationship with Iran than most of the other Security Council members that are pressuring Tehran to scale back its nuclear program.
Russian officials dined with the Iranian delegation, and met with members in an effort to push along negotiations.
But U.S. and European officials said the talks remained deadlocked over Iran's program.
As in previous talks in Baghdad last month and in Istanbul before that, Iran demanded a lifting of sanctions before it would back off on its enrichment of uranium to 20% purity, which Western officials call perilously close to weapons grade.
But world powers have insisted that Iran take the first conciliatory move and have been proposing a step-by-step program in which Iran will be rewarded for putting a halt to its high-grade nuclear enrichment, ship out the highly enriched fuel that it has amassed, and shut down a nuclear facility situated deep in a mountain that is impervious to an airstrike.
Ms. Ashton, the lead negotiator for the six powers in talks, said at the end of two days of meeting Tuesday that "significant gaps" remain between the two sides.
U.S. officials insisted that neither they nor their partners changed their demands in Moscow, or offered any sanctions relief before Iran takes steps to start meeting the international community's demands. In fact, the timing of the July 3 meeting, two days after a ban on Iranian oil purchases goes into effect in Europe, is a sign that Iran hasn't won any easing or postponing of sanctions, they said.
In the weeks leading to the talks, Iran likewise took a tough stance, with Iranian officials reiterating the Islamic Republic's position that enriching uranium is an "absolute right" under the Non-Proliferation Treaty.
Mr. Jalili, the Iranian chief negotiator, told Iranian reporters before entering the talks on Monday that this round of talks was really "a test on whether the West is for or against Iran's scientific progress.""Our enemies should know that arrogance and unsubstantiated demands from Iran will lead to nowhere," Mr.Khamenei said, according to official media. He also said Iran's resistance and progress stands as an example of standing up to injustice in the world.
Iran's Supreme Leader Ayatollah Ali Khamenei, who has the last word on all state matters, indirectly made a reference to the nuclear talks in a speech on Monday making it clear where Iran stands on compromise.
Write to Alan Cullison at
Credit: Alan Cullison; Jay Solomon; Farnaz Fassihi
Subject: International relations-US; Meetings; Fines & penalties; Central banks
Location: Iran United States--US Istanbul Turkey
People: Jalili, Saeed Ashton, Catherine (Baroness)
Company / organization: Name: Central Bank-Iran; NAICS: 521110; Name: European Union; NAICS : 926110, 928120; Name: United Nations--UN; NAICS: 928120; Name: Congress; NAICS: 921120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 20, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021365376
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021365376?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Murphy Oil CEO Resigns
Author: Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 June 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: The chief executive of Murphy Oil Corp., David Wood, abruptly resigned late Wednesday and was replaced by the company's former general counsel.
The move surprised some analysts, who noted that Mr. Wood, 55 years old, had been with Murphy Oil for 17 years and the company had not previously indicated a succession plan.
The El Dorado, Ark.-based company produces oil and natural gas in several countries including the U.S., Canada and Malaysia. It also operates a network of over 1,100 retail gasoline stations in 23 U.S. states, primarily in the parking lots of Wal-Mart Stores Inc. Supercenters.
In addition to resigning as president and CEO, Mr. Wood relinquished his post as director, the company said. He will continue to consult with the company for one year.
"David has accomplished a great deal during his tenure with the Company," Murphy Oil's board said in a statement. "We are grateful for his contribution and thank him for his dedication to Murphy."
Analysts with UBS called the unexpected move "highly unusual," noting that Mr. Wood's replacement, former General Counsel Steve Cossé, "is a non-geoscientist who had retired as an officer just 15 months ago."
Murphy Oil did not immediately return requests for comment Wednesday evening. Mr Wood could not be reached for comment.
Write to Tom Fowler at
Credit: By Tom Fowler
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 21, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021227319
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021227319?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Oil-Lease Sale Draws $1.7 Billion in Winning Bids
Author: Fowler, Tom
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]21 June 2012: B.6.
ProQuest document link
Abstract:
The auction attracted winning bids from Royal Dutch Shell PLC, BP PLC and Statoil ASA, among others, showing the industry's eagerness to explore in the offshore area after months of squabbling with the U.S. over strengthened drilling rules.
Full text: HOUSTON -- The first oil- and gas-lease auction for the central Gulf of Mexico since the Deepwater Horizon spill collected $1.7 billion from energy companies, Interior Secretary Ken Salazar said on Wednesday.
The central Gulf of Mexico is widely considered the region's most promising drilling location, but sales of new offshore leases were stalled after the 2010 rig accident, which killed 11 and caused the worst offshore oil spill in U.S. history.
The auction attracted winning bids from Royal Dutch Shell PLC, BP PLC and Statoil ASA, among others, showing the industry's eagerness to explore in the offshore area after months of squabbling with the U.S. over strengthened drilling rules.
Still, analysts with Simmons & Co. International characterized the sale as "less than robust," noting that just 6% of the tracts available for lease received bids. That compared with 7% in a 2010 central Gulf lease sale, and an average of 9% over the previous five central Gulf sales.
If fully developed, the U.S. government estimates that the leases for sale Wednesday could result in the production of up to 1.6 billion barrels of oil and six trillion cubic feet of natural gas.
Mr. Salazar said the interest is "proof positive" that the oil-and-gas industry is confident it can meet new drilling rules.
The total raised by the winning bids was the fourth-largest for a lease sale in the central Gulf, which includes the waters off the coast of Louisiana, Mississippi and western Alabama.
Statoil offered the highest single bid, $157 million, for a block. Shell made the highest sum of winning bids, $406.5 million. In all, 56 companies made 593 bids on 454 locations. There were 7,250 tracts up for lease, comprising 39 million acres.
After making the upfront payment to win the leases, the companies later make royalty payments to the government based on oil and gas they produce from the tracts.
Credit: By Tom Fowler
Subject: Leases; Petroleum industry; Oil fields
Location: United States--US
Company / organization: Name: Statoil; NAICS: 324110; Name: BP PLC; NAICS: 324110, 447110, 211111; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210
Classification: 9190: United States; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.6
Publication year: 2012
Publication date: Jun 21, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021249001
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021249001?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Canadian Spills Fuel Worries --- Three Recent Leaks Ratchet Up Debate Over Plans for New Oil Pipeline Projects
Author: Welsch, Edward
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]21 June 2012: B.6.
ProQuest document link
Abstract:
Three large Canadian oil spills over the past 30 days have increased concern over pipeline safety here, just as the government and the Canadian petroleum industry are trying to drum up support for a series of new pipeline projects.
Full text: CALGARY, Alberta -- Three large Canadian oil spills over the past 30 days have increased concern over pipeline safety here, just as the government and the Canadian petroleum industry are trying to drum up support for a series of new pipeline projects.
Enbridge Inc. said late Tuesday that one of its pipelines, carrying heavy oil-sands crude, spilled some 1,450 barrels in eastern Alberta earlier in the week. Earlier this month, Plains All American Pipeline LP spilled up to 3,000 barrels into a reservoir near the small resort town of Sundre, Alberta. And last month, Pace Oil & Gas Ltd. spilled some 5,000 barrels from a well in a remote corner of northwestern Alberta.
More pipelines cross the oil-rich province of Alberta than anywhere else in Canada, and the province's economy relies heavily on oil and natural-gas production. That has all helped to raise tolerance for minor spills among many residents. But amid a spate of big spills this year and last year, environmental groups have stepped up calls for more regulation.
That has coincided with an effort by Canadian officials and the industry to push a series of ambitious projects -- from a proposed Enbridge pipeline that will take oil from Alberta to the Canadian west coast to a series of plans aimed at reversing or expanding pipeline flows, including a controversial proposed expansion of TransCanada Corp.'s Keystone pipeline in Canada and the U.S.
Canada's federal government is speeding up the review of big energy infrastructure projects. Monday, the government passed legislation that changes some environmental laws in order to help streamline the process.
This week's oil spill has become a lightning rod for critics.
"It's ironic that the day that the House passed the budget bill that significantly rolls back environmental laws there was a major spill in Alberta," said Nathan Lemphers, policy analyst for the environmental think tank the Pembina Institute, referring to the Enbridge incident on Monday.
The industry defends its record of safety. Canadian Energy Pipeline Association spokesman Philippe Reicher said there have been between zero and five spills a year of 50 barrels-plus of oil over the past 10 years.
Alberta's provincial energy regulator, the Energy Resources Conservation Board, said safety regulations are strong.
"Yes, there have been three major leaks in the past short while, but remember there are 400,000 kilometers [about 250,000 miles] of pipelines in this province and we are shipping millions of barrels a day through those pipelines," ERCB spokesman Darin Barter said.
Credit: By Edward Welsch
Subject: Petroleum industry; Pipelines; Oil spills
Location: Canada
Company / organization: Name: TransCanada Corp; NAICS: 486210; Name: Enbridge Inc; NAICS: 486110; Name: Energy Resources Conservation Board; NAICS: 924120; Name: Plains All American Pipeline LP; NAICS: 486110; Name: Canadian Energy Pipeline Association; NAICS: 813910; Name: Pace Oil & Gas Ltd; NAICS: 211111
Classification: 9172: Canada; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.6
Publication year: 2012
Publication date: Jun 21, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021249009
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021249009?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Regulators Back Off Tougher Curbs on Oil
Author: Cui, Carolyn
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]21 June 2012: C.1.
ProQuest document link
Abstract:
In an interim report to the G-20, ahead of final recommendations later this year, the International Organization of Securities Commissions, an association of global financial-markets regulators such as the Securities and Exchange Commission, retreated from an earlier proposal to set up a regulatory body to oversee the so-called physical oil market -- where oil on tankers and in pipelines is traded between major oil producers and refiners such as Exxon Mobil Corp. and Royal Dutch Shell PLC. This week's report was seen as a reprieve for a group of pricing services such as Platts, a unit of McGraw-Hill Cos., and Argus Media Inc., which collect and publish prices used by the world's oil traders.
Full text: Europe and Syria took center stage at the Group of 20 meeting in Los Cabos, Mexico, this week. But in the oil industry, all eyes were on a report that signaled regulators are backing away from efforts to ratchet up scrutiny of the $2 trillion-a-year market.
In an interim report to the G-20, ahead of final recommendations later this year, the International Organization of Securities Commissions, an association of global financial-markets regulators such as the Securities and Exchange Commission, retreated from an earlier proposal to set up a regulatory body to oversee the so-called physical oil market -- where oil on tankers and in pipelines is traded between major oil producers and refiners such as Exxon Mobil Corp. and Royal Dutch Shell PLC.
This week's report was seen as a reprieve for a group of pricing services such as Platts, a unit of McGraw-Hill Cos., and Argus Media Inc., which collect and publish prices used by the world's oil traders. It also demonstrates the difficulty financial regulators have found coming up with ways to extend their reach throughout the murky world of commodities trading.
Trading in physical oil has been of particular concern to regulators, who worry that it has caused volatility and pushed up oil prices globally. Physical oil prices often act as a benchmark for the larger and more actively traded commodities-futures market, including more than 800 exchange-traded energy contracts in the U.S. alone.
"That is what much of the oil market is like right now," said Craig Pirrong, a professor of finance at the University of Houston. The international nature and the lack of liquidity in many markets make it "extremely challenging" to regulate.
In the physical oil market, companies need only report their trades voluntarily. Those deals are reported to companies such as Platts and Argus, which in turn use the information, along with other data, to calculate a fair value for a certain type of oil, which is often posted at the end of the day.
Critics have complained that the system of reporting trades isn't infallible: Companies aren't obliged to report and can influence prices based on what deals they report. Platts and Argus rely on human judgment to produce prices when deals are scarce.
"Even if this situation is not currently being abused, the potential for abuse is obvious," said Liz Bossley, chief executive of Consilience Energy Advisory Group Ltd., a London-based consultancy, in her submission to the international regulatory organization.
Others are concerned about the growing influence Platts and others have on the oil industry. These companies, "which are currently unregulated, are expected to be honest photographers of what they see is going on, not actors or arrangers themselves," said Paul Newman, managing director of ICAP Energy Ltd., a commodities brokerage.
Platts and Argus argue that the system has been functioning well for decades, helping shed light on what would otherwise be an opaque market. They have resisted the push toward extended regulation, arguing that they will lose credibility if regulators can overrule or second-guess them.
"The areas of concern that they raise mirror our own views and we've addressed them in the way we do business," said Adrian Binks, chairman and chief executive of Argus.
Instead, Platts, Argus and ICIS, a London-based pricing service owned by Reed Business Information Ltd., drew up a code of conduct they agreed to abide by that would improve procedures to handle complaints and beef up external auditing.
The industry probe has been going on since 2010, when leaders of the world's biggest economies pushed the regulatory organization to investigate whether the market needed more scrutiny. A final report is expected in November.
In an initial report in March, the organization said it was concerned prices could be manipulated if traders submit false prices or volumes. Among a list of proposals, the organization said it was considering establishing an industry regulator as well as requiring mandatory reporting of trades.
But while the updated report repeated those concerns, it contained fewer recommendations and dropped some of the toughest, including the idea of a regulator. It retained the prospect of requiring that all trades be reported, as well as requirements for better bookkeeping for all price-reporting agencies.
For Platts and Argus, business is booming as producers and consumers demand better information to manage their price risk.
Platts generated $419 million in revenue last year, a 22% surge from a year earlier, according to the company's financial results. Argus, a privately owned U.K. company, is on track for about $115 million in revenue for the fiscal year ending June 30, up from about $90 million a year earlier, Mr. Binks said.
"What fundamentally drives the business are the integrity and reliability of the price assessments," said Larry Neal, president of Platts, the world's largest publisher of commodities data. "We're cautious of anything that would reduce editorial independence and market transparency."
Some traders have been accused in the past of abusing the pricing system, but the number of cases has dropped significantly in recent years. In 2000, U.S. refiner Tosco Corp. sued Arcadia Petroleum, a London-based oil-trading firm, accusing it of manipulating oil prices. Arcadia later settled the suit for an undisclosed sum.
In 2007, Marathon Oil Corp. agreed to pay $1 million to settle oil-manipulation charges by the Commodity Futures Trading Commission.
Arcadia and Marathon neither admitted nor denied wrongdoing.
Platts and Argus say they have safeguards to weed out questionable transactions and minimize manipulation. For example, both say they confirm reported deals with the parties involved.
Credit: By Carolyn Cui
Subject: Petroleum industry; Reporting requirements; Prices; Regulation of financial institutions; Economic summit conferences
Location: Mexico Syria Europe
Company / organization: Name: Platts; NAICS: 511140, 541613; Name: Argus Media Inc; NAICS: 511199; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: McGraw-Hill Cos Inc; NAICS: 511120, 511130, 551112; Name: Group of Twenty; NAICS: 926110; Name: University of Houston; NAICS: 611310; Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: Securities & Exchange Commission; NAICS: 926150; Name: International Organization of Securities Commissions; NAICS: 813910
Classification: 9180: International; 4310: Regulation; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.1
Publication year: 2012
Publication date: Jun 21, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021254491
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021254491?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Plunges 4% in Commodities Rout
Author: Biers, John; Kent, Sarah
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 June 2012: n/a.
ProQuest document link
Abstract:
In Europe, business activity in the euro zone contracted for the fifth consecutive month in June, increasing the likelihood that the European Central Bank will cut its key interest rate in an effort to stimulate growth when its governing council meets in two weeks.
Full text: Oil prices plunged 4% to below $80, part of a broad selloff in commodities, sending an alarming signal about the health of the global economy.
Crude for August delivery on the New York Mercantile Exchange closed at its lowest level since October, and copper prices also fell in a week of disheartening news from China, the U.S. and Europe..
Commodities like copper and crude oil are often seen as a barometer for industrial activity and, as such, the strength of the world economy. The steep price drops in both over the past few months, with oil down around 30% and copper off 15% since March, are sending a worrying signal about the depth of the global economic problems.
With Nymex oil below $80 a barrel, the talk turned to how much lower oil could drop.
"Every $10 are big numbers," said Kyle Cooper, an analyst with IAF Advisors in Houston. "These are psychologically important price points."
A big question, he said, is if Thursday's trading constitutes a one-day blip, or of oil closes out the week below $80 on Nymex. If the latter happens, the discussion could shift to $73 or $75 oil, he said.
The retreat came as U.S. and global oil inventories remain well-supplied in the face of sluggish demand.
Analysts also pointed to a report released Thursday by the Federal Reserve Bank of Philadelphia that showed a big drop in general business activity within the factory sector, tumbling to -16.6 in June from -5.8 in May. That followed policy moves by the Federal Reserve Wednesday that fell short of the quantitative easing market participants thought would stimulate the economy--and boost demand for crude.
Also weighing on prices was a preliminary gauge of China's manufacturing activity that showed more weakness in June and appeared to build a case for fresh stimulus measures to spur growth in the world's second-biggest economy. The HSBC initial measure of manufacturing also pointed to weakness ahead as its barometer of new manufacturing orders, particularly export orders, showed further weakening.
In Europe, business activity in the euro zone contracted for the fifth consecutive month in June, increasing the likelihood that the European Central Bank will cut its key interest rate in an effort to stimulate growth when its governing council meets in two weeks.
Oil futures for light sweet crude on the New York Mercantile Exchange dropped $3.25, or 4%, to settle at $78.20. Crude has plunged 9.6% so far this month.
Brent oil futures for August delivery dropped $3.46, or 3.7%, to $89.23, its lowest settlement since Dec. 1.
Among precious metals, gold futures slumped $50.30, or 3.1%, to settle at $1,565.50 an ounce. Silver futures tumbled $1.55, or 5.5%, to end at $26.839 a troy ounce, the lowest settlement price since Jan. 25, 2011.
Copper futures dropped 8.95 cents, or 2.6%, to end at $3.298 a pound.
Cotton futures sank 6% to 78.17 cents a pound, the second straight day of steep declines.
Bucking the broad commodities retreat, Arabica coffee futures rallied 4.6% as concerns over weather in Brazil prompted short-covering from investors.
Some analysts suggest that the fall in prices might not accurately reflect the global economic situation, with the fundamentals for base metals and oil looking brighter in the second half of the year.
"It's all sentiment," said David Wech, head of research at JBC Energy. "This is reflecting the concerns about the global economy not necessarily the global economy itself."
Write to John Biers at and Sarah Kent at
Credit: By John Biers And Sarah Kent
Subject: Commodity prices; Copper; Economic conditions; Central banks; Futures
Location: United States--US China Europe
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210; Name: European Central Bank; NAICS: 521110; Name: Federal Reserve Bank of Philadelphia; NAICS: 521110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 21, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021346831
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021346831?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Drives Slide in Raw Materials
Author: Strumpf, Dan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 June 2012: n/a.
ProQuest document link
Abstract:
Commodities prices fell broadly Thursday, with crude oil tumbling to its lowest level all year, after a slew of negative economic data pointed to slackening demand for raw materials.
Full text: Commodities prices fell broadly Thursday, with crude oil tumbling to its lowest level all year, after a slew of negative economic data pointed to slackening demand for raw materials.
A preliminary reading on Chinese manufacturing activity showed the sector's contraction accelerating this month. In the U.S., the news wasn't much better, with weekly jobless claims coming in weaker than expected and the Federal Reserve holding off on aggressive stimulus measures.
U.S. crude slid to its lowest level since October and the European benchmark was at its cheapest since December 2010.
"It's on a global scale--every single indicator is pointing to slowing economic growth and slowing demand for oil," said Matt Smith, analyst at Summit Energy.
Light, sweet crude for August delivery settled $3.25, or 4%, lower at $78.20 a barrel on the New York Mercantile Exchange, its lowest finish since Oct. 4. Brent crude on ICE Futures Europe was off $3.46, or 3.7%, to $89.23 a barrel, on track for its lowest finish since December 2010.
Benchmark crude in the U.S. is down 29% off its 2012 high near $110 a barrel reached in February, battered by sluggish economic growth in the U.S., Europe's deepening fiscal crisis and the easing standoff over Iran's nuclear program. Crude prices are particularly sensitive to economic headlines because demand for oil and gasoline is closely tied to economic growth.
In the U.S., oil stockpiles rose to their highest level in 22 years, the government reported Wednesday. Demand for gasoline sank to its lowest since 2001.
Other commodities also fell sharply--and the sector as a whole has been on a downward trajectory. The Standard & Poor'sGoldman Sachs Commodities Index is down about 22% from its high on Feb. 24, placing the index in bear-market territory. The index, which tracks the performance of 24 commodities markets, is a widely watched barometer for raw material prices.
Copper for July delivery fell 8.95 cents, or 2.6%, to $3.2980 a pound--its lowest in almost two weeks. Copper prices are widely seen as an economic bellwether because of its broad application across many industries, from construction to autos.
The industrial metal took a beating after a purchasing managers index on China's manufacturing sector fell to 48.1 in June from 48.4 in May. Ratings below 50 indicate contraction from the previous month.
"People are looking for China to be one of the engines of the global recovery, and news that we get of China slowing is not going to be taken well," said Matt Zeman, chief market strategist at Kingsview Financial.
Meanwhile, the number of Americans filing for jobless benefits fell slightly last week, but the prior week's figure was revised higher, underscoring the struggling labor market.
Precious metals also dropped. Silver for July delivery fell $1.550, or 5.4%, to $26.839 a troy ounce, a 16-month low. Gold hit a four-week low of $1,565.50 a troy ounce.
Raw sugar for July delivery fell 1.6% at 21.39 cents per pound. Cocoa for July delivery sank 1.7% to $2,130 per ton.
Meanwhile, the gap between the Nymex and Brent crude contracts continued to narrow Thursday, shrinking to $11.03 a barrel, the lowest level since January.
For more than a year, a bottleneck of oil in the Central U.S. has depressed the price of the U.S. contract, but the reversal of a key pipeline in late May has helped ease the glut. In early June, the pipeline, called Seaway, reported its first delivery of crude to refiners on the Gulf Coast.
Write to Dan Strumpf at
Credit: By Dan Strumpf
Subject: Purchasing managers index; Pipelines; Commodity prices
Location: China United States--US
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 21, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021390628
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021390628?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Chinese Oil Imports From Iran Rebound
Author: Ma, Wayne; Spegele, Brian
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 June 2012: n/a.
ProQuest document link
Abstract:
China's oil imports from Iran continued to sharply rebound in May to nearly match 2011 levels following a steep drop-off earlier this year, figures showed Thursday, a day after Secretary of State Hillary Clinton said Beijing appeared to be taking steps to reduce purchases from Iran.
Full text: China's oil imports from Iran continued to sharply rebound in May to nearly match 2011 levels following a steep drop-off earlier this year, figures showed Thursday, a day after Secretary of State Hillary Clinton said Beijing appeared to be taking steps to reduce purchases from Iran.
The latest data raise pressure on the Obama administration as it tries to decide whether it will grant China an exemption to looming U.S. sanctions that target financial institutions doing business with Iran's energy sector. Granting China an exemption just as its trade with Iran appears to be normalizing could be politically risky for President Barack Obama, analysts say. The deadline to comply with U.S. sanctions is June 28.
China's General Administration of Customs said crude imports from Iran slipped 2.3% in May compared with a year earlier, to 2.2 million metric tons, or 524,000 barrels a day, allowing Iran to reclaim its spot as China's third-largest supplier after it slipped earlier this year. May data also showed imports rose 38.99% compared with April.
Crude imports from Iran were still down nearly 25% in the January-to-May period following commercial disputes between China International United Petroleum & Chemical Co., known as Unipec, and National Iranian Oil Co. The deadlock was resolved in mid-February, and purchases began recovering in April.
Even if China's crude shipments from Iran equal last year's levels for the rest of this year, Beijing's full-year crude imports from Iran would still be 12% lower than in 2011, according to calculations by The Wall Street Journal.
Western diplomats and energy analysts say it is unreasonable to expect Beijing to significantly cut Iran imports in the short term because of its high dependence on them.
It remains unclear whether Washington will accept the import drop-off from early this year as reason for an exemption.
Mark Dubowitz, executive director at the Foundation for Defense of Democracies, a Washington think tank that has pushed for more sanctions against Iran, said the Obama administration is likely concerned about granting China a waiver based on earlier cuts at a time when Iranian crude imports return to previous levels.
"The administration may, however, decide to move ahead with the waiver to avoid a political fight with Beijing," he said.
Chinese Foreign Ministry spokesman Hong Lei reiterated China's opposition to U.S. sanctions at a daily news briefing on Thursday. "China's import of oil from Iran is completely fair and reasonable and does not hurt third parties or the international community," Mr. Hong said.
Mrs. Clinton's remarks, broadcast Wednesday, suggested the U.S. was softening its tone against Beijing ahead of the deadline. "We've seen China slowly but surely take actions," Mrs. Clinton said in an appearance with former Secretary of State James A. Baker III.
Earlier this month, the White House granted exemptions to seven more countries from the new U.S. sanctions before next week's deadline. India and South Korea were among those exempted from the U.S. sanctions after the U.S. believed they had significantly reduced imports.
Thursday's data, meanwhile, showed China's imports from Sudan were halted for a second consecutive month.
Sudan's oil exports originate in oil fields in South Sudan, which stopped crude production in January due to a dispute over transit fees with its northern neighbor. Sudan was China's seventh largest supplier in 2011, exporting about 260,000 barrels a day there.
Surges in imports from Venezuela, Iraq and Oman helped offset reduced supplies from South Sudan and Iran. Potentially longterm South Sudanese supply concerns make Beijing even less likely to slash Iran imports, according to JBC Energy, a Vienna-based consultancy.
Energy analysts say China appears to be growing its strategic petroleum reserves, as a result of supply concerns tied to South Sudan and Iran. China recorded a surprising crude-oil surplus of more than 1 million barrels a day in May, government data showed, which energy analysts have said indicates commercial and strategic stockpiling.
Government data showed China's crude surplus--which is its net crude imports minus refinery throughput--jumped to 440,000 barrels a day in the January-to-May period, from averaging 145,000 barrels a day in 2011. May's unusually large surplus of 4.4 million metric tons is equal to about 15 fully loaded supertankers.
Write to Wayne Ma at and Brian Spegele at
Credit: By Wayne Ma And Brian Spegele
Subject: Sanctions; Petroleum industry; International relations-US; Energy industry
Location: Beijing China Iran United States--US China
People: Obama, Barack Hong Lei Clinton, Hillary
Company / organization: Name: National Iranian Oil Co; NAICS: 324110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 21, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021390636
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021390636?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Drives Slide in Raw Materials
Author: Strumpf, Dan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 June 2012: n/a.
ProQuest document link
Abstract:
Commodities prices fell broadly Thursday, with crude oil tumbling to its lowest level all year, after a slew of negative economic data pointed to slackening demand for raw materials.
Full text: Commodities prices fell broadly Thursday, with crude oil tumbling to its lowest level all year, after a slew of negative economic data pointed to slackening demand for raw materials.
A preliminary reading on Chinese manufacturing activity showed the sector's contraction accelerating this month. In the U.S., the news wasn't much better, with weekly jobless claims coming in weaker than expected and the Federal Reserve holding off on aggressive stimulus measures.
U.S. crude slid to its lowest level since October and the European benchmark was at its cheapest since December 2010.
"It's on a global scale--every single indicator is pointing to slowing economic growth and slowing demand for oil," said Matt Smith, analyst at Summit Energy.
Light, sweet crude for August delivery settled $3.25, or 4%, lower at $78.20 a barrel on the New York Mercantile Exchange, its lowest finish since Oct. 4. Brent crude on ICE Futures Europe was off $3.46, or 3.7%, to $89.23 a barrel, on track for its lowest finish since December 2010.
Benchmark crude in the U.S. is down 29% off its 2012 high near $110 a barrel reached in February, battered by sluggish economic growth in the U.S., Europe's deepening fiscal crisis and the easing standoff over Iran's nuclear program. Crude prices are particularly sensitive to economic headlines because demand for oil and gasoline is closely tied to economic growth.
In the U.S., oil stockpiles rose to their highest level in 22 years, the government reported Wednesday. Demand for gasoline sank to its lowest since 2001.
Other commodities also fell sharply--and the sector as a whole has been on a downward trajectory. The Standard & Poor'sGoldman Sachs Commodities Index is down about 22% from its high on Feb. 24, placing the index in bear-market territory. The index, which tracks the performance of 24 commodities markets, is a widely watched barometer for raw material prices.
Copper for July delivery fell 8.95 cents, or 2.6%, to $3.2980 a pound--its lowest in almost two weeks. Copper prices are widely seen as an economic bellwether because of its broad application across many industries, from construction to autos.
The industrial metal took a beating after a purchasing managers index on China's manufacturing sector fell to 48.1 in June from 48.4 in May. Ratings below 50 indicate contraction from the previous month.
"People are looking for China to be one of the engines of the global recovery, and news that we get of China slowing is not going to be taken well," said Matt Zeman, chief market strategist at Kingsview Financial.
Meanwhile, the number of Americans filing for jobless benefits fell slightly last week, but the prior week's figure was revised higher, underscoring the struggling labor market.
Precious metals also dropped. Silver for July delivery fell $1.550, or 5.4%, to $26.839 a troy ounce, a 16-month low. Gold hit a four-week low of $1,565.50 a troy ounce.
Raw sugar for July delivery fell 1.6% at 21.39 cents per pound. Cocoa for July delivery sank 1.7% to $2,130 per ton.
Meanwhile, the gap between the Nymex and Brent crude contracts continued to narrow Thursday, shrinking to $11.03 a barrel, the lowest level since January.
For more than a year, a bottleneck of oil in the Central U.S. has depressed the price of the U.S. contract, but the reversal of a key pipeline in late May has helped ease the glut. In early June, the pipeline, called Seaway, reported its first delivery of crude to refiners on the Gulf Coast.
Write to Dan Strumpf at
Credit: By Dan Strumpf
Subject: Purchasing managers index; Pipelines; Commodity prices
Location: China United States--US
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 22, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021390840
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021390840?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Beijing's Oil Imports From Iran Rebound
Author: Ma, Wayne; Spegele, Brian
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]22 June 2012: A.11.
ProQuest document link
Abstract:
China's oil imports from Iran continued to sharply rebound in May to nearly match 2011 levels following a steep drop-off earlier this year, figures showed Thursday, a day after Secretary of State Hillary Clinton said Beijing appeared to be taking steps to reduce purchases from Iran.
Full text: China's oil imports from Iran continued to sharply rebound in May to nearly match 2011 levels following a steep drop-off earlier this year, figures showed Thursday, a day after Secretary of State Hillary Clinton said Beijing appeared to be taking steps to reduce purchases from Iran.
The latest data raise pressure on the Obama administration as it tries to decide whether it will grant China an exemption to looming U.S. sanctions that target financial institutions doing business with Iran's energy sector. Granting China an exemption just as its trade with Iran appears to be normalizing could be politically risky for President Barack Obama, analysts say. The deadline to comply with U.S. sanctions is June 28.
China's General Administration of Customs said crude imports from Iran slipped 2.3% in May compared with a year earlier, to 2.2 million metric tons, or 524,000 barrels a day, allowing Iran to reclaim its spot as China's third-largest supplier after it slipped earlier this year. May data showed imports rose 39% compared with April.
Crude imports from Iran were still down nearly 25% in the January-to-May period following commercial disputes between China International United Petroleum & Chemical Co., known as Unipec, and National Iranian Oil Co. The deadlock was resolved in mid-February.
Even if China's crude shipments from Iran equal last year's levels for the rest of this year, Beijing's full-year crude imports from Iran would still be 12% lower than in 2011, according to calculations by The Wall Street Journal.
Western diplomats say it is unreasonable to expect Beijing to significantly cut Iran imports in the short term.
Chinese Foreign Ministry spokesman Hong Lei reiterated China's opposition to U.S. sanctions on Thursday.
Credit: By Wayne Ma and Brian Spegele
Subject: Sanctions; International relations-US; Crude oil; Imports
Location: United States--US Iran China
Classification: 9179: Asia & the Pacific; 1300: International trade & foreign investment
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.11
Publication year: 2012
Publication date: Jun 22, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021441668
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021441668?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Drives Slide In Raw Materials
Author: Strumpf, Dan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]22 June 2012: C.4.
ProQuest document link
Abstract:
Commodities prices fell broadly Thursday, with crude oil tumbling to its lowest level all year, after a slew of negative economic data pointed to slackening demand for raw materials.
Full text: Commodities prices fell broadly Thursday, with crude oil tumbling to its lowest level all year, after a slew of negative economic data pointed to slackening demand for raw materials.
A preliminary reading on Chinese manufacturing activity showed the sector's contraction accelerating this month. In the U.S., the news wasn't much better, with weekly jobless claims coming in weaker than expected and the Federal Reserve holding off on aggressive stimulus measures.
U.S. crude slid to its lowest level since October and the European benchmark was at its cheapest since December 2010.
"It's on a global scale -- every single indicator is pointing to slowing economic growth and slowing demand for oil," said Matt Smith, analyst at Summit Energy.
Light, sweet crude for August delivery settled $3.25, or 4%, lower at $78.20 a barrel on the New York Mercantile Exchange, its lowest finish since Oct. 4. Brent crude on ICE Futures Europe was off $3.46, or 3.7%, to $89.23 a barrel, on track for its lowest finish since December 2010.
Benchmark crude in the U.S. is down 29% off its 2012 high near $110 a barrel reached in February, battered by sluggish economic growth in the U.S., Europe's deepening fiscal crisis and the easing standoff over Iran's nuclear program. Crude prices are particularly sensitive to economic headlines because demand for oil and gasoline is closely tied to economic growth.
In the U.S., oil stockpiles rose to their highest level in 22 years, the government reported Wednesday. Demand for gasoline sank to its lowest since 2001.
Other commodities also fell sharply -- and the sector as a whole has been on a downward trajectory. The Standard & Poor'sGoldman Sachs Commodities Index is down about 22% from its high on Feb. 24, placing the index in bear-market territory. The index, which tracks the performance of 24 commodities markets, is a widely watched barometer for raw material prices.
Copper for July delivery fell 8.95 cents, or 2.6%, to $3.2980 a pound -- its lowest in almost two weeks. Copper prices are widely seen as an economic bellwether because of its broad application across many industries, from construction to autos.
The industrial metal took a beating after a purchasing managers index on China's manufacturing sector fell to 48.1 in June from 48.4 in May. Ratings below 50 indicate contraction from the previous month.
"People are looking for China to be one of the engines of the global recovery, and news that we get of China slowing is not going to be taken well," said Matt Zeman, chief market strategist at Kingsview Financial.
Meanwhile, the number of Americans filing for jobless benefits fell slightly last week, but the prior week's figure was revised higher, underscoring the struggling labor market.
Precious metals also dropped. Silver for July delivery fell $1.550, or 5.4%, to $26.839 a troy ounce, a 16-month low. Gold hit a four-week low of $1,565.50 a troy ounce.
Raw sugar for July delivery fell 1.6% at 21.39 cents per pound. Cocoa for July delivery sank 1.7% to $2,130 per ton.
Meanwhile, the gap between the Nymex and Brent crude contracts continued to narrow Thursday, shrinking to $11.03 a barrel, the lowest level since January.
For more than a year, a bottleneck of oil in the Central U.S. has depressed the price of the U.S. contract, but the reversal of a key pipeline in late May has helped ease the glut. In early June, the pipeline, called Seaway, reported its first delivery of crude to refiners on the Gulf Coast.
Credit: By Dan Strumpf
Subject: Purchasing managers index; Pipelines; Commodity prices; Crude oil
Location: China United States--US
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Jun 22, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021443517
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021443517?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Repro duced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
India Working on Insurance for Iran Oil Imports
Author: Sharma, Rakesh; Choudhury, Santanu
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 June 2012: n/a.
ProQuest document link
Abstract:
NEW DELHI - India is speeding up efforts to ensure insurance cover for tankers that bring in crude-oil from Iran, about a week before the onset of European Union sanctions that will effectively cut off insurance services for oil shipments from the Islamic Republic.
Full text: NEW DELHI - India is speeding up efforts to ensure insurance cover for tankers that bring in crude-oil from Iran, about a week before the onset of European Union sanctions that will effectively cut off insurance services for oil shipments from the Islamic Republic.
The move by India's oil ministry comes after the South Asian nation got exemptions from U.S. sanctions. India and South Korea were among the countries exempted earlier this month from U.S. sanctions after the U.S. believed they had significantly reduced oil imports from Iran.
But India continues to face logistical challenges in importing oil from Iran as the EU sanctions, which come into effect on July 1, are affecting its ability to get insurance for ships carrying Iranian crude.
Oil Secretary G.C. Chaturvedi said Friday that the oil ministry has asked the shipping ministry to allow refiners to import crude from Iran on Iranian ships.
The current system for importing oil favors Indian shippers as part of the federal government's policy to support the local shipping industry. Allowing Iranian ships to bring crude to India would free refiners from the responsibility of arranging insurance for the tankers.
"The ministry of shipping is considering our proposal," Mr. Chaturvedi told reporters.
He said the oil ministry has also asked the finance ministry to press state-owned reinsurer General Insurance Corp. to provide insurance cover to Indian ships carrying crude from Iran. The oil ministry is also working to get sovereign guarantees for Indian vessels, he added.
"We are providing for the contingency. We are taking all steps to ensure supplies are not hit," Mr. Chaturvedi said.
Asian countries that import oil from Iran, such as India, Japan and South Korea, have been working to find a way around EU sanctions. Earlier this month, Japan passed a bill that would enable the government to back insurance plans for tankers carrying Iranian crude-oil to the country.
India has been reducing its oil shipments from Iran saying it wants to cut dependence on a single nation. Shipments from Iran fell 5.7% in the financial year ended March 31 to 17.44 million tons, or 349,300 barrels a day. That led to Iran slipping to fourth position from second among oil suppliers to India.
Indian refiners aim to cut Iranian imports by 11% to about 15.5 million tons this fiscal year.
"We are receiving supplies from Iran," said Oil Minister Jaipal Reddy. "We are adopting all possible legitimate means," he said, adding that India has "decided not to discuss these things too loudly and too frequently."
Earlier this month, Mr. Reddy met energy ministers from Saudi Arabia, Qatar and Algeria, seeking additional supplies for India.
Write to Rakesh Sharma at and Santanu Choudhury at
Credit: By Rakesh Sharma And Santanu Choudhury
Subject: Oil sands; Sanctions; Shipping industry
Location: India Japan United States--US Iran South Korea
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 22, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021636826
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021636826?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibi ted without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil and the Canadian Dollar: Too Close to Last
Author: Cottle, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 June 2012: n/a.
ProQuest document link
Abstract:
[...]pervasive is this risk trade that the correlation between the loonie and oil, in this instance expressed as the Nymex benchmark, has never been higher than it is now.
Full text: One of the hoariest old correlations in the market is that between oil and the Canadian dollar.
There's no special mystery about it, either.
On the most basic level, Canada produces and exports oil, so that link is clear. However, it also produces and exports a lot of other raw materials the world needs so, when an oil-friendly growth cycle is in the offing, the chances are it will be friendly to all that other stuff too, so buy Canada.
In more recent, crisis-ridden days, that correlation has increased. Oil and the Canadian dollar are now both 'risk assets', which means, essentially, that they are sold when the euro zone dominates the headlines and bought when it doesn't. Oh, the logic of markets.
Anyway, so pervasive is this risk trade that the correlation between the loonie and oil, in this instance expressed as the Nymex benchmark, has never been higher than it is now. Or, to put it another way, the correlation between Nymex oil and USD/CAD has never been lower.
According to Societe Generale's correlation crunchers, the six-month rolling correlation between the two is around -0.8, an historic low.
So, what happens from here? Well, despite some reticence from the U.S. Federal Reserve this week, investors still reckon we'll see another flood of special stimulus from the world's central banks before too long. On past evidence, this should give risk assets a shot in the arm, even if the law of diminishing returns means that it won't buy them the months of grace they got when the European Central Bank opened the liquidity floodgates at the start of this year.
However, when the results of that fade, it would seem that the loonie's correlation with oil has nowhere to go but down. After all, oil prices are not the sole determinant of Canadian economic fortunes. The fate of the U.S. economy will be far more important; it takes more than 70% of Canadian exports.
Canada is now far more about the U.S., and Fed QE, than about oil, as SocGen puts it.
Write to David Cottle at
Credit: By David Cottle
Subject: Canadian dollar; Central banks; Investment policy
Location: Canada
Company / organization: Name: Societe Generale; NAICS: 522110, 522120, 523110, 523120; Name: European Central Bank; NAICS: 521110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 22, 2012
column: DJ FX Trader
Section: Forex
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021636827
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021636827?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Brent Oil Prices Signal Possible Turning Point
Author: Cui, Carolyn
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 June 2012: n/a.
ProQuest document link
Abstract:
Backwardation is a condition in which oil for delivery several months out is lower than the near-term price. Since February 2011, except for a few brief occasions, Brent has been backwardated, indicating buyers are willing to pay a premium to have the oil immediately, he said.
Full text: Oil has lost nearly one-third of its value over the past three months. This week, the Brent market made a surprising turn, which could indicate the market may be near a turning point.
On Tuesday, the price of the Brent crude contract for near-term delivery dropped below those for delivery several months out, flipping into a market condition known as "contango." As of the close of trading Friday, the front-month Brent contract, for August delivery, settled at $90.98 a barrel, up $1.75, or 2%, compared with $91.34 for the October contract.
Brent, traded on the ICE Futures U.S. exchange, is the European benchmark, while West Texas Intermediate is the U.S. benchmark. WTI, traded on the New York Mercantile Exchange, rose $1.56, or 2%, to $79.76.
This marks a reversal from an extended period of "backwardation" in the Brent market, said James Williams, owner of WTRG Economics, an independent energy-research company. Backwardation is a condition in which oil for delivery several months out is lower than the near-term price. Since February 2011, except for a few brief occasions, Brent has been backwardated, indicating buyers are willing to pay a premium to have the oil immediately, he said.
"The fact that it is trading in contango through most of 2013 underscores how weak the fundamentals are," said Hussein Allidina, head of commodity research at Morgan Stanley. In a contango market, producers are offering discounts for oil ready for shipment, suggesting subdued demand and ample supply. For now, fears of supply disruptions, in particular Western tensions with Iran, that have been plaguing the Brent market finally seem to be abating.
If the price gap between near- and long-term Brent prices widens, it may trigger a series of reactions among market participants. Refiners would have the incentive to buy crude oil and put it into storage to capitalize on lower spot prices, while producers will choose to leave the oil in the ground as they expect to fetch a higher price later.
If Saudi Arabia decides to cut back on its output, it will help absorb the glut in the market and stop the downward trend in crude prices, analysts said.
Write to Carolyn Cui at
Credit: By Carolyn Cui
Subject: Oil sands; Petroleum industry
Location: United States--US
Company / organization: Name: Morgan Stanley; NAICS: 523110, 523120, 523920; Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 22, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021724435
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021724435?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Prices Head Back to the Future
Author: Peaple, Andrew
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 June 2012: n/a.
ProQuest document link
Abstract:
The average call on oil production from Organization of Petroleum Exporting countries needed to balance the market was 31 million barrels per day in 2010's fourth quarter.
Full text: As you were.
Having dropped 25% since early May, Brent crude oil now trades around $90 per barrel, a level last seen in the fourth quarter of 2010. That was before Libya's civil war took its oil supply off the market for most of 2011. Those barrels have now largely returned, and in the meantime the euro-zone crisis has deepened and China's growth has slackened.
So oil prices could yet trend lower. The question is: how low?
Oil supply and demand have loosened somewhat. The average call on oil production from Organization of Petroleum Exporting countries needed to balance the market was 31 million barrels per day in 2010's fourth quarter. But they only produced 29.3 million barrels per day, according to the International Energy Agency.
In contrast, this quarter's call on OPEC will likely be 29.4 million barrels per day, the IEA estimates. But OPEC--thanks largely to high Saudi Arabian output--is producing around 31.8 million barrels per day.
In this excess supply lie the seeds of a more bullish argument. When oil prices peaked in the spring, Saudi Arabia said their longer-term target is still $100 per barrel, suggesting they might rein in production soon. Other oil producers could also start cutting: The marginal cost of production for the world's 50 largest oil companies outside OPEC and Russia is now $90 per barrel, Sanford C. Bernstein estimates.
But Saudi Arabia must tread carefully. It increased production largely on fears of lost supply from Iran. That threat hasn't gone away. It will also be wary of engineering higher prices when global demand is still so fragile.
For now, the drip-drip of poor manufacturing data could keep prices trending downward toward $70 per barrel, Capital Economics forecasts.
However, that assumes the avoidance of a catastrophe, most likely stemming from Europe, akin to the collapse of Lehman Brothers. Only this time, governments will have less firepower for a new fiscal stimulus. That scenario would see oil falling to $50 and failing to recover much beyond $80 over the medium term, Credit Suisse estimates. That would be bad enough for oil bulls. Even worse is the knowledge that in that sort of crisis, even the most bearish estimates often prove too optimistic.
Write to Andrew Peaple at
Credit: By Andrew Peaple
Subject: Petroleum industry; Oil prices; Petroleum production; Energy economics
Location: Libya China Saudi Arabia
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: Lehman Brothers Holdings Inc; NAICS: 523110, 551112; Name: Credit Suisse Group; NAICS: 522110; Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 22, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021724470
Document URL: https://login.ezproxy.uta.edu/l ogin?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021724470?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Mystery Ship Underlines Pain Tehran Faces Over Sanctions; As Iran Sanctions Build, an Oil Shipper and a Chinese Shipbuilder Distance Themselves From New Vessel
Author: Faucon, Benoît; Ma, Wayne
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 June 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: An Iranian oil shipper's $100 million tanker, on order from China, is nearly ready to sail the high seas. But it's turning out to be a mystery ship.
The National Iranian Tanker Co., a private company that records show ordered the tanker three years ago for its fleet, has acknowledged it ordered the ship but is now trying to distance itself from its ownership. The ship's Chinese state-owned builder, Shanghai Waigaoqiao Shipbuilding Co., dismisses any link with Iran or NITC.
The fog around the new tanker shows the high level of secrecy companies are imposing on their business with Iran these days--especially in the oil sector--in the face of heightened pressure to squeeze Iran economically.
This week, a third recent round of international talks with Tehran aimed at curbing the country's nuclear program failed. That clears the way for a European Union oil embargo to kick in on July 1, adding to pressures to Iran's faltering economy.
The sanctions have scared away many foreign oil shippers, leaving Tehran increasingly reliant on NITC to export the country's economic lifeblood.
Until now, the company had been spared by the restrictions. But political and legal pressure from governments and groups such as New York-based United Against Nuclear Iran is building for companies to cut their links to the tanker company.
A bill in Congress would squeeze NITC further by banning any financial transaction with the company if the U.S. Treasury determines the company is an "agent or affiliate" of Iran's Revolutionary Guard Corps--a connection the Iranian company denies. The guards, an elite branch of Iran's military, are under U.S. sanctions for allegedly aiding Iran's nuclear program and supporting terrorists.
Meanwhile, NITC is working on creative ways to ship oil, especially to Iran's biggest customers of China and India. One possibility Iranian officials say NITC is considering is selling the ship--named "Safe"--to a third party and leasing it back. Another is to transfer legal ownership of the ship to a shell company in the European tax haven of Malta.
Trevor Houser, an energy director of at New York-based consultancy Rhodium Group, said NITC's ownership woes underline how stepped-up international pressure on Iran is making it costlier and more difficult to ship Iranian oil abroad.
Safe, which the official say will soon be delivered, is a behemoth, with a capacity of two million barrels of oil valued at about $200 million. NITC has a fleet of 39 oil tankers that can carry nearly a third of Iran's normal exports. Until recently, the country exported 2.2 million barrels a day of crude--which earn about half of the country's revenue.
Industry database Equasis and two people in Iran familiar with the matter say NITC ordered Safe from Shanghai Waigaoqiao and it cost $100 million. But NITC is now trying to conceal its ownership of the ship.
The ship may be controlled by "an intermediary [non-Iranian] company, not in the name of NITC," a person said.
A representative of Shanghai Waigaoqiao--which shipping databases say is about to deliver a second tanker for NITC called Souvenir--said the company has never done business with Iran nor with NITC.
Malta's company registry shows that two companies, Safe Shipping Co. Ltd. and Souvenir Shipping Co. Ltd., are controlled by NITC via intermediaries. One of the Iranians familiar with the matter said the companies were initially set up as part of the deals to finance purchase of the ships. But amid sanctions, the arrangement has other advantages for Iran: Safe will fly the flag of Malta, not Iran, according to a Malta ship-registration official, obscuring its ownership.
Maltese flags and incorporation are a favorite among shippers because they are convenient to get bank mortgages from banks while limiting the owners' exposure to legal responsibility.
Iran has used the Malta strategy in the past to bypass sanctions. With U.S. penalties looming in 2008 for aiding Iran's nuclear and military programs, the state-owned Islamic Republic of Iran Shipping Lines transferred the registration of its ships to corporate shells outside Iran to tax havens including Malta. The strategy was later discovered by an antinuclear group and the shipping company was sanctioned by the EU.
An official at Malta's ship registration said it complies with EU sanctions on Iran.
NITC is considering a sale-leaseback arrangement, hoping to avoid sanctions while keeping the vessel under its control.
The Shanghai Waigaoqiao representative said Safe could be handed over to a company called Parakou Group in Hong Kong. But a person familiar with NITC's plans said it is "not Parakou necessarily" that will own the ship. "There could be other owners."
A Parakou representative said the company only advised a third party, which he declined to name, over owning and operating Safe and Souvenir.
One thing is certain: Iran needs NITC to retain the ability to ship oil abroad as the international pressure begins to pinch.
Mainstream shippers, like New-York-based Overseas Shipholding Group Inc and Bermuda-based Frontline Ltd., have already stopped accepting Iranian oil, leaving a dwindling number of smaller firms to handle it. But even they are disappearing.
In recent months, Libya's General National Maritime Transport--which itself was under U.S. sanctions during its civil conflict last year--has emerged as the single largest transporter of Iranian oil to the EU, with six trips in as many months, according to the Clarksons shipping database.
A transport spokesman confirmed the voyages while saying the company complies with sanctions. But now, it too is pulling back: The Libyan company says it will stop serving Iran from July 1, when an EU ban on the import, transportation and insurance of Iranian oil kicks in.
Write to Wayne Ma at
Credit: Benoît Faucon; Wayne Ma
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 22, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022031328
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022031328?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Brent Oil Prices Signal Possible Turning Point
Author: Cui, Carolyn
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]23 June 2012: B.4.
ProQuest document link
Abstract:
Backwardation is a condition in which oil for delivery several months out is lower than the near-term price. Since February 2011, except for a few occasions, Brent has been backwardated, indicating buyers are willing to pay a premium to have the oil immediately, he said.
Full text: Oil has lost nearly one-third of its value over the past three months. This week, the Brent market made a surprising turn, which could indicate the market may be near a turning point.
On Tuesday, the price of the Brent crude contract for near-term delivery dropped below those for delivery several months out, flipping into a market condition known as "contango." As of the close of trading Friday, the front-month Brent contract, for August delivery, settled at $90.98 a barrel, up $1.75, or 2%, compared with $91.34 for the October contract.
Brent, traded on the ICE Futures U.S. exchange, is the European benchmark, while West Texas Intermediate is the U.S. benchmark. WTI, traded on the New York Mercantile Exchange, rose $1.56, or 2%, to $79.76.
This marks a reversal from an extended period of "backwardation" in the Brent market, said James Williams, owner of WTRG Economics, an energy-research company. Backwardation is a condition in which oil for delivery several months out is lower than the near-term price. Since February 2011, except for a few occasions, Brent has been backwardated, indicating buyers are willing to pay a premium to have the oil immediately, he said.
"The fact that it is trading in contango through most of 2013 underscores how weak the fundamentals are," said Hussein Allidina, head of commodity research at Morgan Stanley. In a contango market, producers are offering discounts for oil ready for shipment, suggesting subdued demand and ample supply. For now, fears of supply disruptions, in particular Western tensions with Iran, that have been plaguing the Brent market finally seem to be abating.
If the price gap between near- and long-term Brent prices widens, it may trigger a series of reactions among market participants. Refiners would have the incentive to buy crude oil and put it into storage to capitalize on lower spot prices, while producers will choose to leave the oil in the ground as they expect to fetch a higher price later.
If Saudi Arabia decides to cut back on its output, it will help absorb the glut in the market and stop the downward trend in crude prices, analysts said.
Credit: By Carolyn Cui
Subject: Oil sands; Petroleum industry; Crude oil prices; Commodity prices
Location: United States--US
Company / organization: Name: Morgan Stanley; NAICS: 523110, 523120, 523920; Name: New York Mercantile Exchange; NAICS: 523210
Classification: 3400: Investment analysis & personal finance; 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.4
Publication year: 2012
Publication date: Jun 23, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021786874
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021786874?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iran's Oil Ships Sail Into Troubled Waters
Author: Fauçon, Benoit
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 June 2012: n/a.
ProQuest document link
Abstract:
Under pressure from lobbying groups campaigning against Iran's nuclear program, some specialized companies that supply the safety certificates required for ships to dock at foreign ports are terminating their dealings with Iran.
Full text: Iran, already braced for escalating sanctions in coming days, is facing another challenge to ship its oil that could ultimately curtail its crude sales more than expected.
Under pressure from lobbying groups campaigning against Iran's nuclear program, some specialized companies that supply the safety certificates required for ships to dock at foreign ports are terminating their dealings with Iran. Tankers from Iran and elsewhere can't sail without a stamp of approval from these "classification societies," which survey the vessels to ensure they are safe and environmentally sound.
The move is narrowing the number of foreign vessels willing to load Iranian oil at Iranian terminals, which could hit Iran's already declining oil exports and ultimately push prices upward.
One by one over the last few months, European classification societies such as Norway's Det Norske Veritas, the U.K.'s Lloyd's Register and France's Bureau Veritas have terminated contracts to survey Iranian ships, including ships for the country's largest tanker company, NITC.
"Without the correct certificates in place...it may be impossible to gain access to an international port," said Peter Sand, chief analyst at international shipping association Bimco.
Any sailing ban on Iranian tankers would be a dramatic setback for Tehran's oil lifeblood, which increasingly relies on its domestic vessels to ship its crude after shippers that feared insurance problems stopped carrying its oil. A European Union embargo coming into force July 1 will ban not only Iranian oil exports to the EU but also the use of European reinsurance programs used by 90% of tankers in the world.
Even without factoring in problems such as classification, most analysts expect Tehran to halve its exports to about one million barrels a day this summer because of the EU ban and U.S. sanctions beginning June 28 on firms doing business with Iran's central bank.
Oil markets are hardly holding their breath at the prospect of lost Iranian supplies. Oil traders in London have been mostly focused on the euro-zone debt crisis, pushing Brent prices down by $35 in recent months to about $90 a barrel. Just in the last week Brent has fallen by 7%.
Yet some analysts say problems such as those faced by Iran to ship its oil could return to the foreground in the second half of the year.
"The uncertainty around Iranian supplies risks pushing actual [Organization of Petroleum Exporting Countries] output lower than" the need for its crude on the market, U.K. bank Barclays said in a note Thursday.
"The issues surrounding Iran's external relations are likely to be highly bullish for prices as the year progresses," it said in a separate report.
Iranian tankers in need of safety certificates aren't out of options, as Asian classification societies have stepped into the breach.
A spokesman for the Korean Register of Shipping said it provides classification services to a small number of Iranian ships as part of its ongoing contractual responsibilities. The Korean Register is in charge of surveying seven tankers, according to its website.
China Classification Society, which didn't return a request for comment, also surveys some of NITC's tankers, according shipping database Equasis.
While confirming the European pullout, an NITC official said the Iranian tanker company is confident its ships will continue to find surveyors. "I don't think we have a problem with classification," he said.
Yet, as the Europeans' pullout underscores, Iranian dealings don't need to be illegal to be terminated. Political pressure will suffice.
A European Union spokeswoman said the EU's oil ban doesn't include classification. NITC isn't currently under sanctions.
"It's quite possible that political pressure has been brought to bear on the classification societies," said Andreas Welz, a maritime lawyer at Newcastle's Mills & Co.
Some classification companies hint that political campaigning from U.S.-based campaign groups was behind their decision to sever their Iranian links.
"It is of the utmost importance that we maintain our good reputation," Germany's Germanische Lloyd said in a letter sent to advocacy group United Against Nuclear Iran, announcing its termination of Iranian ship surveys.
The intense scrutiny surrounding Iran's ships has forced NITC to make its ownership as discrete as possible. In the past two months, the company has changed its flags for many tankers from Iran or Malta for the more opaque Tuvalu or Tanzania, according to Equasis.
Should sanctions escalate, though, even Asian companies may have to pull out. The Korean Register "continues to monitor the situation concerning Iran and closely follows all relevant international regulations," its spokesman said. "KR's policy is to comply, without compromise, with all international regulations concerning Iran."
Write to Benoit Faucon at
Credit: By Benoit Fauçon
Subject: Oil sands; Classification; Bans
Location: Iran
Company / organization: Name: Det Norske Veritas; NAICS: 541380, 541690; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 24, 2012
column: Market Focus
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1021923877
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1021923877?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
EU Confirms Full Iran Oil Embargo to Start Sunday
Author: Norman, Laurence
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 June 2012: n/a.
ProQuest document link
Abstract:
According to two people who saw the text of the statement, foreign ministers said that member states "decided to remain proactively seized" by concerns about the security of energy supplies and would discuss the issue "in light of developments which would require prompt action at the EU level."
Full text: LUXEMBOURG--A full embargo of Iranian crude oil exports will enter into force Sunday as initially planned, the European Union confirmed Monday, as nuclear talks with Tehran remained stymied.
At a meeting in Luxembourg on Monday, EU foreign ministers discussed the latest international talks with Iran over its nuclear program that ended in stalemate in Moscow last week.
Afterwards, the EU confirmed the full embargo would go ahead--ending an exemption for oil imports from contracts signed before January and an exemption allowing European companies to offer certain kinds of insurance contracts for transporting Iranian crude.
The embargo is the centerpiece of a stricter EU approach to Iran over its nuclear program. Measures include sweeping financial sanctions and an asset freeze and travel ban on scores of senior officials and Iranian companies.
The confirmation of the embargo had been widely expected as the nuclear talks between six international powers--the U.S., the U.K., France, German, China and Russia--and Iran bogged down in recent weeks.
After talks in Moscow last week, the two sides failed to even set a new date for high-level talks and in a press conference after the foreign ministers gathering Monday, EU foreign-policy chief Catherine Ashton said the gap between the two sides is "extremely wide."
The U.S. and a number of European countries accuse Iran of seeking to develop nuclear weapons, a charge Tehran has consistently denied. They want Iran to stop enriching uranium at 20% purity grade, which is considered dangerously close to weapons capability.
U.S. and European officials have said the threat of the full oil embargo had played a key role in forcing Tehran back into nuclear talks.
In its statement, the EU said "the objective of the EU remains to achieve a comprehensive, long-term settlement" of the nuclear issue.
The decision was backed by U.K. Foreign Secretary William Hague who earlier Monday had said the EU should start considering further measures it could take if Iran fails to engage seriously in the negotiations.
"It is important the Iranian leaders understand the resolve of the countries of the European Union on this, and that we will go on intensifying the economic pressure until the world can be satisfied that Iran's nuclear program is for peaceful purposes," he told reporters.
Still in a concession to Greece--which had long been the member state most opposed to the embargo--ministers made a pledge to secure the energy supplies of all member states after July 1, several EU diplomats said. The promise was entered into the meeting's minutes, the diplomats said, providing a legal basis for Greece to come back to the issue in future.
When foreign ministers agreed on the embargo in January, Greece extracted a concession that the embargo would be reviewed to see whether it threatened member states' energy security or had a negative effect on the international oil price.
According to two people who saw the text of the statement, foreign ministers said that member states "decided to remain proactively seized" by concerns about the security of energy supplies and would discuss the issue "in light of developments which would require prompt action at the EU level."
Member states also pledged to take "all necessary measures" to ensure "the continuity of energy supplies of member states taking into account their national economic situation," the people said.
-Write to Laurence Norman at laurence.norman@dowjones.com
Write to Laurence Norman at
Credit: By Laurence Norman
Subject: Nuclear weapons; International relations
Location: Iran United States--US United Kingdom--UK Greece Luxembourg
People: Ashton, Catherine (Baroness)
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 25, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022048662
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022048662?accountid=7117
Copyright: (c) 2012 Do w Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
EU Ratifies Sanctions, Bolstered by Oil's Decline
Author: Johnson, Keith
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 June 2012: n/a.
ProQuest document link
Abstract:
Iran's crude-oil production has dropped by about 400,000 barrels per day since the fourth quarter of last year--from 3.5 million barrels per day to about 3.1 million barrels--according to the latest data from the Organization of Petroleum Exporting Countries.
Full text: A sharp fall in oil prices is helping the U.S. and the European Union clamp down on Iranian oil exports in the coming days with less fear that the sanctions will spark a price rise that would harm the global economy.
The EU on Monday ratified its decision to start an embargo against Iranian oil on July 1. British Foreign Secretary William Hague called the current sanctions regime the toughest ever, and said the U.K. would push for intensified sanctions if progress isn't made in nuclear talks with Tehran.
The U.S. benchmark oil price fell again on Monday, closing at $79.21 a barrel in New York trading, from more than $109 in February. Lower prices give the U.S. and EU a measure of flexibility they didn't have at the beginning of the year, when the Obama administration decided to ratchet up pressure on Iran by targeting the country's central bank.
The main worry at the time was that by curtailing Iran's oil exports, the U.S. might trigger a price jump that in turn would undermine any prospect of economic recovery this year.
Iran was "the clearest possible case where oil supplies and oil prices conflict with other security interests," said Elliott Abrams, a former national-security official in the administration of George W. Bush who is now at the Council on Foreign Relations.
The Obama administration determined markets could handle a cutback in Iranian oil, reaffirming the assessment in March and again in early June. With increased oil production from the U.S. and Saudi Arabia, as well as soft demand, crude oil prices have fallen sharply since the spring.
The fall is partly because of signs of a slowdown in China, whose fast-growing economy accounted for much of the surge in global oil prices over the last decade.
Beginning June 28, under legislation signed by President Barack Obama late last year, the U.S. will be able to sanction any country doing business with Iran's central bank, its main conduit for oil sales. The U.S. has given exemptions to countries such as Japan, South Korea and India, which traditionally bought significant amounts of Iranian oil, but which the U.S. says have made efforts to scale back their purchases this year.
Most European countries have been winding down their purchases of Iranian oil in advance of the embargo to take effect July 1. Iran's crude-oil production has dropped by about 400,000 barrels per day since the fourth quarter of last year--from 3.5 million barrels per day to about 3.1 million barrels--according to the latest data from the Organization of Petroleum Exporting Countries.
Obama administration officials said this month that Iranian oil exports had dropped to between 1.2 million and 1.8 million barrels a day, down from about 2.5 million barrels per daylast year.
Even when negotiations between Iran and the West foundered last week in Moscow, the oil markets seem unfazed. Crude oil dropped, and futures contracts for the end of the year are only trading about $1 per barrel higher than oil for delivery in August.
"The oil market has so far taken no attention of the shift back toward less benign potential outcomes for Iran," oil analysts at Barclays noted on Thursday.
Cheaper oil makes it easier for Washington to pursue its foreign-policy goals. Tehran's budget, dependent on oil exports, is based on crude oil costing at least $85 a barrel, Obama administration officials said. To the extent Iran was able to weather the first stage of sanctions earlier this year, it was because soaring oil prices compensated for reduced export volumes. Now, with exports and prices falling, administration officials say that the Iranian regime is feeling significant effects from the sanctions.
More broadly, the shift under way in the U.S. toward greater domestic oil production and less reliance on foreign oil could help loosen decades of restraints for U.S. foreign policy around the globe.
If the U.S. can keep moving toward greater energy independence, Mr. Abrams said, "our options in the world widen and expand in more ways than we can even count."
Write to Keith Johnson at
Credit: By Keith Johnson
Subject: Sanctions; Crude oil prices; Petroleum industry; Oil prices; Petroleum production
Location: Iran United States--US United Kingdom--UK New York
People: Obama, Barack Bush, George W
Company / organization: Name: European Union; NAICS: 926110, 928120; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: Council on Foreign Relations; NAICS: 813910, 541720
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 25, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022048741
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022048741?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: EU Ratifies Sanctions, Bolstered by Oil's Decline
Author: Johnson, Keith
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]26 June 2012: A.8.
ProQuest document link
Abstract:
A sharp fall in oil prices is helping the U.S. and the European Union clamp down on Iranian oil exports in the coming days with less fear that sanctions will spark a price rise that would harm the global economy.
Full text: A sharp fall in oil prices is helping the U.S. and the European Union clamp down on Iranian oil exports in the coming days with less fear that sanctions will spark a price rise that would harm the global economy.
The EU on Monday ratified its decision to start an embargo against Iranian oil on July 1. British Foreign Secretary William Hague called the current sanctions regime the toughest ever, and said the U.K. would push for intensified sanctions if progress isn't made in nuclear talks with Tehran.
The U.S. benchmark oil price fell again on Monday, closing at $79.21 a barrel in New York trading, from more than $109 in February. Lower prices give the U.S. and EU a measure of flexibility they didn't have at the beginning of the year, when the Obama administration decided to ratchet up pressure on Iran by targeting the country's central bank.
The main worry at the time was that by curtailing Iran's oil exports, the U.S. might trigger a price jump that in turn would undermine any prospect of economic recovery this year.
Iran was "the clearest possible case where oil supplies and oil prices conflict with other security interests," said Elliott Abrams, a former national-security official in the administration of George W. Bush who is now at the Council on Foreign Relations.
The Obama administration determined markets could handle a cutback in Iranian oil, reaffirming the assessment in March and again in early June. With increased oil production from the U.S. and Saudi Arabia, as well as soft demand, oil prices have fallen sharply since the spring.
Beginning June 28, under legislation signed by President Barack Obama, the U.S. will be able to sanction any country doing business with Iran's central bank, its main conduit for oil sales. The U.S. has given exemptions to countries it says have made efforts to scale back their purchases this year.
Obama administration officials said this month that Iranian oil exports had dropped to between 1.2 million and 1.8 million barrels a day, down from about 2.5 million last year.
Even when negotiations between Iran and the West foundered last week in Moscow, the oil markets seem unfazed.
Cheaper oil makes it easier for Washington to pursue its foreign-policy goals. Tehran's budget is based on crude oil costing at least $85 a barrel, administration officials said. To the extent Iran was able to weather sanctions earlier this year, it was because soaring oil prices compensated for reduced export volumes. Now, with exports and prices falling, administration officials say that the Iranian regime is feeling significant effects from the sanctions.
Credit: By Keith Johnson
Subject: Crude oil prices; Embargoes & blockades; Sanctions; Exports; Crude oil
Location: United States--US Iran
Company / organization: Name: European Union; NAICS: 926110, 928120
Classification: 9180: International; 1300: International trade & foreign investment; 1510: Energy resources
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.8
Publication year: 2012
Publication date: Jun 26, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022109226
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022109226?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
A Taste of Prohibition in Tulsa; This Prohibition-era home in Tulsa, Okla., was built on the area's booming oil industry -- and designed with the gentleman bootlegger in mind. -Stefanos Chen
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 June 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: The owner, Georgianna W. Oliver, 45, purchased this 1930 home in Tulsa, Okla. for $748,000 in 2007, according to public records. Built in the upscale neighborhood of Maple Ridge, which grew to prominence as a luxury enclave for oil tycoons in the early 20th century, it was not uncommon for homes built in the Prohibition era to feature hidden compartments for liquor or rooms for gambling, said Michelle Place, executive director of the Tulsa Historical Society. Ms. Oliver says she found just such a closet in the home.
The 3,140-square-foot home is ideal for entertaining, Ms. Oliver said. The first floor features 10 doors that open out to the gardens and patio areas for 'full-circle traffic' throughout the home.
The home features 9-foot ceilings throughout and ample light. The hardwood floors and plaster walls are original to the home, Ms. Oliver said.
In the back of a hallway closet is a false wall that opens up to a lighted, hidden compartment -- just large enough for a collection of libations. The previous owner told Ms. Oliver about the closet; the story had been passed down from owner to owner. In recent years, though, the not-so-secret nook has become a favorite hide-and-seek spot for her son.
The most significant changes Ms. Oliver made to the home include the kitchen and breakfast area. She bought new appliances and added slate tile flooring that extends to the butler's pantry and enclosed porch. She said the renovations cost roughly $200,000.
The enclosed porch is Ms. Oliver's favorite room in the house, she said. 'To sit there with all the windows around you, it's just soothing and wonderful.'
The home includes four bedrooms and 3½ baths. There are three fireplaces in the home, including one in the master bedroom suite.
The home also includes an elevator that opens into three rooms in the home. The door on the far left of this bedroom opens to the elevator, which runs down to the dining room and finished basement. Ms. Oliver said she had to turn off the elevator recently because her son and his friends were using it so frequently. It will be turned back on for home tours.
Ms. Oliver, who founded and recently sold a software company for multifamily landlords, said she's moving to Boston to marry her fiancé. She said she met him through the same real-estate circles.
The home was listed in June for $839,000 with Julie Luna of Keller Williams Realty.
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 26, 2012
Section: Real Estate
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022175415
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022175415?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil, Gas Producers Look to Expand Arctic Exploration
Author: Hovland, Kjetil Malkenes; Molin, Anna
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 June 2012: n/a.
ProQuest document link
Abstract:
The U.S. is expected to become a net exporter of liquefied natural gas starting in 2016 and an overall net exporter of natural gas in 2021, according to the U.S. Energy Information Administration.
Full text: TRONDHEIM, Norway--Two of the world's major oil and gas producing nations, bolstered by big Arctic discoveries in recent years, are looking to further develop one of the world's most remote regions as a more vibrant hub of exploration.
Norway plans to award new drilling licenses for dozens of blocks of sea acreage in icy Arctic waters as early as 2013, Norway's oil ministry said at a conference here Tuesday. U.S. Secretary of the Interior Ken Salazar, speaking at the same conference, said the Obama administration plans to further open and develop its own Arctic areas for drilling to continue reducing that nation's dependence on foreign imports.
The comments come amid growing appetite in recent years for the vast Arctic region as a potential source of new oil and gas resources. Although criticized for being a costly and difficult area to explore, the region north of the Arctic Circle is believed to contain about a fifth of the world's undiscovered oil and gas, according to the most recent data. Yet the frontier remains largely unexplored.
Norway is the world's seventh biggest oil exporter in 2010 and looks to ride a swell of interest by awarding licenses for 72 blocks or partial blocks of acreage in the Barents sea, and 14 additional locations in the Norwegian sea, Oil Minister Ola Borten Moe said. Applications for licenses are due Dec. 4, and Norway will complete the licensing by next summer.
"We are now experiencing record levels of interest in the Barents Sea," Mr. Moe said.
Norway also will open up a research facility in one of its northernmost cities with plans to tackle the challenges involved in drilling for oil in the cold waters of the Arctic region. It will be partially funded by the oil and foreign ministries, and partially by the Norwegian oil industry.
Oil production--a key source of revenue for Norway's $600 billion sovereign wealth fund--in Norway has been falling since 2001, and production of oil and gas combined have declined since 2004. In order to buoy revenue, new production areas are needed to replace mature sources that have passed their peak.
In the U.S., officials are accelerating efforts to stage oil and gas lease sales in the Beaufort Sea north of Alaska and the Chukchi Sea located between Russia and Alaska. Those sales, slated for 2016 and 2017, follow attempts under way by Royal Dutch Shell PLC, ConocoPhillips and others to win exploration permits, Mr. Salazar said.
"Opening up and developing our domestic resources is a priority for us," Mr. Salazar said during an interview.
But exploitation of Arctic resources has been opposed by environmentalists. Mr. Salazar said that there will remain a buffer of 25 nautical miles from shore in the Chukchi Sea and another buffer of an as-yet undisclosed distance in the Beaufort Sea to protect highly prized acreage.
Technological breakthroughs, such as "fracking," have allowed the U.S. gas industry to expand production of shale gas, significantly reducing the U.S. need for imports. The U.S. is expected to become a net exporter of liquefied natural gas starting in 2016 and an overall net exporter of natural gas in 2021, according to the U.S. Energy Information Administration.
Write to Kjetil Malkenes Hovland at kjetilmalkenes.hovland@wsj.com
Corrections & Amplifications
The U.S. will retain a buffer zone of 25 nautical miles, or 46 kilometers, from the shore in the Chukchi Sea and another buffer of an as-yet undisclosed distance in the Beaufort Sea. An earlier version of this article incorrectly said the buffer zones would be 30 miles, or 48 kilometers, in both seas.
Credit: By Kjetil Malkenes Hovland and Anna Molin
Subject: Petroleum industry; Oil sands; Licenses
Location: Arctic region United States--US Norway Chukchi Sea Beaufort Sea
People: Salazar, Ken
Company / organization: Name: Arctic Circle; NAICS: 722211; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 26, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022175421
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022175421?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Has Peak Oil Peaked?
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 June 2012: n/a.
ProQuest document link
Abstract:
Oil prices aren't responding to the usual stimuli. [...]the beta version of Google's Insights for Search tool shows Web searches for the phrase "peak oil" surged in early 2008, since when interest has waned.
Full text: Remember the days when a threatened hurricane and news of Syria downing a Turkish jet would send oil prices spiking?
Peak oil, the Malthusian scenario whereby global oil-supply growth has reached its limit, appears to have, er, peaked. Oil prices aren't responding to the usual stimuli. Moreover, the beta version of Google's Insights for Search tool shows Web searches for the phrase "peak oil" surged in early 2008, since when interest has waned. So far in June, the number of "peak oil" searches is less than one-tenth of the level in May 2008.
It isn't just that demand in the Western world is down, although it is, offsetting roughly half of the gain in emerging-markets demand since 2005. The more troublesome development for peak oil proponents is on the supply side, where recent events such as the shale-based resumption of oil-output growth in the U.S. suggest terminal decline isn't the only option.
A new report from the Harvard Kennedy School's Belfer Center for Science and International Affairs suggests the world could be capable of producing 110.6 million barrels a day by 2020, up from 93 million barrels a day now. Moreover, the report concludes more than 80% of the new oil production looks profitable at a long-term oil price of just $70 a barrel. That isn't a return to cheap oil, but it would be less than what the world has been conditioned to expect.
The report's author, Leonardo Maugeri, a former executive vice president of Italian oil major Eni, is a well-known critic of peak oil theories. While the report wasn't commissioned by BP, his report was produced under the auspices of the Belfer Center's Geopolitics of Energy project, which is supported in part by a general grant from the oil major.
Even so, it is hard to argue with Mr. Maugeri's central argument: that this decade should see the results of the wave of investment spurred by the rising oil prices of the past one. This is what happened during the period of the 1970s oil shocks and the subsequent collapse in the price of oil in the mid-1980s.
Going long on Malthus is to effectively go short on human ingenuity and technological innovation. Belief in peak oil sows the seeds of its own refutation as it forces up prices and makes what was previously too expensive to contemplate--such as fracturing shale rocks--worth trying. It also encourages efficiency, meaning some of that decline in Western consumption will prove structural.
Most of the new projects examined in Mr. Maugeri's report should be developed or close to completion by 2015. If demand doesn't keep up beyond then for whatever reason--say, a Chinese slowdown--the second half of the decade could be a real downer for peak oilers. Long-term price expectations would follow.
Write to Liam Denning at
Credit: By Liam Denning
Subject: Petroleum industry; Petroleum production; Oil prices
Location: Syria
Company / organization: Name: Google Inc; NAICS: 519130
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 26, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022180323
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022180323?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Expanded Oil Drilling Helps U.S.Wean Itself From Mideast
Author: González, Ángel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 June 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: HOUSTON--America will halve its reliance on Middle East oil by the end of this decade and could end it completely by 2035 due to declining demand and the rapid growth of new petroleum sources in the Western Hemisphere, energy analysts now anticipate.
The shift, a result of technological advances that are unlocking new sources of oil in shale-rock formations, oil sands and deep beneath the ocean floor, carries profound consequences for the U.S. economy and energy security. A good portion of this surprising bounty comes from the widespread use of hydraulic fracturing, or fracking, a technique perfected during the last decade in U.S. fields previously deemed not worth tampering with.
By 2020, nearly half of the crude oil America consumes will be produced at home, while 82% will come from this side of the Atlantic, according to the U.S. Energy Information Administration. By 2035, oil shipments from the Middle East to North America "could almost be nonexistent," the Organization of Petroleum Exporting Countries recently predicted, partly because more efficient car engines and a growing supply of renewable fuel will help curb demand.
The change achieves a long-sought goal of U.S. policy-making: to draw more oil from nearby, stable sources and less from a volatile region half a world away. "Whereas at one point there were real and serious concerns about the ability to maintain sustainable access of supplies to the United States if there were disruptions in the Middle East, that has changed," Carlos Pascual, the top energy official at the State Department, said in an interview.
U.S. officials stress that the Middle East will remain important to American foreign policy partly because of the region's continuing influence on global oil prices. "We need to continue to pay attention to how global markets function, because we have a fundamental interest that those markets are stable," Mr. Pascual said.
That means the U.S. military will keep guarding the region's oil shipping lanes, as it has done for decades. "Nobody else can protect it and if it were no longer available, U.S. oil prices would go up," said Michael O'Hanlon, a national security expert with the Brookings Institution, who says the U.S. spends $50 billion a year protecting oil shipments. But China, a growing consumer of Middle Eastern crude, is seeking a larger presence in the region, with its navy joining antipiracy efforts near Somalia.
Still, growing domestic energy production could allow the U.S. to lessen its focus on the unpredictable region over time. Dependence on Middle East oil has shaped American foreign, national-security and defense policies for most of the last half century. It helped drive the U.S. into active participation in the search for Arab-Israeli peace; drove Washington into close alignments with the monarchies of the Persian Gulf states; compelled it to side with Iraq during its war with Iran; prompted it to then turn against Iraq after its invasion of Kuwait, bringing about the first Persian Gulf war; and prompted Washington to then build up and sustain its military presence in the region.
Whatever the success such strategies had in ensuring American influence in the region, all also came at a price. Involvement in the Arab-Israeli peace process brought the U.S. the enmity of many of the region's most radical forces upset at the failure to create a Palestinian state. The decision to build up an American military presence in the region was used as a rationale for anti-American agitation and attacks by al Qaeda and other extremist forces.
The shift away from Middle Eastern oil means closer ties with Canada, which is emerging as the top U.S. energy ally, but also with Latin neighbors that are strong trading partners. A dollar spent buying oil from these countries is more likely to end up back in the U.S. than a dollar spent buying Iraqi or Saudi crude. Economies buoyed by petrodollars also lessen the appeal of northward migration for Latin America's poor, says Jeremy Martin, director of the energy program at the Institute of the Americas in La Jolla, Calif.
The American energy revolution also is making a splash across the Atlantic. Countries in Eastern Europe, long dependent on Russia for their energy, are seeking to tap their own shale resources with the help of U.S. companies. Even Russia, which needs new sources of oil to maintain its status as an energy superpower, is getting into fracking with the biggest U.S. oil company, Exxon Mobil Corp. This month Exxon and Russia's state-controlled OAO Rosneft broadened an existing alliance to include the joint development of tight oil reserves in western Siberia.
The prospect that new sources of supply in the Americas could lead to years of flat or even falling oil prices is a source of great concern in the Kremlin. Surging oil revenues over his 12 years in power have helped President Vladimir Putin pay for an eightfold increase in government spending, going to everything from pension and wage hikes to costly projects like the Sochi Olympics to a major military buildup. Now, his government is scrambling to find ways to tighten its belt as oil prices--and thus tax revenues--slide. Finding a new driver for Russia's economy is "a colossal challenge," said economy minister Andrei Belousov.
The domestic oil picture has become part of the presidential campaign this year. President Barack Obama likes to point out that output has surged during his first term. "We've added enough new oil and gas pipeline to encircle the Earth and then some," he said in a speech earlier this year. Mitt Romney, the presumed GOP candidate, says the U.S. must do more to promote domestic exploration and says Mr. Obama is holding back the industry. Mr. Romney's campaign ads say that on "Day 1" he will give approval for the Keystone XL pipeline, a project to bring oil from Canada that Mr. Obama's administration has rejected for now.
The renaissance of the U.S. oil patch is pushing down oil prices, giving a boost to the economy at a time when a global slowdown threatens to crimp demand. Research firm Raymond James lowered its 2013 forecast for U.S. crude prices this month to $65 per barrel from $83, partly because production in the U.S. has risen much more quickly than previously expected.
Just the same, obstacles to developing the Western Hemisphere's oil riches remain.
Argentina recently nationalized the assets of Spanish energy giant Repsol SA, arguing that the company wasn't investing enough to develop the country's full oil potential. The action makes investors leery of risking capital there to tap shale-rock formations that could rival booming U.S. oil fields.
In Brazil, where most of the newfound oil lies under thick salt domes far beneath the seabed, a small spill in a Chevron Corp. offshore field led to criminal charges, which Chevron contests. Also, state giant Petroleo Brasileiro SA cut its world-wide 2020 production forecast by 11% earlier this month while estimating that extracting its oil would be more costly than anticipated.
In the U.S., offshore drilling in the Gulf of Mexico is recovering slowly from the impact of the 2010 Deepwater Horizon oil spill.
Still, U.S. government forecasters expect that U.S. petroleum purchases from the Middle East, Africa, and Europe will drop to about 2.5 million barrels a day by 2020, from more than four million barrels today. Oil imports from the Persian Gulf's OPEC members--a group that includes Saudi Arabia, Iraq and Kuwait--will drop to 860,000 barrels a day that year from 1.6 million barrels currently.
Global oil and gas investments tripled between 2003 and 2011, according to IHS Cambridge Energy Research Associates. In the Western Hemisphere, where the U.S. and Canada provided more political stability for investors, they nearly quadrupled. In 2011, 48% of global oil investment, or $320 billion, ended up in the Americas, up from 39% in 2003.
A lot of that money went into the revival of the U.S. oil patch, where energy companies learned to profitably produce oil from tight oil formations by injecting them with high-pressure jets of water mixed with chemicals and sand. The technique has raised concerns with environmentalists who claim it uses too much water and can contaminate water supplies.
First developed in natural-gas fields, fracking yielded an unexpected oil boom that has redrawn America's energy geography. Abundant crude, combined with a huge refining base and waning demand at home turned the U.S. into a net exporter of refined products last year; the EIA expects that situation to continue beyond 2020.
North Dakota went from being a minor producer to surpassing Alaska in March in petroleum output thanks to the Bakken Shale, which is being developed through fracking. Now it is only second to Texas in oil production.
The Bakken, as well as Texas' booming Eagle Ford Shale and the deep-water U.S. Gulf of Mexico, helped average daily U.S. oil production rise 6% between October 2011 and March 2012, topping six million barrels a day for the first time since 1998, the EIA said this month.
"U.S. oil production was for nearly 40 years in total decline, and that decline was never supposed to end," says Jim Burkhard, an analyst with IHS CERA. "This is a major pivot point."
Canada's oil sands--where the earth is drenched in thick, tar-like oil--contain some of the largest quantities of oil in the world but for years they were too expensive to tap. Companies had to mine tons of oil-drenched sand for each barrel of oil, or inject steam deep beneath the earth to make the oil liquid enough for extraction.
As oil prices began to rise, starting in 1999, oil-sands reserves became more profitable, and early investments from Canadian producers like Suncor Energy Inc. and Encana Corp., along with international producers like Royal Dutch Shell PLC turned Canada into the largest oil exporter to the U.S. Later in the decade, international investment poured into Alberta's boreal forest from U.S.-based companies like ConocoPhillips and Exxon Mobil, and Chinese oil companies like Sinopec, PetroChina Co. and CNOOC Ltd.
Deep-water technology enabled Brazil, which for years depended on oil imports, to become a net exporter in 2009. By 2020, Brazil's production is expected to rival Canada's, rising 57% to 4.7 million barrels a day, thanks to some of the largest offshore oil field finds in 30 years.
The drop in American energy imports comes at a time when hundreds of millions in the developing world are beginning to consume more energy as they rise from poverty. "We're very fortunate that this is happening," said Marvin Odum, the president of Shell's U.S. unit, who also heads its exploration and production activities in the Western Hemisphere. "It enables resources to flow to emerging economies."
Gerald F. Seib, Gregory L. White, Chip Cummins and Keith Johnson contributed to this article.
Credit: By Ángel González
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 27, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022232106
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022232106?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Milestones for American Oil
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 June 2012: n/a.
ProQuest document link
Abstract:
Abundant crude, combined with a huge refining base and waning demand at home turned the U.S. into a net exporter of refined products last year; the EIA expects that situation to continue beyond 2020.
Full text: In 1859, Edwin Drake drilled the first commercially successful oil well in Titusville, Pa.
Two decades later, John D. Rockefeller founded Standard Oil Co. Trustbusters later split it into 34 companies, including what became Chevron, ConocoPhillips, Exxon and Mobil.
Here, Walworth Run refinery in Cleveland, Ohio. John D. Rockefeller invested in it in 1863.
Henry Ford incorporated the Ford Motor Company in 1903. The mass-produced Model T, aimed at the average businessman like the one shown here, started rolling off assembly lines in 1908. Here, a businessman stands beside a Ford Model T in 1910.
The East Texas Oil Field, one of the largest in the U.S., was discovered in 1930. Here, oil rig workers, called roughnecks, loosened sections of pipe on a drilling platform in Kilgore, Texas, in 1939.
As cars became more popular, oil became the most-used source of energy world-wide in 1950.
In 1973, oil prices in the U.S. quadrupled as OPEC blocked the sale of oil to the U.S. and its allies. Here, a subcommittee of six OPEC members met in Kuwait on Nov. 3, 1973. In the aftermath of the embargo, the U.S. established the U.S. Strategic Petroleum Reserve.
Dependence on Middle East oil shaped American foreign, national-security and defense policies for most of the last half century. In 1979, the Iranian Revolution caused another drop in production and a spike in prices, and led the U.S. and other countries to think about alternative fuel sources. Here, Iranian women protested in Tehran on April 16, 1979.
In 1991, President George H.W. Bush authorized the first sale of oil from the Strategic Petroleum Reserve the day the U.S. entered the war in the Persian Gulf. Here, firefighters tried to put out a blaze at a well at the Al-Ahmadi oil field in Kuwait, which was damaged by retreating Iraqi soldiers.
In the last few years, domestic oil output has surged. Abundant crude, combined with a huge refining base and waning demand at home turned the U.S. into a net exporter of refined products last year; the EIA expects that situation to continue beyond 2020. Here, crude oil pipes at the Bryan Mound site near Freeport, Texas.
Offshore drilling in the Gulf of Mexico is recovering slowly from the impact of the 2010 Deepwater Horizon oil spill.
Fracking has yielded an unexpected oil boom that has redrawn America's energy geography. North Dakota went from being a minor producer to surpassing Alaska in March in petroleum output thanks to the Bakken Shale. This worker transferred 240 barrels of oil into a tank at an Enbridge Inc. facility outside Alexander, N.D., in October.
Subject: Strategic petroleum reserve; Petroleum industry; Energy policy; Oil prices
Location: Texas Ohio United States--US Kuwait Cleveland Ohio
People: Bush, George H W
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: Ford Motor Co; NAICS: 333924, 336111, 336399
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 27, 2012
Section: US
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022232115
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022232115?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Investment Boom Means Fears of Peak Oil Have Peaked
Author: Denning, Liam
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]27 June 2012: C.14.
ProQuest document link
Abstract:
Oil prices aren't responding to the usual stimuli. [...]the beta version of Google's Insights for Search tool shows Web searches for the phrase "peak oil" surged in early 2008, since when interest has waned.
Full text: [Financial Analysis and Commentary]
Remember the days when a threatened hurricane and news of Syria downing a Turkish jet would send oil prices spiking?
Peak oil, the Malthusian scenario whereby global oil-supply growth has reached its limit, appears to have, er, peaked. Oil prices aren't responding to the usual stimuli. Moreover, the beta version of Google's Insights for Search tool shows Web searches for the phrase "peak oil" surged in early 2008, since when interest has waned. So far in June, the number of "peak oil" searches is less than a 10th of the level in May 2008.
It isn't just that demand in the Western world is down, although it is, offsetting roughly half of the gain in emerging-markets demand since 2005. The more troublesome development for peak-oil proponents is on the supply side, where recent events such as the shale-based resumption of oil-output growth in the U.S. suggest terminal decline isn't the only option.
A new report from the Harvard Kennedy School's Belfer Center for Science and International Affairs suggests the world could be capable of producing 110.6 million barrels a day by 2020, up from 93 million barrels a day now. Moreover, the report concludes more than 80% of the new oil production looks profitable at a long-term oil price of just $70 a barrel. That isn't a return to cheap oil, but it would be less than what the world has been conditioned to expect in recent years.
The report's author, Leonardo Maugeri, a former executive vice president of Italian oil major Eni, is a well-known critic of peak-oil theories. While the report wasn't commissioned by BP, his report was produced under the auspices of the Belfer Center's Geopolitics of Energy project, which is supported in part by a general grant from the oil major.
Mr. Maugeri has factored in declines at existing fields as well as other issues, such as political constraints, holding back potential output. The latter, especially, is a wild card. Even so, it is hard to argue with the main argument: that this decade should see the results of the wave of investment spurred by the rising oil prices of the past one. This is what happened during the period of the 1970s oil shocks and the subsequent collapse in the price of oil in the mid-1980s.
Going long on Malthus is to effectively go short on human ingenuity and technological innovation. Belief in peak oil sows the seeds of its own refutation as it forces up prices and makes what was previously too expensive to contemplate -- such as fracturing shale rocks -- worth trying. It also encourages greater conservation, such as raising fuel efficiency for vehicles, meaning some of that recent decline in Western oil consumption will likely prove structural.
Most of the new projects examined in Mr. Maugeri's report should be developed or close to completion by 2015. If demand doesn't keep up beyond then for whatever reason -- say, a Chinese slowdown -- the second half of the decade could be a real downer for peak oilers. Long-term price expectations would follow.
Credit: By Liam Denning
Subject: Petroleum industry; Oil sands; Crude oil prices
Location: Syria
Company / organization: Name: Google Inc; NAICS: 519130
Classification: 8510: Petroleum industry; 9180: International
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.14
Publication year: 2012
Publication date: Jun 27, 2012
column: Heard on the Street
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022245549
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022245549?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Vietnam Spars With China Over Oil Plans
Author: Ma, Wayne; Hookway, James
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 June 2012: n/a.
ProQuest document link
Abstract:
"Either Cnooc is doing national service and helping Beijing push the boundary of the South China Sea maritime dispute, or it's doing what analysts have been calling for" and pursuing foreign help to increase the size of its reserves, said Simon Powell, head of Asian oil and gas research at CLSA.
Full text: A spat between China and Vietnam over energy rights in the South China Sea intensified on Wednesday as Vietnam's biggest company called on China to scrap its plans to develop areas near the Vietnamese shore.
The disagreement, the latest in a string of arguments over the potentially energy-rich sea, erupted earlier in the week when China National Offshore Oil Corp. said it was offering a new batch of oil-exploration blocks inside the 200-nautical-mile exclusive economic zone granted to Vietnam under the United Nations' Law of the Sea.
Vietnam's government quickly objected, saying the Chinese state oil firm was moving into its territorial waters. On Wednesday, state-run Vietnam Oil & Gas, or PetroVietnam, weighed in, showing how territorial claims in the sea are increasingly being backed up by powerful companies in addition to rival governments, and potentially adding new sources of tension to the conflict.
PetroVietnam Chairman Do Van Hauon Wednesday described the Chinese firm's strategy as illegal and urged it to cancel the bidding, adding that two of the blocks offered by China National Offshore Oil, known as Cnooc, overlap with those offered by PetroVietnam.
"We strongly protest Cnooc's offering to international companies and we request foreign firms not to get involved," Mr. Hau told reporters.
Cnooc's spokesman in charge of legal affairs wasn't available to comment. At an earlier news briefing, China's Foreign Ministry said Cnooc's tender represented "normal business activities" in line with Chinese law and international practice.
Cnooc's move is likely influenced by a desire to see how far it can press its claims in the sea rather than entirely commercial considerations, analysts and diplomats say. Few foreign firms are likely to engage in drilling in such disputed waters, especially after Vietnam's protests.
"There is no way any foreign company will go there," said Laban Yu, head of oil and gas research at Jefferies Hong Kong Ltd., a securities and investment banking firm. "This is just Cnooc being used by the central government to make a statement."
An official from a third country that also has claims in the sea said the bidding announcement appeared to be designed to buttress China's territorial claims to the area while nearby countries such as Vietnam and Philippines press ahead with their own plans to drill for oil and gas in other parts of the South China Sea.
The Cnooc blocks, in water 300 to 4,000 meters (1,000 to 13,000 feet) deep, cover an area of about 160,000 square kilometers (62,000 square miles). Previously, most blocks offered for joint development by the state-owned firm were located well within Chinese waters, and mostly in shallow water.
"Either Cnooc is doing national service and helping Beijing push the boundary of the South China Sea maritime dispute, or it's doing what analysts have been calling for" and pursuing foreign help to increase the size of its reserves, said Simon Powell, head of Asian oil and gas research at CLSA.
Mr. Powell added that the resources there are more likely to be gas than oil, and thus less attractive to potential foreign partners. "Given how low natural-gas prices are in China, the distance of these blocks from the mainland and how uneconomic it is to lay pipelines and run gas from such distances, maybe the offerings are more about politics than about earnings," he said.
The spat looks set to further shake relations between Vietnam and China, which, while both having Communist governments, view each other with suspicion. Relations between the two countries worsened after Hanoi's legislature passed a new law last week claiming Vietnam's sovereignty over the Spratlys and Paracels archipelagos, which are also in the South China Sea.
China summoned Vietnam's ambassador to Beijing to protest the new law, which will be enacted at the beginning of next year but will have little real impact on who controls the island chains.
Some of the atolls are partially occupied by small garrisons from some of the claimant nations, including China, Vietnam and the Philippines.
Vietnam dismissed China's objections as "absurd," with a Foreign Ministry spokesman last week describing Vietnam's move as "normal lawmaking activity."
Vietnam also has objected to apparent recent Chinese moves to assert jurisdiction over portions of the South China Sea; China recently bestowed higher, prefectural-level powers upon a city in its Hainan province to administer some South China Sea islands, state media reported.
The stakes in the South China Sea have grown significantly in recent years as East Asia's energy-hungry economies roar ahead. For China, the energy resources that geologists believe to lie below its waters are means to potentially reduce its dependence on imports from the Middle East and elsewhere. The contested waters contain 28 billion to 213 billion barrels in proven and undiscovered oil resources, according to figures cited by the U.S. Energy Information Administration. It isn't clear, though, how much is easily accessible.
China, Vietnam and the Philippines all have stepped up exploration and drilling in the sea in recent years. Earlier this week, Italy's Eni SpA bought 50% stakes in two exploration blocks in Vietnamese-controlled waters. Eni's partner, Australia's Neon Energy Ltd., said Monday that Eni will carry out early technical work and finance exploratory drilling in each block. ExxonMobil Corp. also has acquired Vietnamese blocks in the South China Sea. Last October it said it found oil and gas in its second exploration well.
British-Philippine firm Forum Energy Plc, meanwhile, plans to begin drilling off Reed Bank in the Philippines' U.N.-declared waters later this year.
In addition to China and Vietnam, the Philippines, Malaysia, Taiwan and Brunei also claim parts of the South China Sea. The U.S. in recent years has angered China by urging multilateral talks to resolve the overlapping claims in the area, and also to ensure safe navigation for some of the world's busiest shipping lanes as China's commercial and military power grows.
Write to Wayne Ma at and James Hookway at
Credit: By Wayne Ma And James Hookway
Subject: Oil sands; Natural gas
Location: China Vietnam South China Sea
Company / organization: Name: Vietnam Oil & Gas Group; NAICS: 211111; Name: United Nations--UN; NAICS: 928120; Name: CNOOC Ltd; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 27, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022246082
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022246082?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Expanded Oil Drilling Helps U.S. Wean Itself From Mideast
Author: Gonzalez, Angel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]27 June 2012: A.1.
ProQuest document link
Abstract:
Even Russia, which needs new sources of oil to maintain its status as an energy superpower, is getting into fracking with the biggest U.S. oil company, Exxon Mobil Corp. This month Exxon and Russia's state-controlled OAO Rosneft broadened an existing alliance to include the joint development of tight oil reserves in western Siberia.
Full text: HOUSTON -- America will halve its reliance on Middle East oil by the end of this decade and could end it completely by 2035 due to declining demand and the rapid growth of new petroleum sources in the Western Hemisphere, energy analysts now anticipate.
The shift, a result of technological advances that are unlocking new sources of oil in shale-rock formations, oil sands and deep beneath the ocean floor, carries profound consequences for the U.S. economy and energy security. A good portion of this surprising bounty comes from the widespread use of hydraulic fracturing, or fracking, a technique perfected during the last decade in U.S. fields previously deemed not worth tampering with.
By 2020, nearly half of the crude oil America consumes will be produced at home, while 82% will come from this side of the Atlantic, according to the U.S. Energy Information Administration. By 2035, oil shipments from the Middle East to North America "could almost be nonexistent," the Organization of Petroleum Exporting Countries recently predicted, partly because more efficient car engines and a growing supply of renewable fuel will help curb demand.
The change achieves a long-sought goal of U.S. policy-making: to draw more oil from nearby, stable sources and less from a volatile region half a world away. "Whereas at one point there were real and serious concerns about the ability to maintain sustainable access of supplies to the United States if there were disruptions in the Middle East, that has changed," Carlos Pascual, the top energy official at the State Department, said in an interview.
U.S. officials stress that the Middle East will remain important to American foreign policy partly because of the region's continuing influence on global oil prices. "We need to continue to pay attention to how global markets function, because we have a fundamental interest that those markets are stable," Mr. Pascual said.
That means the U.S. military will keep guarding the region's oil shipping lanes, as it has done for decades. "Nobody else can protect it and if it were no longer available, U.S. oil prices would go up," said Michael O'Hanlon, a national security expert with the Brookings Institution, who says the U.S. spends $50 billion a year protecting oil shipments. But China, a growing consumer of Middle Eastern crude, is seeking a larger presence in the region, with its navy joining antipiracy efforts near Somalia.
Still, growing domestic energy production could allow the U.S. to lessen its focus on the unpredictable region over time. Dependence on Middle East oil has shaped American foreign, national-security and defense policies for most of the last half century. It helped drive the U.S. into active participation in the search for Arab-Israeli peace; drove Washington into close alignments with the monarchies of the Persian Gulf states; compelled it to side with Iraq during its war with Iran; prompted it to then turn against Iraq after its invasion of Kuwait, bringing about the first Persian Gulf war; and prompted Washington to then build up and sustain its military presence in the region.
Whatever the success such strategies had in ensuring American influence in the region, all also came at a price. Involvement in the Arab-Israeli peace process brought the U.S. the enmity of many of the region's most radical forces upset at the failure to create a Palestinian state. The decision to build up an American military presence in the region was used as a rationale for anti-American agitation and attacks by al Qaeda and other extremist forces.
The shift away from Middle Eastern oil means closer ties with Canada, which is emerging as the top U.S. energy ally, but also with Latin neighbors that are strong trading partners. A dollar spent buying oil from these countries is more likely to end up back in the U.S. than a dollar spent buying Iraqi or Saudi crude. Economies buoyed by petrodollars also lessen the appeal of northward migration for Latin America's poor, says Jeremy Martin, director of the energy program at the Institute of the Americas in La Jolla, Calif.
The American energy revolution also is making a splash across the Atlantic. Countries in Eastern Europe, long dependent on Russia for their energy, are seeking to tap their own shale resources with the help of U.S. companies. Even Russia, which needs new sources of oil to maintain its status as an energy superpower, is getting into fracking with the biggest U.S. oil company, Exxon Mobil Corp. This month Exxon and Russia's state-controlled OAO Rosneft broadened an existing alliance to include the joint development of tight oil reserves in western Siberia.
The prospect that new sources of supply in the Americas could lead to years of flat or even falling oil prices is a source of great concern in the Kremlin. Surging oil revenues over his 12 years in power have helped President Vladimir Putin pay for an eightfold increase in government spending, going to everything from pension and wage hikes to costly projects like the Sochi Olympics to a major military buildup. Now, his government is scrambling to find ways to tighten its belt as oil prices -- and thus tax revenues -- slide. Finding a new driver for Russia's economy is "a colossal challenge," said economy minister Andrei Belousov.
The domestic oil picture has become part of the presidential campaign this year. President Barack Obama likes to point out that output has surged during his first term. "We've added enough new oil and gas pipeline to encircle the Earth and then some," he said in a speech earlier this year. Mitt Romney, the presumed GOP candidate, says the U.S. must do more to promote domestic exploration and says Mr. Obama is holding back the industry. Mr. Romney's campaign ads say that on "Day 1" he will give approval for the Keystone XL pipeline, a project to bring oil from Canada that Mr. Obama's administration has rejected for now.
The renaissance of the U.S. oil patch is pushing down oil prices, giving a boost to the economy at a time when a global slowdown threatens to crimp demand. Research firm Raymond James lowered its 2013 forecast for U.S. crude prices this month to $65 per barrel from $83, partly because production in the U.S. has risen much more quickly than previously expected.
Just the same, obstacles to developing the Western Hemisphere's oil riches remain.
Argentina recently nationalized the assets of Spanish energy giant Repsol SA, arguing that the company wasn't investing enough to develop the country's full oil potential. The action makes investors leery of risking capital there to tap shale-rock formations that could rival booming U.S. oil fields.
In Brazil, where most of the newfound oil lies under thick salt domes far beneath the seabed, a small spill in a Chevron Corp. offshore field led to criminal charges, which Chevron contests. Also, state giant Petroleo Brasileiro SA cut its world-wide 2020 production forecast by 11% earlier this month while estimating that extracting its oil would be more costly than anticipated.
In the U.S., offshore drilling in the Gulf of Mexico is recovering slowly from the impact of the 2010 Deepwater Horizon oil spill.
Still, U.S. government forecasters expect that U.S. petroleum purchases from the Middle East, Africa, and Europe will drop to about 2.5 million barrels a day by 2020, from more than four million barrels today. Oil imports from the Persian Gulf's OPEC members -- a group that includes Saudi Arabia, Iraq and Kuwait -- will drop to 860,000 barrels a day that year from 1.6 million barrels currently.
Global oil and gas investments tripled between 2003 and 2011, according to IHS Cambridge Energy Research Associates. In the Western Hemisphere, where the U.S. and Canada provided more political stability for investors, they nearly quadrupled. In 2011, 48% of global oil investment, or $320 billion, ended up in the Americas, up from 39% in 2003.
A lot of that money went into the revival of the U.S. oil patch, where energy companies learned to profitably produce oil from tight oil formations by injecting them with high-pressure jets of water mixed with chemicals and sand. The technique has raised concerns with environmentalists who claim it uses too much water and can contaminate water supplies.
First developed in natural-gas fields, fracking yielded an unexpected oil boom that has redrawn America's energy geography. Abundant crude, combined with a huge refining base and waning demand at home turned the U.S. into a net exporter of refined products last year; the EIA expects that situation to continue beyond 2020.
North Dakota went from being a minor producer to surpassing Alaska in March in petroleum output thanks to the Bakken Shale, which is being developed through fracking. Now it is only second to Texas in oil production.
The Bakken, as well as Texas' booming Eagle Ford Shale and the deep-water U.S. Gulf of Mexico, helped average daily U.S. oil production rise 6% between October 2011 and March 2012, topping six million barrels a day for the first time since 1998, the EIA said this month.
"U.S. oil production was for nearly 40 years in total decline, and that decline was never supposed to end," says Jim Burkhard, an analyst with IHS CERA. "This is a major pivot point."
Canada's oil sands -- where the earth is drenched in thick, tar-like oil -- contain some of the largest quantities of oil in the world but for years they were too expensive to tap. Companies had to mine tons of oil-drenched sand for each barrel of oil, or inject steam deep beneath the earth to make the oil liquid enough for extraction.
As oil prices began to rise, starting in 1999, oil-sands reserves became more profitable, and early investments from Canadian producers like Suncor Energy Inc. and Encana Corp., along with international producers like Royal Dutch Shell PLC turned Canada into the largest oil exporter to the U.S. Later in the decade, international investment poured into Alberta's boreal forest from U.S.-based companies like ConocoPhillips and Exxon Mobil, and Chinese oil companies like Sinopec, PetroChina Co. and CNOOC Ltd.
Deep-water technology enabled Brazil, which for years depended on oil imports, to become a net exporter in 2009. By 2020, Brazil's production is expected to rival Canada's, rising 57% to 4.7 million barrels a day, thanks to some of the largest offshore oil field finds in 30 years.
The drop in American energy imports comes at a time when hundreds of millions in the developing world are beginning to consume more energy as they rise from poverty. "We're very fortunate that this is happening," said Marvin Odum, the president of Shell's U.S. unit, who also heads its exploration and production activities in the Western Hemisphere. "It enables resources to flow to emerging economies."
---
Gerald F. Seib, Gregory L. White, Chip Cummins and Keith Johnson contributed to this article.
Credit: By Angel Gonzalez
Subject: Petroleum industry; Energy policy; Armed forces; Hydraulic fracturing; Petroleum production
Location: United States--US Western Hemisphere Latin America Middle East
People: O Hanlon, Michael
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: Brookings Institution; NAICS: 541711, 541720
Classification: 8510: Petroleum industry; 9180: International
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.1
Publication year: 2012
Publication date: Jun 27, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022247145
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022247145?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon: 'Losing Our Shirts' on Natural Gas
Author: DiColo, Jerry A; Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 June 2012: n/a.
ProQuest document link
Abstract:
Exxon is following the trend of smaller companies, such as Cheniere Energy Inc., that have already pursued the necessary permits to export gas from the U.S. On Wednesday, he said there are enough U.S. oil and gas reserves to provide the domestic economy with fuel through the rest of the century if public policy encourages the industry.
Full text: NEW YORK---Even energy titan Exxon Mobil Corp. is showing signs of strain from low natural-gas prices.
On Wednesday Exxon Chief Executive Rex Tillerson broke from the previous company line that it wasn't being hurt by natural gas prices, admitting that the Irving, Texas-based firm is among those hurting from the price slump.
"We are all losing our shirts today." Mr. Tillerson said in a talk before the Council on Foreign Relations in New York. "We're making no money. It's all in the red."
His comments mark a departure from remarks made earlier this year on how lower natural-gas prices hadn't yet hurt the company because of its operational efficiency and low production costs.
The comments from Exxon's chief come amid a massive U.S. gas supply glut that has kept prices depressed and helped to reduce energy costs for many consumers and businesses. In recent months, demand for natural gas from utilities has surged as firms turn to gas instead of more expensive coal to supply electricity. Just as Mr. Tillerson was speaking, however, natural-gas prices rallied to a 5 1/2-month high, with the July contract settling at $2.774 per million British thermal units, the fifth straight day of gains.
Exxon's $26 billion acquisition of XTO Energy in 2010 made the company the largest producer of natural gas in the U.S.; among U.S. integrated oil companies, it is the one that has bet the most on the value of unconventional natural-gas production.
Mr. Tillerson said last month during Exxon's shareholders' meeting that he had "no regrets" on the timing of the XTO purchase, which occurred just before the most recent slump in U.S. gas prices. At the company's annual analysts' meeting in March, Exxon said production costs varied greatly from project to project, but it wasn't losing money on its natural-gas production.
But the executive acknowledged Wednesday that Exxon and most of the industry had "grossly underestimated" the speed of the U.S. natural-gas boom, as the technology to unlock gas trapped in shale-rock formations, known as hydraulic fracturing, advanced faster than expected.
"It shows even Exxon can feel the pain from low natural-gas prices," said Fadel Gheit, an analyst with Oppenheimer & Co.
In April the company said the average price at which it sold its natural-gas production in the first quarter was $2.74 per million British thermal units, down 20% from the same period a year earlier. That price reflects a combination of spot prices and long-term contracted sales, but analysts expect that figure to drop.
Market prices have averaged about $2.20 per million British thermal units in the second quarter, down from $2.70 in the first quarter, said Guy Baber, an analyst with Simmons & Co. International. Even during the worst days of 2011, prices averaged more than $3.50.
"The message from Tillerson is candid and maybe a bit different than in the past, but I think this is largely because natural-gas prices are so much weaker now than they have been," Mr. Baber said.
That doesn't mean Exxon will necessarily stop drilling for natural gas, however.
The company has started to shift its drilling toward sites with greater potential for oil and natural-gas liquids, but it has said repeatedly it believes natural gas will grow significantly in the coming decades. The company is designing drilling programs on most of its U.S. gas fields to better assess the long-term prospects of the assets, not capture short-term production and revenue gains.
With first-quarter earnings of $9.45 billion and cash reserves of $19.1 billion, Exxon has the balance sheet and financial strength to be patient and keep drilling gas wells, unlike many smaller oil companies, Mr. Baber said.
In his talk, Mr. Tillerson said energy companies won't be able to continue drilling unless prices rise.
More recently, Exxon has been studying the possibility of exporting natural gas from the U.S. Gulf Coast and from Canada as shale drilling has unlocked natural-gas reserves to allow exports.
Exxon is following the trend of smaller companies, such as Cheniere Energy Inc., that have already pursued the necessary permits to export gas from the U.S.
On Wednesday, he said there are enough U.S. oil and gas reserves to provide the domestic economy with fuel through the rest of the century if public policy encourages the industry.
"To say the U.S. is energy poor is simply not accurate," Mr. Tillerson said. He added U.S. energy security is "a matter of policy choices" and could be achieved "within the visible future."
North America has become an important area for the development of new energy resources in recent years, with surging production in both Canada and the U.S. Mr. Tillerson said he was "hopeful" that reforms in Mexico would make possible further collaboration between Exxon and Mexico's state-owned oil company, Petroleos Mexicanos, or Pemex.
Write to Jerry A. DiColo at and Tom Fowler at
Credit: By Jerry A. DiColo And Tom Fowler
Subject: Petroleum industry; International relations; Energy industry
Location: United States--US New York
People: Tillerson, Rex W
Company / organization: Name: XTO Energy Inc; NAICS: 211111; Name: Council on Foreign Relations; NAICS: 813910, 541720; Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 27, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022297887
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022297887?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Analysts See Palm-Oil Pop for Felda's IPO
Author: Ng, Jason; Shie-Lynn Lim
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 June 2012: n/a.
ProQuest document link
Abstract:
KUALA LUMPUR--Shares in Felda Global Ventures Holdings Bhd. are expected to rise by at least 10% from their IPO price when they start trading on Thursday, buoyed by demand from institutional investors eager for a stock that is likely to offer a hefty dividend yield and qualify for Malaysia's blue-chip index.
Full text: KUALA LUMPUR--Shares in Felda Global Ventures Holdings Bhd. are expected to rise by at least 10% from their IPO price when they start trading on Thursday, buoyed by demand from institutional investors eager for a stock that is likely to offer a hefty dividend yield and qualify for Malaysia's blue-chip index.
Felda Global, a state-owned operator of palm-oil plantations, raised $3.1 billion in an IPO this month, making the deal second only to Facebook's $16 billion share sale so far this year. Felda priced the offering, of 2.19 billion shares, at 4.55 ringgit ($1.43) each. Retail investors paid 4.45 ringgit.
State governments and cornerstone investors, those that committed to holding the shares for at least six months, bought about a third of the offer.
Based on the institutional price, which accounts for the bulk of the shares sold, Felda Global's market capitalization would be 16.61 billion ringgit ($5.2 billion), making it the 22nd-largest company on the Malaysian stock exchange. The Malaysian government-owned company would thus be a must-have in the 30-share benchmark FTSE Bursa Malaysia KLCI index, fund managers said.
James Ratnam, senior plantation analyst at TA Investment Bank Bhd., said he had a 12-month price target for Felda Global of 5.50 ringgit and expected a first-day gain of 10%-15%, because of its potential inclusion in the index. Many fund managers, who couldn't buy the shares through the institutional portion of the IPO because it was oversubscribed by more than 30 times, will likely buy it in the first few days of trading for its high dividend yield as well, analysts said.
They said, however, that retail investors eager for capital gains, rather than dividends, will likely cash out. Around 88% of the IPO went to institutions, ranging from investment funds to cornerstone buyers and state governments, all of whom are bought at the 4.55 ringgit IPO price.
MIDF Research, a Kuala Lumpur brokerage, expects Felda Global's stock to appreciate more than 16% to 5.30 ringgit over the next 12 months. The 4.55 ringgit price translates to 13 times the consensus forecast for 2013 earnings, according to bankers on the deal, while other Malaysian plantation stocks trade at around 14 times on average. Palm-oil plantation operator Kuala Lumpur Kepong Bhd. trades at more than 16 times.
MIDF also said that Felda Global intends to distribute at least 50% of its net profit to shareholders as dividends, meaning that it will have a dividend yield of 4.5%, compared with the 3.5% its peers offer.
Felda Global said its net profit for the three months ended March 31 was 192.2 million ringgit, down 47% from 359.0 million ringgit a year earlier, while revenue edged up 1.8% to 1.72 billion ringgit from 1.69 billion ringgit. Felda Global said the profit fall was due to higher prices it has had to pay for crude palm oil, as well as the cost of replanting trees to improve yields.
Felda Global is the biggest IPO in Malaysia since state oil firm Petroliam Nasional Bhd.'s unit Petronas Chemicals Group Bhd. raised $4.14 billion in late 2010. In May, Gas Malaysia, a natural gas supplier, raised $230 million from an IPO. The stock rose as much as 15% on its debut on the local stock exchange when trading began this month, even though the company reported a drop of more than 50% in its first-quarter net profit.
The shares ended Wednesday at 2.61 ringgit, nearly 19% higher than the company's IPO price of 2.20 ringitt.
Felda Global appointed CIMB Investment Bank and Maybank Investment Bank as the joint principal advisers. It has also hired Deutche Bank AG; JP Morgan Securities Ltd., part of J.P. Morgan Chase & Co. and Morgan Stanley to work on the offering.
Write To Jason Ng and Shie-Lynn Lim at jason.ng@dowjones.com
Credit: By Jason Ng And Shie-Lynn Lim
Subject: Stock prices; Investment advisors; Corporate profits; Stock exchanges; Plantations; State government; Institutional investments
Location: Malaysia Kuala Lumpur Malaysia
Company / organization: Name: Kuala Lumpur Kepong; NAICS: 311223
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 27, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022777959
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022777959?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Overheard: Big Oil and the Media
Author: Anonymous
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]28 June 2012: C.12.
ProQuest document link
Abstract:
In his recent book, "Private Empire," Steve Coll quotes an unnamed executive as saying that "Being the head of public affairs for Exxon is probably not viewed as one of the more desirable jobs in the world." Besides a reputation for reticence -- former CEO Lee Raymond once started a CNBC interview saying "We talk when we need to talk to the media" --
Full text: [Financial Analysis and Commentary]
Exxon Mobil doesn't have the easiest relationship with the media. In his recent book, "Private Empire," Steve Coll quotes an unnamed executive as saying that "Being the head of public affairs for Exxon is probably not viewed as one of the more desirable jobs in the world."
Besides a reputation for reticence -- former CEO Lee Raymond once started a CNBC interview saying "We talk when we need to talk to the media" -- Exxon feels it doesn't get a fair hearing from the press. Speaking at the Council on Foreign Relations on Wednesday, current CEO Rex Tillerson scolded journalists for not doing their "homework" when writing about controversial topics such as hydraulic fracturing, or "fracking," and fueling a climate of fear.
But surely generalizations of the sort that paint Big Oil as a monolithic menace also are inaccurate when applied to the media? Mr. Tillerson was challenged on this very point in the Q&A session after he spoke. His somewhat grudging response: "There's probably a couple of camel hairs in the brush that I would say don't apply."
Subject: Media coverage; Scandals; International relations; Hydraulic fracturing
People: Tillerson, Rex W
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: Council on Foreign Relations; NAICS: 813910, 541720
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.12
Publication year: 2012
Publication date: Jun 28, 2012
column: Heard on the Street
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022370973
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022370973?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Vietnam Spars With China Over Oil Plans
Author: Ma, Wayne; Hookway, James
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]28 June 2012: A.11.
ProQuest document link
Abstract:
The disagreement, the latest in a string of arguments over the potentially energy-rich sea, erupted earlier in the week when China National Offshore Oil Corp. said it was offering a new batch of oil-exploration blocks inside the 200-nautical-mile exclusive economic zone granted to Vietnam under the United Nations' Law of the Sea.
Full text: A spat between China and Vietnam over energy rights in the South China Sea intensified on Wednesday as Vietnam's biggest company called on China to scrap its plans to develop areas near the Vietnamese shore.
The disagreement, the latest in a string of arguments over the potentially energy-rich sea, erupted earlier in the week when China National Offshore Oil Corp. said it was offering a new batch of oil-exploration blocks inside the 200-nautical-mile exclusive economic zone granted to Vietnam under the United Nations' Law of the Sea.
Vietnam quickly objected, saying the Chinese state oil firm was moving into its territorial waters. On Wednesday, state-run Vietnam Oil & Gas, or PetroVietnam, weighed in, showing how territorial claims are increasingly being backed up by powerful companies in addition to governments.
PetroVietnam Chairman Do Van Haudescribed the Chinese firm's strategy as illegal and urged it to cancel the bidding, adding that two blocks offered by China National Offshore Oil, known as Cnooc, overlap with those offered by PetroVietnam.
"We strongly protest Cnooc's offering to international companies and we request foreign firms not to get involved," Mr. Hau told reporters.
Cnooc's spokesman in charge of legal affairs wasn't available to comment. At an earlier briefing, China's Foreign Ministry said Cnooc's tender represented "normal business activities" in line with Chinese law and international practice.
Cnooc's move is likely influenced by a desire to see how far it can press its claims in the sea rather than entirely commercial considerations, analysts and diplomats say. Few foreign firms are likely to engage in drilling in such disputed waters, especially after Vietnam's protests.
Credit: By Wayne Ma and James Hookway
Subject: Disputes; International relations; Oil exploration
Location: China South China Sea Vietnam
Company / organization: Name: Vietnam Oil & Gas Group; NAICS: 211111; Name: United Nations--UN; NAICS: 928120; Name: CNOOC Ltd; NAICS: 211111
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.11
Publication year: 2012
Publication date: Jun 28, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022372300
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022372300?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Brazilian Mogul's Oil Firm Takes Hit
Author: Lyons, John; Cowley, Matthew
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]28 June 2012: B.10.
ProQuest document link
Abstract:
Shares of OGX Petroleo e Gas Participacoes S/A, based in Rio de Janeiro, fell around 25% after the start-up company said its much anticipated first two wells would start producing around 5,000 barrels of oil per day -- less than a third of some earlier estimates.
Full text: SAO PAULO, Brazil -- The oil and mining empire of Brazil billionaire Eike Batista suffered a sharp blow Wednesday as investors unloaded shares in Batista firms after its oil concern slashed production estimates at its first venture.
Shares of OGX Petroleo e Gas Participacoes S/A, based in Rio de Janeiro, fell around 25% after the start-up company said its much anticipated first two wells would start producing around 5,000 barrels of oil per day -- less than a third of some earlier estimates. Other companies such as ship builder OSX and mining company MMX also declined.
Mr. Batista, speaking on a conference call late Wednesday, expressed confidence that his oil company -- Brazil's biggest private oil venture -- would start producing from other projects. On the call, he played up the company's previous drilling success, saying that after drilling 100 wells it has had a hit ratio of more than 85% in the three areas it has drilled.
"The company is changing from an exploration company to a production company," said Mr. Batista.
Few businessmen have captured international investor excitement for Brazil as broadly as Mr. Batista. The 55-year-old executive started an oil company from scratch five years ago to take advantage of huge new oil finds off the Brazilian coast. He took the then-30-employee firm public in 2008 before it drilled a single well in a $3.6 billion share sale.
The large initial public offering -- it was bigger than Google Inc.'s 2004 IPO -- created enormous expectations. It is one of four IPOs of Brazilian oil, mining, port and ship-building companies that Mr. Batista has sold to investors in recent years. Today, Mr. Batista's investors include Abu Dhabi's sovereign wealth fund and the Ontario Teacher's Pension Plan.
Credit: By John Lyons and Matthew Cowley
Subject: Petroleum industry; Initial public offerings; Petroleum production; Stock prices
Location: Brazil
People: Batista, Eike
Company / organization: Name: OGX Petroleo e Gas Participacoes SA; NAICS: 211111
Classification: 9180: International; 9110: Company specific; 8510: Petroleum industry; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.10
Publication year: 2012
Publication date: Jun 28, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022423753
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022423753?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Canadian Dollar Ends Sharply Lower As Oil, Stocks Slide
Author: Curren, Don
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 June 2012: n/a.
ProQuest document link
Abstract:
News that the Malaysian state-owned energy company Petronas agreed to buy Canada's Progress Energy Resources Corp. for 5.5 billion Canadian dollars ($5.36 billion) may be a source of short-term support for the currency, said a report from TD Securities.
Full text: TORONTO--The Canadian dollar ended sharply lower Thursday, underperforming other major currencies as crude oil prices tumbled and stock markets slumped, putting intense pressure on the risk-sensitive currency.
The U.S. dollar was at C$1.0332 Thursday compared with C$1.0249 late Wednesday, according to data provider CQG.
"It's sort of a double whammy for [the Canadian dollar]," said Greg Anderson, senior foreign exchange strategist at Citibank in New York.
A "really violent" move lower in oil was one of the two key drivers in the Canadian unit's decline, he said.
Slumping equities was the other. "The U.S. dollar appreciates against everything when you have an equity risk off day," Mr. Anderson said.
The Canadian dollar's decline in recent weeks hasn't been commensurate with the slump in oil in the last several weeks, suggesting the currency is now catching up with some of the decline, he said.
"Oil ground lower in May and the first part of June and the reaction in dollar/CAD was pretty darn small," Mr. Anderson said.
News that the Malaysian state-owned energy company Petronas agreed to buy Canada's Progress Energy Resources Corp. for 5.5 billion Canadian dollars ($5.36 billion) may be a source of short-term support for the currency, said a report from TD Securities.
Citi's Mr. Anderson said there's solid support for the U.S. dollar at C$1.0250.
There aren't a lot of technical restraints to a move higher, he said. "If we get through C$1.0400, there's a good chance that this move could accelerate," he said
"Today's movement, with CAD falling more than euro and falling more than sterling, that's unusual and I don't expect that to last more than a day or two," he added.
On Friday, Canadian gross domestic product data for April will be released. Economists expect GDP growth of 0.2%.
These are the exchange rates at 3:41 p.m. EDT (1941 GMT) and 8:00 a.m. EDT (1200 GMT) Thursday, and late Wednesday.
-Write to Don Curren at don.curren@dowjones.com
Credit: By Don Curren
Subject: Canadian dollar; American dollar; Foreign exchange rates; Currency; Crude oil prices; Gross Domestic Product--GDP
Location: United States--US New York
Company / organization: Name: Petronas; NAICS: 211111; Name: Progress Energy Resources Corp; NAICS: 221122; Name: Citibank; NAICS: 551111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 28, 2012
column: DJ FX Trader
Section: Forex
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022495366
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022495366?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Europe Prepared for Iranian Oil Embargo
Author: Kent, Sarah; Rozhnov, Konstantin
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 June 2012: n/a.
ProQuest document link
Abstract:
Eni SpA, Italy's largest refiner, received an exemption to allow it to keep getting oil shipments as payment for work it had done in Iran, but a spokesman for the company said it isn't receiving any other Iranian crude.
Full text: A European Union ban on the purchase of Iranian oil that comes into full force Sunday will be greeted with little fanfare by European customers.
Many refiners have already turned to alternatives, and other countries, particularly Saudi Arabia but also Iraq, have increased production. The increased output comes as the euro zone's debt crisis dents oil demand from the region. That has left Europe's refiners well-positioned to weather the July 1 cutoff in Iranian supplies.
"We've seen continuing slowdown in demand, and Saudi Arabia has provided extra oil, and it has removed worries," said Ole Hansen, futures manager on Saxo Bank's fixed-income trading desk.
Oil prices soared to $128.40 a barrel earlier in the year, primarily because of concern that the loss of Iranian crude could cause large shortages in the market and put pressure on some of the region's most fragile economies, such as Greece, Spain and Italy.
Before the sanctions, Iran was among the European Union's top energy suppliers. The bloc imported 600,000 barrels a day of Iranian crude before the sanctions were ratified in January, according to the International Energy Agency. Companies with long-term contracts were allowed to keep importing until the end of June.
But Thursday, just days ahead of the July 1 deadline, the price of Brent crude futures closed at $91.30 a barrel, near levels last seen in December 2010. Market participants say concerns over the state of the global economy outweigh any worries about supply.
The IEA's latest projections for this year peg European oil demand at an average of 14.7 million barrels a day, compared to 15 million barrels a day last year and 15.3 million barrels a day in 2010.
Analysts say a large price move following the start of the embargo on Sunday is unlikely, adding that a large proportion of Iran's oil output would still be able to reach Asian buyers. Many of these countries have received exemptions from international sanctions barring dealings with Iranian financial institutions that make it difficult to pay for the country's oil.
Indeed, many European refiners have already done without Iranian crude for several months. Some preferred to wind down their dealings with the Iran well in advance of the full embargo, leaving the market well prepared for what is to come.
Greece, which kicked up strong opposition to the sanctions in January, stopped buying Iranian oil "a few months ago," a Greek government official said Tuesday, while Spanish refiner Repsol YPF SA said it hasn't bought any of the country's crude since January.
Prior to the sanctions, Spain and Greece were the two largest European importers of Iranian crude, although Italy also imported significant amounts of the country's oil.
A person familiar with crude buying by Cepsa, another major Spanish refinery, said Tuesday the company had stopped its imports of Iranian oil several weeks ago. Eni SpA, Italy's largest refiner, received an exemption to allow it to keep getting oil shipments as payment for work it had done in Iran, but a spokesman for the company said it isn't receiving any other Iranian crude.
Other small, regional refineries in Italy said they had made plans to stop receiving Iranian crude next month. Market participants said the market is unlikely to come under strain as these companies seek alternative sources, given that supplies are plentiful. Refiners and crude traders said that in addition to buying from Saudi Arabia and Iraq, consumers have also turned to Russia, the world's largest oil producer, to replace Iranian supplies.
The comfortable supply picture has helped remove the premium of around $20 a barrel that traders factored into oil prices at the beginning of the year, said Torbjorn Kjus, oil-market analyst at DnB NOR.
"There's no material price premium from the Iran issue," he said.
However, analysts said, the loss of Iranian crude could begin to strain the market later in the year if the global economy strengthens or tensions in the oil-rich Middle East escalate.
"Refiners have replaced Iranian oil, but we will see tightness if demand increases," said Amrita Sen, oil analyst at Barclays. "We haven't seen it yet as demand has been weak for several weeks now."
Write to Sarah Kent at
Corrections & Amplifications
An earlier version of this article included a sentence, attributed to the International Energy Agency, regarding Iranian crude as a percentage of European Union demand.
Credit: By Sarah Kent And Konstantin Rozhnov
Subject: Petroleum industry; Oil prices; Sanctions; Supplies
Location: Europe Greece Iraq Spain Italy Iran Saudi Arabia
Company / organization: Name: YPF SA; NAICS: 211111; Name: International Energy Agency; NAICS: 928120; Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 28, 2012
column: Market Focus
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022495418
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022495418?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Brazilian Mogul's Oil Firm Takes Hit
Author: Lyons, John; Cowley, Matthew
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 June 2012: n/a.
ProQuest document link
Abstract:
In speeches at business conferences and investor forums, Mr. Batista often remarks that his goal is to surpass Mexican tycoon Carlos Slim as one of the world's richest men.
Full text: SAO PAULO, Brazil--The oil and mining empire of Brazil billionaire Eike Batista suffered a sharp blow Wednesday as investors unloaded shares in Batista firms after its oil concern slashed production estimates at its first venture.
Shares of OGX Petroleo e Gas Participacoes S/A, based in Rio de Janeiro, fell around 25% after the start-up company said its much anticipated first two wells would start producing around 5,000 barrels of oil per day--less than a third of some earlier estimates. Other companies such as ship builder OSX and mining company MMX also declined.
Mr. Batista, speaking on a conference call late Wednesday, expressed confidence that his oil company--Brazil's biggest private oil venture--would start producing from other projects. On the call, he played up the company's previous drilling success, saying that after drilling 100 wells it has had a hit ratio of more than 85% in the three areas it has drilled.
"The company is changing from an exploration company to a production company," said Mr. Batista.
Few businessmen have captured international investor excitement for Brazil as broadly as Mr. Batista. The 55-year-old executive started an oil company from scratch five years ago to take advantage of huge new oil finds off the Brazilian coast. He took the then-30-employee firm public in 2008 before it drilled a single well in a $3.6 billion share sale.
The large initial public offering--it was bigger than Google Inc.'s 2004 IPO--created enormous expectations. It is one of four IPOs of Brazilian oil, mining, port and ship-building companies that Mr. Batista has sold to investors in recent years. Today, Mr. Batista's investors include Abu Dhabi's sovereign wealth fund and the Ontario Teacher's Pension Plan.
The fortunes of any one of Mr. Batista's companies quickly reverberate across the rest of his empire. That's because his companies have big contracts with each other. Ship builder OSX fulfills the orders of OGX. Minerals dug up by mining firm MMX are meant to be shipped from ports managed by LLX Logistica.
The steep share declines across Batista companies mark a recalibration of investor confidence in the earnings outlook for a business empire of a man given to bold predictions for growth. The X in his company names is meant to symbolize the multiplication of wealth. In speeches at business conferences and investor forums, Mr. Batista often remarks that his goal is to surpass Mexican tycoon Carlos Slim as one of the world's richest men.
That goal is farther away after a share decline that wiped several billion dollars from the market value of Mr. Batista's companies. Shares of OGX are now down more than 50% this year.
It is the latest bad news for Mr. Batista, who got his start in gold mining. In May, Mr. Batista's son Thor, whom Mr. Batista has indicated could succeed him, ran over and killed a bicyclist while driving a $1 million Mercedes sports car.
Batista's son wasn't charged with a crime. But the accident was a heavy blow to Mr. Batista's previously flawless image in Brazil. Brazilians were aware of the Mercedes before the accident, since it was often photographed parked in Mr. Batista's living room as a trophy.
More recently, Mr. Batista has been selling stakes in some of his firms. Group officials, however, have stated that it doesn't need to raise cash.
Write to John Lyons at and Matthew Cowley at
Credit: By John Lyons And Matthew Cowley
Subject: Petroleum industry; Acquisitions & mergers
Location: Brazil Rio de Janeiro Brazil
Company / organization: Name: Google Inc; NAICS: 519130
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 28, 2 012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022777936
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022777936?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. Clears China From Iran Oil Sanctions
Author: Johnson, Keith
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 June 2012: n/a.
ProQuest document link
Abstract:
A separate oil embargo by the European Union will go into effect on Sunday. Since the embargo was announced earlier this year, European purchasers of Iranian crude have found alternative suppliers.
Full text: WASHINGTON--The U.S. exempted China from penalties for doing business with Tehran as the latest set of U.S. sanctions targeting Iran's oil exports took effect on Thursday.
The State Department, which had determined that China had significantly reduced its purchases of Iranian crude, had previously exempted 19 other countries, all traditional purchasers of Iranian crude. That left China, the biggest buyer of Iranian oil, potentially shut out of doing business with the U.S.
The Obama administration determined that China met the requirements because its purchases of Iranian crude fell about 25% in the first five months of the year. The exemption lasts for six months.
China's reduction in oil imports took place in the first few months of 2012 because of a pricing dispute between Beijing and Tehran, rather than compliance with U.S. sanctions. In May, Chinese imports of Iranian oil jumped 39% from April, to more than 500,000 barrels a day--roughly the same level of imports as last year.
Beijing has opposed the latest round of U.S. sanctions, which ban companies that deal with Iran's central bank from doing business in the U.S. Chinese officials said this month that purchases of Iranian oil are "legitimate."
Obama administration officials said they didn't "want to speculate" on the reasons for the first-half decline, but said "it's clearly there." They added that for 2012 as a whole, Chinese imports of Iranian oil will be at a lower level than in 2011.
Secretary of State Hillary Clinton said the reductions of purchases of Iranian oil by countries such as Japan, South Korea and Spain "are a clear demonstration to Iran's government that Iran's continued violation of its international nuclear obligations carries an enormous economic cost."
The Obama administration estimates that Iran is now exporting about one million barrels a day less than it did last year, costing Tehran about $8 billion per quarter. The U.S. sanctions, part of a bill signed into law late last year, are designed to ratchet up economic pressure on Iran to persuade it to take steps to guarantee its nuclear program is for civilian purposes, as it contends.
A separate oil embargo by the European Union will go into effect on Sunday. Since the embargo was announced earlier this year, European purchasers of Iranian crude have found alternative suppliers. Additionally, some aspects of the EU embargo--such as prohibiting insurance for tankers carrying Iranian oil--have convinced non-European countries such as South Korea to halt imports of Iranian oil.
Some House Republicans were upset that China was granted a U.S. exemption. "Today the administration has granted a free pass to Iran's biggest enabler, China, which purchases more Iranian crude than any other country," said Rep. Ileana Ros-Lehtinen of Florida, chairman of the House Foreign Affairs Committee.
A decision not to grant an exemption to China would have risked a diplomatic and economic showdown with an important trading partner, a country Washington is trying to persuade to play a more constructive role in other areas, such as the Syrian conflict and North Korea's nuclear program.
Granting the temporary exemption, which indicates that China's price dispute with Tehran counts as compliance, increases the pressure on the administration to redouble efforts to get China on board.
"With Chinese imports likely to rise in June and July, the administration will need to insist on Chinese compliance for the remainder of the year or face political embarrassment," said Mark Dubowitz, the executive director of the Foundation for the Defense of Democracies.
He said the U.S. needs to press countries that have received exemptions to make even deeper cuts in purchases of Iranian oil to increase the pressure on Tehran. "Iranian nuclear physics is beating Western economic pressure and the Iranian regime doesn't yet fear U.S. military power. The administration has very little time to change that strategic calculus," he said.
Jay Solomon contributed to this article.
Write to Keith Johnson at
Credit: By Keith Johnson
Subject: International relations-US; International trade; Sanctions; Compliance
Location: Beijing China China United States--US Iran South Korea
People: Clinton, Hillary
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 28, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022921062
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022921062?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
North Dakota City Draws Foreign Workers; Students on Visas Fill Service Jobs Vacated by the Oil Boom; Good Pay Trumps State Dept. Goal of Cultural Exchange
Author: Nicas, Jack
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 June 2012: n/a.
ProQuest document link
Abstract:
Williston and the surrounding area face a rare problem in today's economy: more jobs than workers. Since 2006, when new drilling technology opened up the region's shale reserve to oil production, the northwest corner of North Dakota has added 30,000 jobs--a 136% increase.
Full text: WILLISTON, N.D.--With the nearby oil boom draining this city of many of its service workers, businesses here are relying on a cultural-exchange program for foreign college students to keep the local economy humming.
More than 500 foreign students--from Thailand, Jamaica and about a dozen other countries--are staffing nearly every hotel, car wash and fast-food place in town, tending to the troops of roughnecks from the oilfields.
"Without them, I don't know what we'd do," said Ward Koeser, mayor of this city of 16,000, citing long lines, slow service and limited hours at stores and restaurants before the students arrived.
But the State Department is beginning to raise questions about possible misuse of the program, which gives foreign college students four-month visas to work and travel in the U.S. In 1961, Congress created the program for foreign students to fill seasonal or temporary jobs--mostly in beach-resort towns on the coasts--"to strengthen the ties which unite us with other nations."
The program has faced scrutiny in recent years after complaints of harsh working conditions, and in May, the State Department tightened rules on the visas to refocus "on the cultural experience of participants, which in recent years has been overshadowed by the goal of income production." A State Department official said, "We run an exchange program" not a labor program. Officials and employers here say the students in North Dakota are getting a genuine taste of life in the U.S. More than a dozen students interviewed had no complaints of poor working conditions or long hours. Nearly all, however, said they chose North Dakota for the prospects of higher wages and the opportunity to work two jobs, rather than the cultural experience.
"It's a boring town... but I want to make money, so I stay here all summer," said Dragan Mitev, a 21-year-old computer-science major from Macedonia, now on his second summer in Williston with the State Department program. He can earn $700 a week working 60 hours at a grocery store here. Last year, he bought a $6,000 car with his summer earnings, and this summer, he plans to fund a year of college.
Williston and the surrounding area face a rare problem in today's economy: more jobs than workers. Since 2006, when new drilling technology opened up the region's shale reserve to oil production, the northwest corner of North Dakota has added 30,000 jobs--a 136% increase. Those jobs were filled by many former service workers in Williston--along with mostly male workers who flocked to the oil jobs from across the country.
While the overall economy here is roaring, the influx of bachelors has strained the service sector. "The men come without a teenager to work at a restaurant or a spouse to work at Wal-Mart, but they still need to get their hair cut and a meal," Mayor Koeser said.
By late 2009, United Work and Travel, a Maryland-based private company authorized by the U.S. to recruit, screen and place foreign students in the exchange program, began offering North Dakota to students as a summer-job destination, highlighting the high wages. In 2010, United Work placed fewer than 15 students in the state. This year, the company is sending about 1,000 students to North Dakota, or one-fifth of all its placements.
Many businesses here have come to depend on the program for about a third of their work force. Indeed, managers complained about the gap in October and November, when most students are in school and not available for the program.
In October last year, "every business hurt. I mean it was literally overnight," said Vern Brekhus, manager of the local McDonald's, where 30 of the 87 employees are foreign students.
To the State Department, such reliance on the program is problematic, because the jobs are supposed to be seasonal or temporary. "If one-third of the jobs are constantly being filled (by foreign students), we'd want to put a stop to that," the official said, noting the program in North Dakota is due for a site visit this summer. "We don't want a (foreign) student to displace an American."
Officials and employers in Williston say that logic doesn't apply. As of May, the county surrounding Williston had nearly 1,700 unfilled jobs and 240 people unemployed. The unemployment rate is 0.7%. "It'd be different if we had people being kept from a job because of them," Mayor Koeser said. "Everyone here who wants a job has a job."
United Work President Kasey Simon said the jobs are temporary because they are created by the oil boom, which won't last forever. He also said United Work facilitates outings for the students to a national park and Mount Rushmore in South Dakota.
But most foreign students interviewed were clear about why they came to North Dakota. The average job for a programparticipant outside the state pays about $8 an hour, Mr. Simon said, compared to $9 to $10 an hour in North Dakota. In Williston, some jobs range as high as $12 an hour. About 90% of the foreign students in North Dakota hold two or more jobs.
Janike Banton and Colesha Phelps, best friends from Jamaica who are spending their second summer here, said they can each make about $800 a week working two full-time jobs together. They spent a previous summer in the program near the beach in Florida, but "the opportunities are here and we can use the money to pay our tuition," Ms. Banton said.
The women stay with four other Jamaicans in a three-bedroom home provided by one of their employers. Other students pay $100 a week to live in dormitories at Williston State College.
The influx of foreigners in a city that is 93% white has been jarring for some residents. Merle Gunlock, a 90-year-old retired rancher and lifelong resident, said the students are the first foreigners he has ever seen working in Williston. "They've been very polite," he said, though he wishes some spoke better English.
Business owners laud the students' work ethic, and say that without them, the local employees "would just quit because it's too hard and it's too busy," said Mr. Brekhus of McDonald's. "Everyone's got to eat, but who's going to serve them?"
Write to Jack Nicas at
Credit: By Jack Nicas
Subject: Foreign students; Colleges & universities; Exchange programs; Working conditions; Petroleum production
Location: Jamaica United States--US Thailand North Dakota
Company / organization: Name: Congress; NAICS: 921120; Name: Williston State College; NAICS: 611310
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jun 29, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022504574
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022504574?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: U.S. Clears China From Iran Oil Sanctions
Author: Johnson, Keith
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]29 June 2012: A.10.
ProQuest document link
Abstract:
A separate oil embargo by the European Union will go into effect on Sunday. Since the embargo was announced earlier this year, European purchasers of Iranian crude have found alternative suppliers.
Full text: WASHINGTON -- The U.S. exempted China from penalties for doing business with Tehran as the latest set of U.S. sanctions targeting Iran's oil exports took effect on Thursday.
The State Department, which had determined that China had significantly reduced its purchases of Iranian crude, had previously exempted 19 other countries, all traditional purchasers of Iranian crude. That left China, the biggest buyer of Iranian oil, potentially shut out of doing business with the U.S.
The Obama administration determined that China met the requirements because its purchases of Iranian crude fell about 25% in the first five months of the year. The exemption lasts for six months.
China's reduction in oil imports took place in the first few months of 2012 because of a pricing dispute between Beijing and Tehran, rather than compliance with U.S. sanctions. In May, Chinese imports of Iranian oil jumped 39% from April, to more than 500,000 barrels a day -- roughly the same level of imports as last year.
Beijing has opposed the latest round of U.S. sanctions, which ban companies that deal with Iran's central bank from doing business in the U.S. Chinese officials said this month that purchases of Iranian oil are "legitimate."
Obama administration officials said they didn't "want to speculate" on the reasons for the first-half decline, but said "it's clearly there." They added that for 2012 as a whole, Chinese imports of Iranian oil will be at a lower level than in 2011.
Secretary of State Hillary Clinton said the reductions of purchases of Iranian oil by countries such as Japan, South Korea and Spain "are a clear demonstration to Iran's government that Iran's continued violation of its international nuclear obligations carries an enormous economic cost."
The Obama administration estimates that Iran is now exporting about one million barrels a day less than it did last year, costing Tehran about $8 billion per quarter. The U.S. sanctions, signed into law late last year, are designed to ratchet up economic pressure on Iran to persuade it to take steps to guarantee its nuclear program is for civilian purposes, as it contends.
A separate oil embargo by the European Union will go into effect on Sunday. Since the embargo was announced earlier this year, European purchasers of Iranian crude have found alternative suppliers.
Some House Republicans were upset that China was granted a U.S. exemption. "Today the administration has granted a free pass to Iran's biggest enabler, China, which purchases more Iranian crude than any other country," said Rep. Ileana Ros-Lehtinen of Florida, chairman of the House Foreign Affairs Committee.
A decision not to grant an exemption to China would have risked a diplomatic and economic showdown with an important trading partner, a country Washington is trying to persuade to play a more constructive role in other areas, such as the Syrian conflict and North Korea's nuclear program.
Granting the temporary exemption, which indicates that China's price dispute with Tehran counts as compliance, increases the pressure on the administration to redouble efforts to get China on board.
"With Chinese imports likely to rise in June and July, the administration will need to insist on Chinese compliance for the remainder of the year or face political embarrassment," said Mark Dubowitz, the executive director of the Foundation for the Defense of Democracies.
He said the U.S. needs to press countries that have received exemptions to make even deeper cuts in purchases of Iranian oil to increase the pressure on Tehran. "Iranian nuclear physics is beating Western economic pressure and the Iranian regime doesn't yet fear U.S. military power. The administration has very little time to change that strategic calculus," he said.
---
Jay Solomon contributed to this article.
Credit: By Keith Johnson
Subject: International trade; Compliance; International relations-US -- China; Sanctions
Location: United States--US China Iran
People: Clinton, Hillary
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.10
Publication year: 2012
Publication date: Jun 29, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022550188
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022550188?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. News: Oil Brings Foreign Accent to North Dakota --- Service Sector Turns to Students on Visas as Locals Take Better-Paid Energy Jobs; Making Money Trumps Cultural Pursuits
Author: Nicas, Jack
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]29 June 2012: A.3.
ProQuest document link
Abstract:
Williston and the surrounding area face a rare problem in today's economy: more jobs than workers. Since 2006, when new drilling technology opened up the region's shale reserve to oil production, the northwest corner of North Dakota has added 30,000 jobs -- a 136% increase.
Full text: WILLISTON, N.D. -- With the nearby oil boom draining this city of many of its service workers, businesses here are relying on a cultural-exchange program for foreign college students to keep the local economy humming.
More than 500 foreign students -- from Thailand, Jamaica and about a dozen other countries -- are staffing nearly every hotel, car wash and fast-food place in town, tending to the troops of roughnecks from the oilfields.
"Without them, I don't know what we'd do," said Ward Koeser, mayor of this city of 16,000, citing long lines, slow service and limited hours at stores and restaurants before the students arrived.
But the State Department is beginning to raise questions about possible misuse of the program, which gives foreign college students four-month visas to work and travel in the U.S. In 1961, Congress created the program for foreign students to fill seasonal or temporary jobs -- mostly in beach-resort towns on the coasts -- "to strengthen the ties which unite us with other nations."
The program has faced scrutiny in recent years after complaints of harsh working conditions, and in May, the State Department tightened rules on the visas to refocus "on the cultural experience of participants, which in recent years has been overshadowed by the goal of income production." A State Department official said, "We run an exchange program" not a labor program. Officials and employers here say the students in North Dakota are getting a genuine taste of life in the U.S. More than a dozen students interviewed had no complaints of poor working conditions or long hours. Nearly all, however, said they chose North Dakota for the prospects of higher wages and the opportunity to work two jobs, rather than the cultural experience.
"It's a boring town -- but I want to make money, so I stay here all summer," said Dragan Mitev, a 21-year-old computer-science major from Macedonia, now on his second summer in Williston with the State Department program. He can earn $700 a week working 60 hours at a grocery store here. Last year, he bought a $6,000 car with his summer earnings, and this summer, he plans to fund a year of college.
Williston and the surrounding area face a rare problem in today's economy: more jobs than workers. Since 2006, when new drilling technology opened up the region's shale reserve to oil production, the northwest corner of North Dakota has added 30,000 jobs -- a 136% increase. Those jobs were filled by many former service workers in Williston -- along with mostly male workers who flocked to the oil jobs from across the country.
While the overall economy here is roaring, the influx of bachelors has strained the service sector. "The men come without a teenager to work at a restaurant or a spouse to work at Wal-Mart, but they still need to get their hair cut and a meal," Mayor Koeser said.
By late 2009, United Work and Travel, a private company authorized by the U.S. to recruit, screen and place foreign students in the exchange program, began offering North Dakota to students as a summer-job destination, highlighting the wages.
Many businesses here have come to depend on the program for about a third of their work force. Indeed, managers complained about the gap in October and November, when most students are in school and not available for the program.
In October last year, "every business hurt. I mean it was literally overnight," said Vern Brekhus, manager of the local McDonald's, where 30 of the 87 employees are foreign students.
To the State Department, such reliance on the program is problematic, because the jobs are supposed to be seasonal or temporary. "If one-third of the jobs are constantly being filled (by foreign students), we'd want to put a stop to that," the official said, noting the program in North Dakota is due for a site visit this summer. "We don't want a (foreign) student to displace an American."
Officials and employers in Williston say that logic doesn't apply. As of May, the county surrounding Williston had nearly 1,700 unfilled jobs and 240 people unemployed. The unemployment rate is 0.7%. "It'd be different if we had people being kept from a job because of them," Mayor Koeser said. "Everyone here who wants a job has a job."
United Work President Kasey Simon said the jobs are temporary because they are created by the oil boom, which won't last forever. He also said United Work facilitates outings for the students to a national park and Mount Rushmore in South Dakota.
But most foreign students interviewed were clear about why they came to North Dakota. The average job for a participant outside the state pays about $8 an hour, Mr. Simon said, compared to $9 to $10 an hour in North Dakota. In Williston, some jobs range as high as $12 an hour.
Credit: By Jack Nicas
Subject: Colleges & universities; Exchange programs; Working conditions; Foreign students; Petroleum production
Location: Jamaica United States--US Thailand North Dakota
Company / organization: Name: Congress; NAICS: 921120
Publication title: Wall Street Journal, Eastern edit ion; New York, N.Y.
Pages: A.3
Publication year: 2012
Publication date: Jun 29, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022550196
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022550196?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
EU Embargo on Iran Oil Takes Effect
Author: DiColo, Jerry A
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]01 July 2012: n/a.
ProQuest document link
Abstract:
European foreign ministers voted for the embargo in January, but provided several months for companies to wind down their existing contracts and make preparations to secure supplies. Because of the long lead time, industry leaders are hoping for a tepid response in oil markets when the ban takes effect.
Full text: Worries about Iran have mellowed over the past month along with the slump in global oil prices. Market watchers are hoping the relative calm persists as the European Union's full embargo on Iranian oil takes hold.
On Sunday, the EU embargo on Iran's oil exports began in earnest, halting the vast majority of imports into Europe, ending exemptions for contracts signed before 2012 and barring insurance for Iranian oil shipments.
Monday marks the first day of oil trading under the embargo, and the International Energy Agency estimates as much as one million barrels of Iran's crude may leave the market.
Oil companies, including French oil major Total SA, and Royal Dutch Shell PLC, have already ended their dealings with Tehran to comply with the embargo. Countries outside of Europe are following suit. South Korea last week said it would suspend Iranian imports by July 1. India may also be forced to halt imports as insurance for most of Iran's shipments has been provided by European firms.
European foreign ministers voted for the embargo in January, but provided several months for companies to wind down their existing contracts and make preparations to secure supplies. Because of the long lead time, industry leaders are hoping for a tepid response in oil markets when the ban takes effect.
"By and large the consumer countries that have the direct supply connections have been taking steps to prepare," said Exxon Mobil Corp. Chief Executive Rex Tillerson on the sidelines of an event last week before adding, "what happens on the day-of is hard to predict."
Earlier this year, concerns about a confrontation between Iran and the West over the Iranian nuclear program helped send oil prices above $105 a barrel on the New York Mercantile Exchange, raising the cost of gasoline and other fuels for consumers and businesses. At the time, government officials were concerned about further price spikes and had promised to review whether the embargo should take effect.
Now, with Nymex oil futures trading near $80 a barrel, those concerns have subsided, said Greg Priddy, an energy-markets analyst at Eurasia Group. "We're not in a scenario where the sanctions will overshoot and create a price spike," Mr. Priddy said. "Back in March there were serious worries."
The biggest contributor to oil-market calm has been Saudi Arabia, the world's largest oil exporter and a rival of Iran in the Organization of Petroleum Exporting Countries. Khalid Al-Falih, the chief executive of state-owned oil producer Saudi Aramco Mobil Refinery Co. said in May that the kingdom's output is more than 10 million barrels a day, up from 9.45 million barrels a day last October.
Analysts say that the kingdom's production has made up for declines in Iranian output. Saudi Arabia is estimated to have roughly two million barrels a day of spare production capacity. Last month, OPEC ministers left its combined production ceiling for its 12 members at 30 million barrels a day.
A demand slump in Europe and economic slowdowns in the U.S. and China have also reduced fears about global supplies.
Barclays oil analyst Amrita Sen said that many countries have oil in storage that can make up for the lost Iranian barrels, and the EU's weak economy has cut oil usage and has lowered the threat of a shortage. Still, she remains cautious about what will happen after the embargo begins.
"If demand recovers, you will see the shortage quite quickly," she said.
Until the ban's full effects are known, many are bracing for the possibility of renewed tensions with Iran or hiccups in the supply chain. Talks between Iran and world powers in Moscow last month ended without an agreement by Tehran to curb its nuclear program. With the new sanctions, the dispute will test past Iranian threats, which included a vow to cut off oil shipments through the Strait of Hormuz, a major chokepoint for global oil supplies.
"This brings the Iran story back to the forefront, if only because we have been ignoring Iran for months," said Jason Schenker, president of Prestige Economics, an energy consulting firm.
Write to Jerry A. DiColo at
Credit: By Jerry A. DiColo
Subject: Petroleum industry; Oil prices; Production capacity
Location: Iran Europe
People: Tillerson, Rex W
Company / organization: Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Total SA; NAICS: 211111, 324110, 447190; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: European Union; NAICS: 926110, 928120; Name: New York Mercantile Exchange; NAICS: 523210; Name: Eurasia Group; NAICS: 523930; Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 1, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022778498
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022778498?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
EU Embargo On Iran Oil Takes Effect
Author: DiColo, Jerry A
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]02 July 2012: C.9.
ProQuest document link
Abstract:
European foreign ministers voted for the embargo in January but provided several months for companies to wind down existing contracts and make preparations to secure supplies. Because of the long lead time, industry leaders are hoping for a tepid response in oil markets when the ban takes effect.
Full text: Worries about Iran have mellowed over the past month along with the slump in global oil prices. Market watchers are hoping the relative calm persists as the European Union's full embargo on Iranian oil takes hold.
On Sunday, the EU embargo on Iran's oil exports began in earnest, halting the vast majority of imports into Europe, ending exemptions for contracts signed before 2012 and barring insurance for Iranian oil shipments.
Monday marks the first day of oil trading under the embargo, and the International Energy Agency estimates as much as one million barrels of Iran's crude may leave the market.
Oil companies, including French oil major Total SA, and Royal Dutch Shell PLC, have already ended their dealings with Tehran to comply with the embargo. Countries outside Europe are following suit. South Korea last week said it would suspend Iranian imports by July 1. India may also be forced to halt imports as insurance for most of Iran's shipments has been provided by European firms.
European foreign ministers voted for the embargo in January but provided several months for companies to wind down existing contracts and make preparations to secure supplies. Because of the long lead time, industry leaders are hoping for a tepid response in oil markets when the ban takes effect.
"By and large the consumer countries that have the direct supply connections have been taking steps to prepare," said Exxon Mobil Corp. Chief Executive Rex Tillerson on the sidelines of an event last week before adding, "what happens on the day-of is hard to predict."
Earlier this year, concerns about a confrontation between Iran and the West over the Iranian nuclear program helped send oil prices above $105 a barrel on the New York Mercantile Exchange. Now, Nymex oil futures are trading near $80.
Credit: By Jerry A. DiColo
Subject: Crude oil prices; Petroleum industry; Embargoes & blockades
Location: India Iran Europe South Korea
People: Tillerson, Rex W
Company / organization: Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Total SA; NAICS: 211111, 324110, 447190; Name: New York Mercantile Exchange; NAICS: 523210; Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: International Energy Agency; NAICS: 928120; Name: European Union; NAICS: 926110, 928120
Classification: 1300: International trade & foreign investment; 8130: Investment services; 8510: Petroleum industry; 9175: Western Europe; 9178: Middle East; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.9
Publication year: 2012
Publication date: Jul 2, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022832175
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022832175?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Iran Tries to Offset Newly Fortified Sanctions on Oil
Author: Faucon, Benoit
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]02 July 2012: A.7.
ProQuest document link
Abstract:
JBC Energy, a respected Vienna-based oil consultancy, said on Friday that Iran's crude-oil production has fallen to its lowest level since 1989, just after its 10-year war with Iraq ended.
Full text: LONDON -- As a European Union oil embargo took effect Sunday, Iran was stepping up its efforts to offset the sanctions by bartering products with China and selling more refined-oil products such as gasoline to its neighbors.
Tehran's strategy is being closely watched because if it doesn't succeed the country may have to shut down some of its oil wells -- a move that over time could damage reservoirs and push up global oil prices.
The EU embargo bans the purchase of Iranian oil and prohibits insurance for tankers carrying Iranian oil, which inhibits the transportation of Iranian oil to non-European nations as well. U.S. sanctions that prohibit companies that conduct oil transactions with Iran's central bank from doing business in the U.S. took effect last week, on top of existing penalties.
The West is ratcheting up pressure on Iran as talks to curb its nuclear program -- which the EU and U.S. suspect is for military purposes, but that Tehran says is for civilian purposes -- have failed to advance. A low-level technical meeting between both sides is set to take place this week in Istanbul, but expectations are low following three rounds of high-level talks.
"With this decision, our partners in the EU have underscored the seriousness with which the international community views the challenge of Iran's nuclear ambitions," the White House said Sunday. "Iran has an opportunity to pursue substantive negotiations, beginning with expert level talks this week in Istanbul."
Iran says it is fully prepared to deal with the sanctions.
"All possible options have been planned in government to counter" the sanctions, Iran's Oil Minister Rostam Ghasemi said Sunday in comments on the ministry's website.
Still, the head of the National Iranian Oil Co., Ahmad Ghalebani, Sunday said that crude-oil exports are set to fall about 20% to 30% in the second half of this year owing to the EU embargo.
Oil professionals and experts say the industry has already been hit hard.
JBC Energy, a respected Vienna-based oil consultancy, said on Friday that Iran's crude-oil production has fallen to its lowest level since 1989, just after its 10-year war with Iraq ended. Iran produced three million barrels a day in June, JBC said, compared to the 3.7 million barrels a day Iran was producing in 2010 before a ban on European investment in Iran oil and gas, still in effect, was implemented. Yet, Iran said it has a strategy in place to withstand the pressure and won't halt its nuclear program.
Mr. Ghasemi, the oil minister, said Friday that Iran was now exporting gasoline rather than importing it, as it used to do, allowing the Islamic Republic to help cushion some of blow of sanctions. In the year ended March 19, Iran exported 382,000 metric tons of gasoline, says Iranian customs statistics.
Iran has been strengthening its relationship with China, its biggest customer, which buys 500,000 barrels a day, according to the shipping tracker. Beijing bypasses banking sanctions by paying Iran in yuan, which is then used by Iran to pay for oil services or equipment, Iran trade professionals said.
A U.S. decision last month to exempt China, India and several other nations from penalties targeting financial institutions for 180 days lets Beijing continue to buy Iranian crude. Still, paying for it amounts to another challenge, amid U.S. Treasury warnings to banks to avoid dealing with Iranian lenders.
India approved a mechanism for Indian oil companies to deposit payments for Iranian oil into rupee accounts, which then will be used by Iran to pay for agricultural products and medicines from India.
Iran is developing other alternatives to maintain its production and offset lost crude sales, such as investing heavily in refining and electric sectors, which are fueled by oil and natural gas.
Under its five-year development plan ending in 2015, the country plans to spend $47.5 billion in new refining and distribution and to boost its power-generating capacity by 40% or 25,000 megawatts.
Credit: By Benoit Faucon
Subject: Oil prices; Petroleum production; Gasoline; Fines & penalties; Embargoes & blockades; Petroleum products; Sanctions
Location: China United States--US Iran Istanbul Turkey
Company / organization: Name: National Iranian Oil Co; NAICS: 324110; Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.7
Publication year: 2012
Publication date: Jul 2, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022833771
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022833771?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Falls 1.4% to $83.75
Author: Biers, John M
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 July 2012: n/a.
ProQuest document link
Abstract:
The HSBC China Manufacturing Purchasing Managers Index fell for the eighth consecutive month, to 48.2, compared with 48.4 in May, HSBC Holdings PLC said Monday.
Full text: NEW YORK--Oil prices retreated 1.4% Monday as the euphoria over last week's European Union plan faded and poor manufacturing data from the U.S. and China came into focus.
Analysts said the decline was probably inevitable after Friday's surge, which saw oil prices leap 9.4%. That move was fueled by enthusiasm over European leaders agreeing to use bailout funds to directly aid Spanish and Italian banks.
"The move on Friday was extremely exaggerated," said IAF Advisors managing partner Kyle Cooper.
Monday's trading is "somewhat of a hangover from what we saw," said Stephen Schork, head of the Schork Report, an energy research note.
Light, sweet crude-oil futures fell $1.21 to settle at $83.75 a barrel for August delivery on the New York Mercantile Exchange.
Sagging manufacturing data also weighed on oil. The U.S. manufacturing sector contracted in June for the first time since July 2009, according to the Institute for Supply Management. The unexpectedly weak report sent fears about future economic growth through the financial markets. The ISM's manufacturing purchasing managers' index plunged to 49.7 last month from 53.5 in May. A reading above 50 indicates expanding activity.
Earlier, manufacturing data from China also suggested stunted growth. The HSBC China Manufacturing Purchasing Managers Index fell for the eighth consecutive month, to 48.2, compared with 48.4 in May, HSBC Holdings PLC said Monday. The official manufacturing PMI in June also fell to 50.2 from 50.4 in May, the China Federation of Logistics and Purchasing said Sunday.
Oil prices rallied briefly early in the session after reports surfaced that Iranian lawmakers have drafted a bill to block the Strait of Hormuz for oil tankers from states that support oil sanctions.
But the jump was short-lived.
"It's only a draft," said Tony Rosado, an oil options analyst and broker at GA Global Markets. But if Iran takes more concrete action in the strait, a key waterway for oil, "then I think people will have to take it more seriously," Mr. Rosado added.
Given the poor manufacturing numbers and persistent weak oil demand, analysts said further declines in oil prices are possible in the days ahead.
Yet after Friday's surge, some energy insiders are loath to bet on oil prices receding too much.
John Kilduff, trader with Again Capital, said a weak jobs report this Friday could spur additional selling. But Mr. Kilduff doesn't see much chance of oil slipping into the $60s, as some had been discussing prior to Friday.
"I don't think you can get crazily bearish," he said.
Yue Li in Shanghai and Kathleen Madigan in New York contributed to this article.
Credit: By John M. Biers
Subject: Purchasing managers index; Manufacturing; Petroleum industry
Location: United States--US China New York
Company / organization: Name: Institute for Supply Management; NAICS: 813910; Name: New York Mercantile Exchange; NAICS: 523210; Name: HSBC Holdings PLC; NAICS: 523120, 551111; Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 2, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022924266
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022924266?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
GE, Rosneft in Preliminary Agreement on Oil Equipment
Author: Chaudhuri, Saabira
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 July 2012: n/a.
ProQuest document link
Abstract:
Last month the company issued a statement saying it supports the introduction of legislation that would establish permanent normal trade relations with Russia, which is slated to join the World Trade Organization later this summer.
Full text: General Electric Co. and Russia's OAO Rosneft reached a preliminary agreement to jointly evaluate and develop commercial oil and gas exploration and production opportunities in the Russian Federation.
GE's oil-and-gas division and the Russian state-run oil-and-gas company signed a memorandum of understanding under which GE would help Rosneft improve efficiency and yields in its exploration and recovery operations. The pair would explore opportunities to jointly develop, manufacture and sell equipment for use in Russia's oil-and-gas industry.
"The MOU underscores GE's interest in discussing, jointly with the Russian government and Russian oil and gas companies, the technology needs of the Russian oil and gas industry today and in the future, identifying key areas of cooperation to create value for the Russian Federation and GE," GE Energy Chief Executive John Krenicki said.
Under the terms of the agreement, GE and Rosneft will form a joint working group to identify potential opportunities, including equipment for Arctic offshore-field development, gas monetization technologies and enhanced oil recovery and difficult reserve development.
GE has a history of partnering with Russia. In September, the Fairfield, Conn., conglomerate revealed that it had set up two new joint ventures in Russia to expand its presence in the country's health-care and energy markets. Last month the company issued a statement saying it supports the introduction of legislation that would establish permanent normal trade relations with Russia, which is slated to join the World Trade Organization later this summer.
Credit: By Saabira Chaudhuri
Subject: Petroleum industry; Normal trade relations; Energy industry; Natural gas utilities; Enhanced oil recovery
Location: Russia
Company / organization: Name: OAO Rosneft; NAICS: 324110; Name: General Electric Co; NAICS: 332510, 334290, 334512, 334518; Name: World Trade Organization; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 2, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022970327
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022970327?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iran Tests Missiles After EU Oil Move
Author: Fassihi, Farnaz
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 July 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: BEIRUT--Iran's Revolutionary Guards Corps launched several days of drills Monday to test missiles capable of hitting targets as far away as Israel, one day after the European Union put into effect its planned embargo against Iranian oil.
The three days of war games in the north-central desert area of Semnan province, dubbed the Great Prophet 7, were reported by official news agencies. They are aimed at testing the precision and efficiency of the Iranian Revolutionary Guard Corps' warheads and missile system, the reports said.
Iran routinely conducts military drills. The continuing crisis in Syria, Iran's closest ally in the Arab world, and the near-failed nuclear talks with the West could potentially make Iran vulnerable for a military attack.
A new round of technical meetings is scheduled in Turkey this week between Iran and six counterparties who are aiming to curb what they say are Iranian steps toward building nuclear weapons. But there is little expectation of a breakthrough between Iran and the five permanent members of the United Nations Security Council plus Germany, or P5+1. During the last rounds of talks in Moscow in June, both sides acknowledged a large gap between their visions for a possible deal. Iran contends its nuclear program is for peaceful energy purposes.
Both Israel and the U.S. have said a military option is on the table.
In this week's drills, dozens of domestic ballistic missiles will be fired at 100 land and sea targets modeled after foreign bases belonging to "extra regional powers," official media reports said. Bomber drones and aircrafts will also be used, reports said.
Gen. Amir Ali Hajizadeh, commander of the Revolutionary Guards' airspace unit, said Monday that Iran wouldn't "sit idly" as the U.S. and Europe built a missile-defense shield program that could target Iran, according to IRNA, the official news agency. The North Atlantic Treaty Organization is pursuing plans for a Europe-based shield that would guard against Iranian missiles.
Iran would unveil a new ballistic missile, called Arm, which Gen. Hajizadeh said has the capacity to detect and hit radar bases. Arm is capable of hitting NATO targets in Turkey, enemy ships in the Persian Gulf and Israel's Iron Dome missile-defense system, he said.
Gen. Hajizadeh also said the Revolutionary Guards' electronic experts had successfully decoded all the classified information in the U.S. RQ-170 drone that went down inside Iran in December. Iran was currently using this intelligence and had begun building a drone modeled after its American counterpart, he said.
The U.S. Central Intelligence Agency declined to comment.
Gen. Hajizadeh also dismissed the threat of military strikes against Iran. He said the U.S. wouldn't go along with this scenario because its bases in the region are "right under the reach of our missile and weapons."
He also said Israel doesn't have the capacity to mount a unilateral attack on Iran, and if it did, Iran would act. "If they [Israelis] make a move, it will give us a great excuse to wipe them off the map," said Gen. Hajizadeh, according to IRNA.
Also on Monday, an Iranian lawmaker said lawmakers had drafted a bill to block the Strait of Hormuz, a vital oil-shipping corridor, to U.S. and European tankers. The bill is an "emergency plan to block the strait" following the implementation of EU sanctions, Ibrahim Agha Mohammadi, a member of the Parliament's national-security and foreign-policy commission, said in remarks posted Monday on Iran's parliamentary website Icana.
He said the bill had the support of 100 of the Parliament's 290 members, and was to exercise Iran's "sovereignty of internal waters and against an unfair and cruel oil embargo." The move would be largely symbolic, as the decision to close the strait would lie with Supreme Leader Ayatollah Ali Khamenei.
"We have seen similar threats from Iran to close the Strait of Hormuz many times before," an official at the U.S. State Department said. "Any attempt by Iran to close the Strait or to require vessels to obtain Iranian consent to transit the Strait would be inconsistent with international law and unacceptable to the United States," the official added.
Benoît Faucon and Sarah Kent contributed to this article.
Credit: By Farnaz Fassihi
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 2, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022984233
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022984233?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Relief for OPEC as Oil's Slide Eases, for Now
Author: Herron, James
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 July 2012: n/a.
ProQuest document link
Abstract:
Last week, concern over Tropical Storm Debby briefly forced oil companies to shut down platforms accounting for around one million barrels a day of oil output, said Olivier Jakob, managing director of Petromatrix, a consulting group.
Full text: Members of the Organization of Petroleum Exporting Countries may be breathing more easily. Analysts say a three-month slide in the price of crude is nearing its end, at least for the short term.
Support for the oil price is coming from several directions. Demand may be stronger than recent data suggest, euro-zone governments are making incremental progress toward solving their debt problems and supply disruptions threaten to shift the balance between demand and the amount of oil on the market.
Prices for Brent crude, the international benchmark grade, "continue to find a base around the low $90s," said Barclays Capital analyst Amrita Sen. Oil demand may be about to take a stronger turn, the analyst said.
The price of Brent has fallen 28% from its mid-March peak to a trough of $89.23 a barrel on June 21, as fears about a collapse in the European economy combined with high levels of oil production.
The swift decline dominated discussions at the twice-yearly OPEC meeting in Vienna last month. As the meeting concluded, several member countries that need the highest oil prices to balance their budgets warned they might call an extraordinary meeting to discuss a reduction in the group's production ceiling, if the oil price slipped below $90 a barrel.
The likelihood of oil remaining below that level for long now appears to be waning, analysts say.
Oil rose sharply Friday following an agreement at a European Union summit to use bailout funds to directly aid banks in Spain and Italy. The development was widely seen as a significant step toward a more-effective solution to the debt crisis.
"The recovery in the prices of energy sources [oil] could persist for longer than many anticipate," Commerzbank said in a note to clients. "What is more, the market has so far ignored the risks on the supply side."
The average price of OPEC crude oil was already recovering before the summit, and surged to $92.99 a barrel Friday, ending the week $4 higher than it started, according to OPEC's website.
Even before Friday's summit news, analysts at Barclays said there were signs that recent weakness in oil demand was derived more from caution than pessimism. "While global demand growth was subdued over the first five months of 2012, it was not negative and had not weakened relative to its 2011 performance," the bank said in a note to clients.
The recent macroeconomic uncertainty in Europe may have caused buyers to defer some oil purchases, meaning demand could bounce back stronger once fears subside, Barclays said. "Severe destocking may have exaggerated the underlying weakness in European oil demand," it said. "Should the euro-zone policy makers eventually be able to restore some confidence in the market by enacting some form of permanent solution, a relatively rapid demand recovery could follow."
At the same time, oil supplies outside OPEC have suffered a number of setbacks. As much as 250,000 barrels a day of Norwegian oil production remained offline Monday because of a strike by offshore workers. Negotiations between the workers and their employers are set to resume this week and the Norwegian Oil Industry Association hopes production could be back to normal by early next week.
Hurricane season is already hitting oil production in the Gulf of Mexico. Last week, concern over Tropical Storm Debby briefly forced oil companies to shut down platforms accounting for around one million barrels a day of oil output, said Olivier Jakob, managing director of Petromatrix, a consulting group.
The storm eventually missed oil-producing areas and oil output was quickly restarted. Still, "there will be other storms and other shut-ins in the months to come, keeping in mind that the last two years have been particularly light in terms of tropical disruptions," Mr. Jakob said.
Because of these factors, lights warning that prices could drop too low may no longer be flashing at OPEC. However, nagging economic questions mean it can't afford to rest too easy.
The price of Brent crude for delivery in August fell by more than a $2 a barrel Monday morning in Europe as traders responded to news of weakness in manufacturing both in China and in the euro zone. Monday afternoon in New York, August Brent was down 56 cents per barrel at $97.24.
There is also no guarantee that Europe's latest fix won't unravel within weeks or months, as have previous plans. "The risk of a euro-zone breakup and a subsequent collapse in oil demand and prices will remain very high until a comprehensive solution to Europe's problems is found," Bank of AmericaMerrill Lynch said in a note to clients.
Credit: By James Herron
Subject: Petroleum production; Petroleum industry; Crude oil prices; Meetings; Eurozone
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 2, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1022984242
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1022984242?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Iran Tests Missiles After EU Oil Move
Author: Fassihi, Farnaz
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]03 July 2012: A.11.
ProQuest document link
Abstract:
Iran's Revolutionary Guards Corps launched several days of drills Monday to test missiles capable of hitting targets as far away as Israel, one day after the European Union put into effect its planned embargo against Iranian oil.
Full text: BEIRUT -- Iran's Revolutionary Guards Corps launched several days of drills Monday to test missiles capable of hitting targets as far away as Israel, one day after the European Union put into effect its planned embargo against Iranian oil.
The three days of war games in the north-central desert area of Semnan province, dubbed the Great Prophet 7, were reported by official news agencies. They are aimed at testing the precision and efficiency of the Iranian Revolutionary Guard Corps' warheads and missile system, the reports said.
Iran routinely conducts military drills. The continuing crisis in Syria, Iran's closest ally in the Arab world, and the near-failed nuclear talks with the West could potentially make Iran vulnerable for a military attack.
A new round of technical meetings is scheduled in Turkey this week between Iran and six counterparties who are aiming to curb what they say are Iranian steps toward building nuclear weapons. But there is little expectation of a breakthrough between Iran and the five permanent members of the United Nations Security Council plus Germany, or P5+1. During the last rounds of talks in Moscow in June, both sides acknowledged a large gap between their visions for a possible deal. Iran contends its nuclear program is for peaceful energy purposes.
Both Israel and the U.S. have said a military option is on the table.
In this week's drills, dozens of domestic ballistic missiles will be fired at 100 land and sea targets modeled after bases belonging to "extra regional powers," official media reports said.
Gen. Amir Ali Hajizadeh, commander of the Revolutionary Guards' airspace unit, said Monday that Iran wouldn't "sit idly" as the U.S. and Europe built a missile-defense shield program that could target Iran, according to IRNA, the official news agency. The North Atlantic Treaty Organization is pursuing plans for a Europe-based shield that would guard against Iranian missiles.
Iran would unveil a new ballistic missile, called Arm, which Gen. Hajizadeh said has the capacity to detect and hit radar bases. Arm is capable of hitting NATO targets in Turkey, ships in the Persian Gulf and Israel's Iron Dome missile-defense system, he said.
Gen. Hajizadeh also said the Revolutionary Guards' electronic experts had successfully decoded all the classified information in the U.S. RQ-170 drone that went down inside Iran in December. Iran was currently using this intelligence and had begun building a drone modeled after its American counterpart, he said.
The U.S. Central Intelligence Agency declined to comment.
Also on Monday, an Iranian lawmaker said lawmakers had drafted a bill to block the Strait of Hormuz, a vital oil-shipping corridor, to U.S. and European tankers. The bill is an "emergency plan to block the strait" following the implementation of EU sanctions, Ibrahim Agha Mohammadi, a member of the Parliament's national-security and foreign-policy commission, said in remarks posted Monday on Iran's parliamentary website.
He said the bill had the support of 100 of the Parliament's 290 members.The move would be largely symbolic, as the decision to close the strait would lie with Supreme Leader Ayatollah Ali Khamenei.
---
Benoit Faucon and Sarah Kent contributed to this article.
Credit: By Farnaz Fassihi
Subject: Nuclear weapons; Missiles; Military exercises
Location: Iran
People: Hajizadeh, Amir Ali
Company / organization: Name: Revolutionary Guard-Iran; NAICS: 813940
Classification: 9178: Middle East; 1210: Politics & political behavior
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.11
Publication year: 2012
Publication date: Jul 3, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1023015401
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1023015401?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permissi on.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Gains 4.7% on Iran Tension
Author: Assis, Claudia; Kumar, V Phani
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 July 2012: n/a.
ProQuest document link
Abstract:
The European Central Bank is expected to lower rates on Thursday, and China is expected to relax the minimum reserve requirement ratio for banks again, analysts at Commerzbank said in a note to clients Tuesday.
Full text: Crude-oil futures leapt 4.7%, ending Tuesday at their highest level in five weeks on a flare-up of geopolitical concerns about Iran.
Crude for August delivery rose $3.91 to settle at $87.66 a barrel on the New York Mercantile Exchange, gathering steam as the session drew to a close.
After Monday's losses of 1.4%, traders were back to worrying about a potential disruption in oil markets as Iran chafed against Western sanctions.
An army general in Iran was reported as saying the country wouldn't "sit idly" by as the U.S. and Europe build a missile-defense shield program that could target Iran. Iranian authorities staged missile drills late Monday to test weapons reportedly capable of hitting targets as far away as Israel and announced possible legislation aimed at closing the Strait of Hormuz.
The drills and news of the legislation came as U.S. and European embargoes on Iranian oil recently took effect.
Iran's actions "got some fear back in the market," said David Bouckhout with TD Securities in the Calgary area.
Iranian rhetoric was "likely just bluster, but it is the kind of noise that has sparked price rallies in the past," said Citi Futures Perspective analyst Tim Evans in a note to clients.
The gains for oil also came as U.S. stocks traded modestly higher, the dollar weakened, and data on U.S. factory orders was positive. The Commerce Department said orders for U.S. factories rose 0.7% in May. Economists polled by MarketWatch expected a rise of 0.1%
There are also some expectations that recently weak macroeconomic reports will spur some central banks to ease in the near term, Mr. Bouckhout said.
The European Central Bank is expected to lower rates on Thursday, and China is expected to relax the minimum reserve requirement ratio for banks again, analysts at Commerzbank said in a note to clients Tuesday.
Other energy futures tracked crude higher on Tuesday.
August gasoline rose 10 cents, or 3.8%, to $2.72 a gallon. Heating oil also for August gained 8 cents, or 3.1%, to $2.76 a gallon.
Natural-gas futures for delivery in the same month advanced 8 cents, or 2.7% to $2.90 per million British thermal units.
Meanwhile, the weekly supplies report for crude and crude products is scheduled for Thursday at 11 a.m. Eastern because of Wednesday's Fourth of July holiday. Natural gas's report, regularly on Thursdays, is slated for Friday at 10:30 a.m. this week.
Credit: By Claudia Assis And V. Phani Kumar
Subject: Central banks; Factories
Location: Iran Strait of Hormuz United States--US Israel Europe
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210; Name: European Central Bank; NAICS: 521110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 3, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1023098688
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1023098688?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Canadian Dollar Trades At 6-Week Highs As Oil, Stocks Gain
Author: Johnson, Karen
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 July 2012: n/a.
ProQuest document link
Abstract:
TORONTO--Strong gains in oil prices and equity markets gave a boost to the Canadian dollar Tuesday, helping the loonie outperform its G10 currency peers and trade at six-week highs.
Full text: TORONTO--Strong gains in oil prices and equity markets gave a boost to the Canadian dollar Tuesday, helping the loonie outperform its G10 currency peers and trade at six-week highs.
The U.S. dollar was down about 0.45%, at C$1.0124 late Tuesday, a low not seen since May 17. It was at C$1.0172 late Monday, according to data provider CQG.
The loonie's rally was "surprising," given the recent round of weaker data from Canada's major trading partner, the U.S., said Win Thin, senior currency strategist at Brown Brothers Harriman in New York.
Poor U.S. data typically hits the Canadian dollar and the Mexican peso the hardest. But crude prices gained sharply, as tensions escalated over Iran and as investors speculated that the recent batch of weaker economic indicators might trigger a fresh round of demand-enhancing economic stimulus.
Light sweet-crude futures on the New York Mercantile Exchange climbed more than 4.4% on the day.
Equities were also stronger, with the Dow Jones Industrial Average gaining 0.5% on the day and the S&P 500 gaining 0.6%. Stocks closed early on Wall Street, ahead of the July 4 holiday.
The Toronto Stock Exchange was solidly higher in late-afternoon trade, up about 2.5%.
"We have taken a pause from all of the negative sentiment," said CIBC director of foreign-exchange sales, Don Mikolich. "For now I think people are trying to bask in the absence of any new disasters."
Write to Karen Johnson at karen.johnson@dowjones.com
Corrections & Amplifications
This item was corrected to fully identify a quoted executive. Don Mikolich should have been identified as CIBC director of foreign-exchange sales in the eighth paragraph.
Credit: By Karen Johnson
Subject: Canadian dollar; American dollar; Economic conditions; Economic indicators
Location: Canada United States--US Iran New York
Company / organization: Name: Canadian Imperial Bank of Commerce; NAICS: 522110; Name: Standard & Poors Corp; NAICS: 511120, 523999, 541519, 561450; Name: New York Mercantile Exchange; NAICS: 523210; Name: Toronto Stock Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 3, 2012
column: DJ FX Trader
Section: Forex
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1023138633
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1023138633?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Norwegian Oil Worker Strike Continues
Author: Stoll, John D
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]04 July 2012: n/a.
ProQuest document link
Abstract:
The head of a labor union representing workers in an 11-day-old strike against oil companies in Norway said negotiations broke down late Wednesday over demands for better pension terms for workers, setting the stage for continued oil production slowdowns in western Europe's largest oil producer and exporter.
Full text: The head of a labor union representing workers in an 11-day-old strike against oil companies in Norway said negotiations broke down late Wednesday over demands for better pension terms for workers, setting the stage for continued oil production slowdowns in western Europe's largest oil producer and exporter.
"We are too far apart at this point," Hilde-Marit Rysst, the head of the SAFE union said in an interview. "The strike will continue indefinitely."
The strike is cutting the country's output of oil by 15% and natural gas by 7%, and has cost companies a total of 2 billion Norwegian kroner ($335 million) so far. The production shortage is adding pressure to already-high oil prices that are also stoked by tensions between Iran and the West and hopes that central banks will provide liquidity boosts to markets.
Representatives of three Norwegian offshore unions (Industri Energi, SAFE and Lederne) and the association representing oil companies met with a third party mediator Wednesday in an attempt to iron out differences. But the meeting didn't yield an agreement, mostly because neither side will compromise in relation to worker demands for better pension terms, Ms. Rysst said.
Ms. Rysst said unions will meet privately on Friday to decide on whether to escalate the strike by pulling more workers off the job. She said there are no negotiations currently scheduled between the unions and the companies.
The company most affected by the strike is Norwegian oil giant Statoil ASA. The company operates the Heidrun and Oseberg fields, as well as the Brage, Veslefrikk and Huldra fields, all of which have been shut. Statoil is also the biggest owner of the BP PLC-operated Skarv field, which may face delays to its planned fourth-quarter start of production.
Write to John D. Stoll at john.stoll
Credit: By John D. Stoll
Subject: Petroleum industry; Petroleum production; Workers
Location: Iran Norway Europe
Company / organization: Name: Statoil; NAICS: 324110; Name: BP PLC; NAICS: 324110, 447110, 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 4, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1023251514
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1023251514?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Falls as Investors Focus on Stronger Dollar
Author: Biers, John M
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 July 2012: n/a.
ProQuest document link
Abstract:
The U.S. Dollar Index, which compares the U.S. currency against a basket of other currencies, increased 1.3%. Since crude oil is traded in dollars, a stronger dollar renders oil more costly for buyers who use other currencies.
Full text: Oil futures eased Thursday, as a stronger U.S. dollar and shrinking hopes for aggressive U.S. stimulus measures overshadowed an unexpectedly large decline in U.S. crude inventories.
Light, sweet crude for August delivery fell 44 cents, or 0.5%, to settle at $87.22 a barrel on the New York Mercantile Exchange.
China's central bank and the European Central Bank both cut interest rates in moves designed to stimulate their economy, which narrowed the difference between their interest rates and those of the U.S., making the dollar attractive. The U.S. Dollar Index, which compares the U.S. currency against a basket of other currencies, increased 1.3%. Since crude oil is traded in dollars, a stronger dollar renders oil more costly for buyers who use other currencies.
"Some of the biggest moves we see in oil are when we get these rate differentials," said Phil Flynn, senior market analyst at the Price Futures Group in Chicago, a brokerage firm.
Analysts also said futures prices were weighed down by the possibility that the U.S. employment picture was improving. Usually, a low unemployment rate is bullish for oil, indicating more people are driving to work and have more discretionary cash.
But now market participants fear a too rosy outlook will lessen the prospects of stimulus measures by the U.S. Federal Reserve. Oil has risen in the past when the Fed has tried to stir a stagnant economy.
Analysts and traders pointed to a surprisingly strong jobs report by payroll processing company Automatic Data Processing. The group said firms added 176,000 jobs last month compared with the expectation of a 108,000 gain, according to analysts.
The report came on the eve of Friday's widely watched nonfarm payrolls report. The stronger job results makes it less likely the U.S. will undertake another round of quantitative easing to boost the economy, said Kyle Cooper, a managing partner at IAF Advisors.
"U.S. petroleum prices have been led much more by macro events as opposed to being led by the U.S. petroleum data," Mr. Cooper said.
Despite the bearish signs, oil futures briefly rallied on the inventory report from the U.S. Energy Information Administration, which showed U.S. oil stocks fell by 4.3 million barrels in the week ended June 29 versus the 1.4 million barrel draw anticipated by analysts surveyed by Dow Jones Newswires--indicating a tightening of supplies.
The report also showed gasoline stockpiles rose by only 151,000 barrels, less than the rise of 500,000 barrels predicted in the Dow Jones Newswires survey. Meanwhile, inventories of distillates, such as heating oil and diesel, fell 1.051 million barrels, compared to a survey prediction of a gain of 300,000 barrels.
"There was nothing bearish in this report," said Tim Evans, an analyst at Citi Futures Perspective.
Yet the price rally from the inventory report was short-lived, in part because market watchers said the result reflected the one-time effects of Tropical Storm Debby, which disrupted production in the Gulf of Mexico.
Still, several analysts highlighted that demand for finished motor gasoline increased to 19.6 million gallons from 19 million.
"We may have started the summer demand season a little late, but...I believe that we are going to see the summer demand carry later into the year," said Carl Larry, an analyst at Oil Outlooks & Opinions, in a research note.
While, U.S. oil futures fell, Brent crude-oil futures, the European benchmark, strengthened on news that an oil field strike in Norway was expanding. Prospects of less supply sent Brent futures up 93 cents, or 0.9%, to $100.70 a barrel at the settlement on IntercontinentalExchange.
Norway's Statoil said it was preparing to shut down production as the country's oil industry association disclosed a lockout starting midnight Monday after talks over a new labor contract broke down.
Statoil said the shortfall in its production will be around 1.2 million barrels of oil equivalent a day.
Front-month reformulated gasoline blendstock, or RBOB, settled at $2.76 a gallon, up 4.2 cents. Front-month heating oil settled at a $2.77 a gallon, up 1 cent.
Write to Claudia Assis at and V. Phani Kumar at
Credit: By John M. Biers
Subject: American dollar; Oil sands; Central banks; Petroleum industry
Location: United States--US China
Company / organization: Name: Dow Jones Newswires; NAICS: 519110; Name: Automatic Data Processing Inc; NAICS: 518210, 511210, 541513; Name: New York Mercantile Exchange; NAICS: 523210; Name: European Central Bank; NAICS: 521110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 5, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1023327076
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1023327076?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Tumbles on Jobs Report
Author: Biers, John M
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 July 2012: n/a.
ProQuest document link
Abstract:
NEW YORK--Crude-oil futures fell nearly 3% after a weak U.S. jobs report reignited concerns about global economic growth. were down $2.54, or 2.9%, at $84.68 in recent trading after the U.S. Labor Department released June nonfarm payrolls figures that fell short of expectations for job creation.
Full text: NEW YORK--Crude-oil futures fell nearly 3% after a weak U.S. jobs report reignited concerns about global economic growth.
were down $2.54, or 2.9%, at $84.68 in recent trading after the U.S. Labor Department released June nonfarm payrolls figures that fell short of expectations for job creation.
"It's a horrendous number," said analyst Stephen Schork. "It's extremely bearish for oil prices, with the impression being the economy is sucking wind."
Jobs data are closely watched by the oil market because of the importance of global economic expansion to oil demand. However, recent jobs reports have disappointed the market, sowing anxiety about future growth.
Nonfarm payrolls grew by 80,000 last month, the Labor Department said Friday. The politically important unemployment rate, obtained by a separate survey of U.S. households, was unchanged at 8.2%. Economists surveyed by Dow Jones Newswires had forecast a gain of 100,000 in payrolls and the steady June jobless rate.
Brent oil futures, which have garnered support in recent days due to an oil-field strike in Norway, also fell after the jobs report. Brent futures were recently trading at $98.64, down $2.06, or about 2%.
Walter Zimmermann, chief technical analyst at the brokerage United-ICAP, said the latest jobs numbers underscored the weakness of the current global economic recovery.
Analysts and traders say the only potentially bullish factor for oil would be an escalation of the Iran situation. Iran has threatened to blockade the Strait of Hormuz amid tensions with Western powers over Tehran's nuclear program.
"We don't see a case for oil strengthening on the back of the global economy," Mr. Zimmermann said. "If there's no escalation in Iran, we expect oil to get sucked down by the same deflationary trend that is hitting the global economy."
Write to John M. Biers at
Credit: By John M. Biers
Subject: Economic recovery; Economic growth
Location: United States--US Iran
Company / organization: Name: Dow Jones Newswires; NAICS: 519110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 6, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1023759011
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1023759011?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Norway Minister Calls Oil-Strike Talks
Author: Zander, Christina
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 July 2012: n/a.
ProQuest document link
Abstract:
According to the U.S. Energy Information Administration, Norway was the world's 14th-largest supplier of oil in 2011, producing about 2.5% of the world's oil on a daily basis, most of which is tagged for export.
Full text: Norway's minister of labor, Hanne Bjustrom, has called oil companies and unions to meet with her Friday in a bid to resolve a 13-day-old strike that is threatening to escalate next week, the ministry confirmed Friday.
The meeting comes after Statoil ASA and other companies represented by Norway's Oil Industry Association threatened to lock out workers and shut down production on the Norwegian continental shelf starting Tuesday in the hope of forcing an end to the strike, which has put upward pressure on oil prices and crimped revenue.
Oil companies and three unions representing offshore workers--Safe, Industri Energi and Ledern--have been negotiating on wages but are clashing over employee demands for better pension terms.
The government has the ability to impose compulsory arbitration, a move that would in effect push striking employees back to work.
"We still don't know what the minister would like to discuss, it might be a general information meeting," Leif Sande, leader of the Industri Energi union, said Friday.
A little more than 10% of the 6,500 workers that are covered by the offshore-wage agreement have actually been pulled off the job as a result of the strike, which began June 24. At that level, the strike has slowed the country's oil output by 240,000 barrels per day, or 15%, of Norway's oil production, and 11.9 million cubic meters of gas a day, or 7%, of natural-gas output. It has led to more than two billion Norwegian kroner ($334 million) in lost revenue for oil companies.
While Statoil is the biggest oil player in Norway, the lockout--which is slated to begin at midnight on Monday--would affect all of the 50 or so companies with production on the Norwegian continental shelf, including Total SA, ConocoPhillips, Royal Dutch Shell PLC and BP PLC. Total production of oil and gas on the Norwegian continental shelf is 3.8 million barrels of oil equivalent a day, according to OIA, and the value of the daily production is estimated at 1.8 billion kroner.
According to the U.S. Energy Information Administration, Norway was the world's 14th-largest supplier of oil in 2011, producing about 2.5% of the world's oil on a daily basis, most of which is tagged for export.
Write to Christina Zander at
Credit: By Christina Zander
Subject: Petroleum industry; Petroleum production; Oil sands
Location: Norway
Company / organization: Name: Statoil; NAICS: 324110; Name: BP PLC; NAICS: 324110, 447110, 211111; Name: Total SA; NAICS: 211111, 324110, 447190
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 6, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1023759024
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1023759024?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
What to Do When Oil Swings
Author: Levisohn, Ben
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 July 2012: n/a.
ProQuest document link
Abstract:
According to research from Adam Parker, chief U.S. equity strategist at Morgan Stanley, earnings for just two sectors--energy and consumer discretionary--are significantly affected by oil-price movements.
Full text: The relationship between stocks and oil prices might be breaking down--but its impact is still being felt in two key sectors. Experts say investors who play those sectors smartly can benefit regardless of where oil prices go from here.
Crude gained 4.7% on July 2, as Iran tested missiles capable of
hitting U.S. targets in the Middle East. That price jump, coupled with a 9.4% surge on June 29, capped a nearly 13% rise in just three days of trading, the largest such move since August 2009.
The spike was quite a turnaround from the first half of 2012, when crude shed about 14% of its value, its worst first-half performance since 1998.
But the broad stock market hasn't been following oil's lead. The Standard & Poor's 500-stock index has moved in the same direction as oil in just two of the first six months of 2012, after doing so in 75% of the months from the stock market's bottom in March 2009 through the end of 2011.
"People think of oil and stocks as moving together," says David Kelly, chief global strategist at J.P. Morgan Funds. "But it's a relatively recent phenomenon to think they should move in the same direction."
According to research from Adam Parker, chief U.S. equity strategist at Morgan Stanley, earnings for just two sectors--energy and consumer discretionary--are significantly affected by oil-price movements. Energy stocks receive a boost from higher oil prices, while consumer-discretionary stocks benefit when prices fall.
J.P. Morgan's Mr. Kelly says investors looking to bet on stocks that will benefit from cheaper oil should consider consumer stocks. "If you're not spending money on gasoline, it helps with your spending power," he says.
Consumers may have more to spend with oil prices low. Last year, they took an $80 billion hit from rising oil prices, something that won't occur in 2012 if estimates for lower oil prices from the Energy Information Administration prove accurate, according to Aram Rubinson, a retail analyst at Nomura Securities International.
That should give a boost to retailers like Dollar General, Mr. Rubinson says, because their customers generally spend a greater proportion of their income on energy. It also could give a boost to companies like AutoZone, because when people are spending less filling the tank, they are more willing to spend money on maintenance.
"When oil is up, the last thing people want to do is invest more money in their cars," he says.
Exchange-traded funds that target consumer-discretionary stocks include Consumer Discretionary Select Sector SPDR and Vanguard Consumer Discretionary.
Investors also might want to start nibbling on energy stocks, says Morgan Stanley's Mr. Parker, who recently recommended clients boost the level of the energy sector in their portfolio to equal weight.
Why the change of heart? The energy sector, which has dropped 2.5% this year and is the only S&P 500 sector in negative territory, might already be priced for lower oil prices, Mr. Parker says. That means if prices rise the stocks should rise with it, and if prices fall the stocks might already reflect much of the pain. He notes that earnings estimates for the sector have been reduced to $3.45 a share from $3.66 in mid-April.
"The good news about oil being down is that if it rises, you'll probably believe that demand is better," Mr. Parker says. "It's hard to be overly bearish."
The easiest way to play the energy sector is with an ETF, such as Energy Select Sector SPDR or Vanguard Energy.
Investors interested in individual stocks should look to the exploration and production corner of the energy world, says Avy Hirshman, chief investment officer at Newgate Capital Management in Greenwich, Conn. That is because those companies have been hit particularly hard recently--Anadarko Petroleum has dropped 13% during the past three months, while Apache has dropped 9%. The group's stock prices are consistent with oil at about $72 a barrel, says Mr. Hirshman.
His favorites include Occidental Petroleum, which trades at 9.5 times 12-month earnings forecasts, according to Morningstar, compared with 10.3 times for the energy sector as a whole, and Pioneer Natural Resources, which trades at 11.5 times earnings, but boasts faster growth.
"Energy stocks have taken it on the chin," Mr. Hirshman says. "The best time to buy is when oil prices drop substantially, especially if demand holds up."
Write to Ben Levisohn at
Credit: By Ben Levisohn
Subject: Investment policy; Stock prices; Petroleum industry; Stock exchanges; Investments
Location: Iran United States--US Middle East
Company / organization: Name: AutoZone Inc; NAICS: 441310; Name: JPMorgan Chase & Co; NAICS: 522110, 522292 , 523110; Name: Dollar General Corp; NAICS: 452990; Name: Morgan Stanley; NAICS: 523110, 523120, 523920; Name: Standard & Poors Corp; NAICS: 511120, 523999, 541519, 561450
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 6, 2012
Section: Personal Finance
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1023795176
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1023795176?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
WEEKEND INVESTOR --- Wealth Manager: What to Do When Oil Swings
Author: Levisohn, Ben
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]07 July 2012: B.9.
ProQuest document link
Abstract:
According to research from Adam Parker, chief U.S. equity strategist at Morgan Stanley, earnings for just two sectors -- energy and consumer discretionary -- are significantly affected by oil-price movements.
Full text: The relationship between stocks and oil prices might be breaking down -- but its impact is still being felt in two key sectors. Experts say investors who play those sectors smartly can benefit regardless of where oil prices go from here.
Crude gained 4.7% on July 2, as Iran tested missiles capable of hitting U.S. targets in the Middle East. That price jump, coupled with a 9.4% surge on June 29, capped a nearly 13% rise in just three days of trading, the largest such move since August 2009.
The spike was quite a turnaround from the first half of 2012, when crude shed about 14% of its value, its worst first-half performance since 1998.
But the broad stock market hasn't been following oil's lead. The Standard & Poor's 500-stock index has moved in the same direction as oil in just two of the first six months of 2012, after doing so in 75% of the months from the stock market's bottom in March 2009 through the end of 2011.
"People think of oil and stocks as moving together," says David Kelly, chief global strategist at J.P. Morgan Funds. "But it's a relatively recent phenomenon to think they should move in the same direction."
According to research from Adam Parker, chief U.S. equity strategist at Morgan Stanley, earnings for just two sectors -- energy and consumer discretionary -- are significantly affected by oil-price movements. Energy stocks receive a boost from higher oil prices, while consumer-discretionary stocks benefit when prices fall.
J.P. Morgan's Mr. Kelly says investors looking to bet on stocks that will benefit from cheaper oil should consider consumer stocks. "If you're not spending money on gasoline, it helps with your spending power," he says.
Consumers may have more to spend with oil prices low. Last year, they took an $80 billion hit from rising oil prices, something that won't occur in 2012 if estimates for lower oil prices from the Energy Information Administration prove accurate, according to Aram Rubinson, a retail analyst at Nomura Securities International.
That should provide a lift to retailers like Dollar General, Mr. Rubinson says, because their customers generally spend a greater proportion of their income on energy. It also could benefit companies like AutoZone, because when people are spending less filling the tank, they are more willing to spend money on maintenance.
"When oil is up, the last thing people want to do is invest more money in their cars," he says.
Exchange-traded funds that target consumer-discretionary stocks include Consumer Discretionary Select Sector SPDR and Vanguard Consumer Discretionary.
Investors also might want to start nibbling on energy stocks, says Morgan Stanley's Mr. Parker, who recently recommended clients increase the portion of energy stocks in their portfolio to equal weight from underweight.
Why the change of heart? The energy sector, which has dropped 2.5% this year and is the only S&P 500 sector in negative territory, might already be priced for lower oil prices, Mr. Parker says. That means if prices rise the stocks should rise with it, and if prices fall the stocks might already reflect much of the pain. He notes that earnings estimates for the sector have been reduced to $3.45 a share from $3.66 in mid-April.
"The good news about oil being down is that if it rises, you'll probably believe that demand is better," Mr. Parker says. "It's hard to be overly bearish."
The easiest way to play the energy sector is with an ETF, such as Energy Select Sector SPDR or Vanguard Energy.
Investors interested in individual stocks should look to the exploration and production corner of the energy world, says Avy Hirshman, chief investment officer at Newgate Capital Management in Greenwich, Conn. That is because those companies have been hit particularly hard recently -- Anadarko Petroleum has dropped 13% during the past three months, while Apache has dropped 9%. The group's stock prices are consistent with oil at about $72 a barrel, says Mr. Hirshman.
His favorites include Occidental Petroleum, which trades at 9.5 times 12-month earnings forecasts, according to Morningstar, compared with 10.3 times for the energy sector as a whole, and Pioneer Natural Resources, which trades at 11.5 times earnings, but enjoys faster growth.
"Energy stocks have taken it on the chin," Mr. Hirshman says. "The best time to buy is when oil prices drop substantially, especially if demand holds up."
Credit: By Ben Levisohn
Subject: Investment policy; Stock prices; Petroleum industry; Stock exchanges; Volatility; Portfolio management; Personal finance
Location: Iran United States--US Middle East
Company / organization: Name: AutoZone Inc; NAICS: 441310; Name: JPMorgan Chase & Co; NAICS: 522110 , 522292, 523110; Name: Dollar General Corp; NAICS: 452990; Name: Morgan Stanley; NAICS: 523110, 523120, 523920; Name: Standard & Poors Corp; NAICS: 511120, 523999, 541519, 561450
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.9
Publication year: 2012
Publication date: Jul 7, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1023894093
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1023894093?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Why Brazilian Oil Struggles to Catch Fire
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 July 2012: n/a.
ProQuest document link
Abstract:
[...]the trend in Petrobras's costs has been upward.
Full text: Brazil floats on a sea of oil. So why have its oil stocks sunk so badly?
It is nearly six years since initial discoveries of vast oil reserves buried under a thick layer of salt beneath the seabed off Brazil's coast. State-controlled Petroleo Brasileiro, or Petrobras, is sole operator, with a minimum 30% stake in all so-called "pre-salt" projects. In a recent study from Harvard's Kennedy School, Brazil ranks fourth in the world in terms of the potential to boost oil output this decade.
Yet Petrobras' stock price is now pretty much where it was back in October 2006, lagging both the Brazilian market and the U.S. exploration-and-production sector.
Even starker is the case of OGX Petróleo e Gás Participações, part of Brazilian tycoon Eike Batista's stable of companies. OGX went public in June 2008, and has lost about two-thirds of its value in U.S. dollar terms. Petrobras's stock has done even worse in that period, and both have performed about as well as Argentina's YPF--incredible given YPF has been renationalized.
Despite their overall performance, both Petrobras and OPX saw their stocks beating the market handily at various points in recent years. Petrobras did very well in 2007 and 2008 as the magnitude of pre-salt oil became clear. Similarly, OGX's ambitious production targets, alongside rising oil prices, sustained a rally from 2009 to mid-2011.
But hype has succumbed to reality. OGX is finding it tougher, and costlier, than expected to develop its reserves. It slashed output estimates in June, touching off a rout in the stock and a change of chief executive. Petrobras, meanwhile, has cut output targets while expanding its already huge capital-expenditure budget.
Roger Tissot, an energy consultant focused on Latin America, says "Brazil has been oversold", referring to the hype around its potential. Despite rich oil resources, government policy limits the deployment of foreign capital and expertise, slowing development and raising costs he says.
Petrobras's stock took a big knock in 2010 amid a complex and dilutive equity raise that boosted the state's ownership in the company. Heavy local-content requirements--as Brazil's government seeks to boost local industry--also embed inefficiencies in Petrobras's development spending.
Little wonder Petrobras's unit costs have jumped. Its average replacement cost for each barrel of oil equivalent of reserves over the past five years is just over $24, according to consultancy IHS Herold. That is higher than for Western oil majors, as well as state-controlled oil company PetroChina. Moreover, the trend in Petrobras's costs has been upward.
Matt Portillo, analyst at investment bank Tudor, Pickering, Holt & Co., says foreign companies involved in discovering the pre-salt reserves, such as the U.K.'s BG Group, have been a better investment. BG has benefited from the excitement around discoveries but has also monetized their potential, and reduced development risk, by selling stakes in them to other companies.
Across the border, Colombian companies such as state-controlled Ecopetrol and Pacific Rubiales have seen their stocks perform much better than Brazilian rivals. Like Brazil's, Colombia's oil industry has been transformed in recent years, with production growing at 6.5% a year since the low point of 2003. That upturn coincides with a more stable security situation in the country, but also with new policies to encourage foreign investment in oil and gas.
TPH's Mr. Portillo estimates Colombian barrels typically offer a net present value of $20 to $30 each, or double what Brazilian barrels offer. Better fiscal terms are one reason. But a better business environment all round also helps. Colombia ranks third in the World Bank's index for ease of doing business in Latin America and the Caribbean, compared with 26th for Brazil.
Big oil strikes often fuel stock-market exuberance. But resources in the ground aren't the same as free cash flow, as investors in Brazil are discovering for themselves.
Liam Denning
Write to Liam Denning at
Credit: By Liam Denning
Subject: Oil reserves; Petroleum industry; Foreign investment; Costs; Stocks
Location: Brazil United States--US
Company / organization: Name: Petroleos Brasileiro SA; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 8, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024004015
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024004015?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Propeller Planes, Fueled By Economics, Take Off; At current oil prices, props make more sense for carriers than smaller jets
Author: Cameron, Doug; Pearson, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 July 2012: n/a.
ProQuest document link
Abstract:
Expanding Reach A key breakthrough for the prop market came earlier this year when Canada's WestJet Airlines Ltd., a pioneering low-cost carrier, opted to equip a new regional unit with as many as 45 Bombardier Q400 turboprops rather than regional jets.
Full text: Passengers who don't like flying on propeller planes might have to brace themselves: The props are back.
Thanks largely to higher fuel prices, ATR and Bombardier Inc., which dominate the market for larger turboprop aircraft, have seen their order books swell. Props have outsold regional jets by two-to-one over the past five years in the global market for planes with between 50 and 90 seats.
For the carriers and aircraft-leasing companies purchasing the planes, the reasoning is simple: At elevated oil prices, a 70-seat turboprop costs about as much to operate as a 50-seat jet.
Driven by the economics of fuel, propeller planes are also becoming larger, while many of the thirstier regional jets have been sent packing to desert storage.
Expanding Reach
A key breakthrough for the prop market came earlier this year when Canada's WestJet Airlines Ltd., a pioneering low-cost carrier, opted to equip a new regional unit with as many as 45 Bombardier Q400 turboprops rather than regional jets.
The Calgary, Alberta-based carrier wants to open new routes--no longer than 650 miles (1,050 kilometers)--to smaller cities that it says are uneconomical to serve with its existing fleet of larger Boeing Co. 737 jets.
"The Q400 is much more efficient than the [regional jets] at the shortest stage lengths," according to John MacLeod, WestJet's vice president of network management and alliances. "The fuel burn is much less, the cost of pilots is less...and it's a lighter plane, so the landing fees are [less]," Mr. MacLeod says.
The WestJet orders were a fresh wind for Bombardier after the Montreal-based plane maker's drubbing last year by ATR--a joint venture between European Aeronautic Defence & Space Co. and Italy's Finmeccanica SpA. ATR bagged 95% of last year's 165 orders in the market for large turboprops.
Ramping Up Production
ATR, whose headquarters are in Toulouse, France, plans to boost production by 60% to a rate of more than seven aircraft a month by 2014 to deliver on its three-year backlog valued at $5 billion.
"We have very few aircraft available [for new customers] between now and 2015, although lessors do have some slots available," says John Moore, ATR's head of sales.
Aircraft-leasing companies, which buy more than a third of the jets that roll off Airbus and Boeing production lines, accounted for 20% of new turboprop orders last year.
Air Lease Corp., based in Los Angeles, and GE Capital Aviation Services, the world's largest aircraft lessor and a division of General Electric Co., are among those to move into the market.
The leasing companies rent their planes to carriers, which gain flexibility with their fleet planning and capital expenses.
"Modern turboprops have a diverse customer base so the lessors are [more] interested," says Philippe Poutissou, vice president for marketing at Bombardier's commercial aircraft unit.
Plusher Interiors
Mindful of passenger perceptions that propeller planes are a step down from jets, however, some carriers are requesting plusher interiors.
Some airlines are also offering extras such as limousine service, something more commonly associated with corporate jets.
Customers are clear about one development they would like to see. They want bigger planes.
"They are asking us for [more] size," says Mr. Poutissou, who adds that Bombardier is evaluating whether to build a new a propeller plane with seating for between 90 and 100 passengers. The Q400 currently carries 70 to 80 passengers.
ATR Chief Executive Filippo Bagnato says he is interested in making a stretched version of the 70-seat ATR-72.
"We've started talking to our shareholders, and now we have to do our homework on the technical aspects and preparing the business case," Mr. Bagnato says. The company may bring in another partner for future programs.
At the same time, there is interest throughout the propeller sector in developing a new generation of turboprop engines with greater efficiency. General Electric, based in Fairfield, Conn., is touting a version of its new GE38 engine developed for military helicopters as a more efficient alternative for turboprop planes.
Allen Paxson, general manager of the GE unit that produces engines for the propeller plane and helicopter markets, says the GE38 could be ready in three years.
As it tries to develop a market for its new product, GE says it is discussing the engine with Sweden's Saab AB, which stopped making turboprops in 1998 but has in recent months signaled that it could return, one of a number of potential new entrants.
Bombardier's Mr. Poutissou, meanwhile, says he wouldn't be surprised if China looked to develop its own large propeller plane, having already established government-backed programs to build regional and single-aisle jets, as well as smaller propeller planes for the general aviation market.
He points to new and existing demand from India, China and other parts of Asia, as well as along the "spine" of Latin America, reflecting the utility of props on shorter hops where geographic barriers restrict ground transport.
The U.S., home to 85% of the larger propeller planes, remains a big potential market, too. The last buying spree in the sector came in the late 1990s--before the wholesale shift toward regional jets.
'Irrational Exuberance'
"You had this crazy irrational exuberance for regional jets in North America that didn't make sense. It was just a marketing thing," says Richard Aboulafia, analyst at Teal Group Corp., a Fairfax, Va.-based research firm specializing in aerospace and defense. "The big upside for turboprops is when airlines in North America will come to their senses and reintroduce [them]," says Mr. Aboulafia.
With all of the surveys and anecdotal evidence suggesting that passengers prefer regional jets to props, some airline executives are surprised by the renewed popularity of propeller planes.
"When I arrived [five years ago] I thought they would be gone by now," says Chip Childs, president of SkyWest Airlines, part of St. George, Utah-based SkyWest Airlines Inc. SkyWest is the largest U.S. regional operator, and flies Embraer Brasilia turboprops alongside a larger fleet of Bombardier regional jets.
Mr. Cameron is deputy bureau chief for The Wall Street Journal and Dow Jones Newswires in Chicago. He can be reached at . Mr. Pearson is a reporter for Dow Jones Newswires in Paris. He can be reached at . Caroline Van Hasselt in Toronto contributed to this article.
Credit: By Doug Cameron and David Pearson
Subject: Airlines; Leasing companies; Airline industry; Air travel
Company / organization: Name: Air Lease Corp; NAICS: 532411; Name: Airbus SAS; NAICS: 336411, 336412, 336413; Name: European Aeronautic Defence & Space Co; NAICS: 336411, 336414; Name: WestJet Airlines Ltd; NAICS: 481111; Name: General Electric Co; NAICS: 332510, 334290, 334512, 334518; Name: Finmeccanica SpA; NAICS: 336411; Name: Boeing Co; NAICS: 336411, 336413, 336414; Name: GE Capital Aviation Services; NAICS: 522220
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 9, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024003999
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024003999?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Norway Orders End to Oil-Worker Standoff
Author: Kitchen, Michael
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 July 2012: n/a.
ProQuest document link
Abstract:
A lockout would idle all 6,500 workers represented by offshore unions affect all of the 50 or so companies with production on the Norwegian continental shelf, including Total SA, ConocoPhillips, Royal Dutch Shell PLC and BP PLC. Total production on the shelf is 3.8 million barrels of oil equivalent a day, according to the OIA, the value of which is estimated at 1.8 billion Norwegian kroner ($300 million).
Full text: Norway's government intervened to stop a petroleum workers' labor strike and impose arbitration early Tuesday in Oslo.
Minister of Labor Hanne Bjurstrøm informed the parties just after a midnight deadline that the government would propose that the conflict be resolved by compulsory arbitration. The conflict was over the right to retire with a full pension at 62 instead of 65, and both sides had abandoned negotiations.
Reuters quoted Norwegian Mr. Bjurstrøm as saying: "I had to make this decision to protect Norway's vital interests. It wasn't an easy choice, but I had to do it."
Norway's Statoil ASA said after the announcement that it is preparing to resume production at its installations affected by the strike, and is expecting to have its fields back in full production within a week.
Crude futures had risen sharply Monday amid a stoppage by offshore workers, with the New York Mercantile Exchange benchmark contract for August jumping 1.8%. Nymex crude fell 0.7% to $85.38 a barrel in electronic trading after news of the arbitration.
Brent, Europe's oil benchmark, also leapt. The contract for August rose $2.13, or 2.2%, to $100.32 a barrel on ICE Futures in London. The Brent futures structure is already in "backwardation," meaning potential buyers worry they may face supply disruptions. Backwardation is when the price of the current contract is more expensive than those in the future.
Norway currently pumps about 2 million barrels a day, roughly equivalent to 2.2% of global supply, and the potential disruption came at the same time as new sanctions over Iran's nuclear program have left crude markets tighter than in the recent past. A closure of the Norwegian oil sector "would send crude oil prices sharply higher," Goldman said in a note.
The 16-day Norwegian dispute already has taken 240,000 barrels a day offline.
A lockout would have led to a shutdown of all production in Norway, Western Europe's largest oil exporter and one of the biggest players in the global gas industry. Such action could have meant tough financial consequences for major oil companies and suppliers doing business in the region, including Statoil, And it could have dealt a blow to Norway's $600 billion sovereign-wealth fund, which relies on oil and gas revenues.
Credit: By Michael Kitchen
Subject: Petroleum industry; Oil sands; Retirement; Labor disputes; Wages & salaries; Futures; Gas industry
Location: United States--US Norway
Company / organization: Name: Statoil; NAICS: 324110; Name: Goldman Sachs Group Inc; NAICS: 523120, 523110; Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 9, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024122352
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024122352?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
What to Do When Oil Swings
Author: Levisohn, Ben
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 July 2012: n/a.
ProQuest document link
Abstract:
According to research from Adam Parker, chief U.S. equity strategist at Morgan Stanley, earnings for just two sectors--energy and consumer discretionary--are significantly affected by oil-price movements.
Full text: The relationship between stocks and oil prices might be breaking down--but its impact is still being felt in two key sectors. Experts say investors who play those sectors smartly can benefit regardless of where oil prices go from here.
Crude gained 4.7% on July 2, as Iran tested missiles capable of
hitting U.S. targets in the Middle East. That price jump, coupled with a 9.4% surge on June 29, capped a nearly 13% rise in just three days of trading, the largest such move since August 2009.
The spike was quite a turnaround from the first half of 2012, when crude shed about 14% of its value, its worst first-half performance since 1998.
But the broad stock market hasn't been following oil's lead. The Standard & Poor's 500-stock index has moved in the same direction as oil in just two of the first six months of 2012, after doing so in 75% of the months from the stock market's bottom in March 2009 through the end of 2011.
"People think of oil and stocks as moving together," says David Kelly, chief global strategist at J.P. Morgan Funds. "But it's a relatively recent phenomenon to think they should move in the same direction."
According to research from Adam Parker, chief U.S. equity strategist at Morgan Stanley, earnings for just two sectors--energy and consumer discretionary--are significantly affected by oil-price movements. Energy stocks receive a boost from higher oil prices, while consumer-discretionary stocks benefit when prices fall.
J.P. Morgan's Mr. Kelly says investors looking to bet on stocks that will benefit from cheaper oil should consider consumer stocks. "If you're not spending money on gasoline, it helps with your spending power," he says.
Consumers may have more to spend with oil prices low. Last year, they took an $80 billion hit from rising oil prices, something that won't occur in 2012 if estimates for lower oil prices from the Energy Information Administration prove accurate, according to Aram Rubinson, a retail analyst at Nomura Securities International.
That should give a boost to retailers like Dollar General, Mr. Rubinson says, because their customers generally spend a greater proportion of their income on energy. It also could give a boost to companies like AutoZone, because when people are spending less filling the tank, they are more willing to spend money on maintenance.
"When oil is up, the last thing people want to do is invest more money in their cars," he says.
Exchange-traded funds that target consumer-discretionary stocks include Consumer Discretionary Select Sector SPDR and Vanguard Consumer Discretionary.
Investors also might want to start nibbling on energy stocks, says Morgan Stanley's Mr. Parker, who recently recommended clients boost the level of the energy sector in their portfolio to equal weight.
Why the change of heart? The energy sector, which has dropped 2.5% this year and is the only S&P 500 sector in negative territory, might already be priced for lower oil prices, Mr. Parker says. That means if prices rise the stocks should rise with it, and if prices fall the stocks might already reflect much of the pain. He notes that earnings estimates for the sector have been reduced to $3.45 a share from $3.66 in mid-April.
"The good news about oil being down is that if it rises, you'll probably believe that demand is better," Mr. Parker says. "It's hard to be overly bearish."
The easiest way to play the energy sector is with an ETF, such as Energy Select Sector SPDR or Vanguard Energy.
Investors interested in individual stocks should look to the exploration and production corner of the energy world, says Avy Hirshman, chief investment officer at Newgate Capital Management in Greenwich, Conn. That is because those companies have been hit particularly hard recently--Anadarko Petroleum has dropped 13% during the past three months, while Apache has dropped 9%. The group's stock prices are consistent with oil at about $72 a barrel, says Mr. Hirshman.
His favorites include Occidental Petroleum, which trades at 9.5 times 12-month earnings forecasts, according to Morningstar, compared with 10.3 times for the energy sector as a whole, and Pioneer Natural Resources, which trades at 11.5 times earnings, but boasts faster growth.
"Energy stocks have taken it on the chin," Mr. Hirshman says. "The best time to buy is when oil prices drop substantially, especially if demand holds up."
Write to Ben Levisohn at
Credit: By Ben Levisohn
Subject: Investment policy; Stock prices; Petroleum industry; Stock exchanges; Investments
Location: Iran United States--US Middle East
Company / organization: Name: AutoZone Inc; NAICS: 441310; Name: JPMorgan Chase & Co; NAICS: 522110, 522292 , 523110; Name: Dollar General Corp; NAICS: 452990; Name: Morgan Stanley; NAICS: 523110, 523120, 523920; Name: Standard & Poors Corp; NAICS: 511120, 523999, 541519, 561450
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 9, 2012
Section: Personal Finance
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024132873
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024132873?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Starts Angola Offshore Oil Project
Author: González, Ángel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 July 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: HOUSTON--Exxon Mobil Corp. said Monday it started production at the Kizomba Satellites Phase 1 oil project in offshore Angola, expected to eventually produce 100,000 barrels of oil day from two large deep-water fields.
It is one of several major oil-production start-ups planned for this year, all of which are critical to maintaining a steady stream of cash at a time in which Exxon's massive North American natural-gas operations are seeing their profitability squeezed by low prices. Oil, which on Monday traded around $85.41 per barrel, remains much more profitable.
The company's other major start-ups set for this year are the Kearl oil-sands project in Canada and several Nigerian satellite fields attached to existing production facilities.
Analysts with Simmons & Co. say the Kearl development will give Exxon, the 100% owner, 110,000 barrels of oil production a day; the Nigerian fields will add 70,000 barrels of oil a day. Exxon has a 40% stake in those fields.
The Angola project was completed ahead of schedule, Neil Duffin, head of ExxonMobil Development Company, said in a statement.
The initial phase of the Kizomba Satellites project ties 18 new wells to production facilities already in use tapping other oil fields in the area, called Block 15. It is expected to collect a total of about 250 million barrels of crude from the Mavacola and Clochas fields, located about 95 miles off the Angolan shore.
Exxon owns 40% of the block. Its partners are BP PLC, Eni SpA and Statoil ASA.
Credit: By Ángel González
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 9, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024132887
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024132887?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iraq Says Kurdish Oil Exports to Turkey Are Illegal
Author: Hassan Hafidh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 July 2012: n/a.
ProQuest document link
Abstract:
The KRG in April suspended crude-oil exports of nearly 100,000 barrels a day through a Baghdad-controlled export pipeline, protesting that the central government was delaying payment of around $1.5 billion that the region needs to pay to contracting companies.
Full text: Iraq's government said crude-oil exports from the semiautonomous northern region of Kurdistan to neighboring Turkey are "illegal" and threatened on Monday to take "appropriate action," in a continuation of recent of tensions between the two.
The Kurdistan Regional Government, or KRG, has begun exporting an unspecified amount of crude oil by truck to Turkey without the permission of the central government.
A Kurdish person familiar with Kurdistan's oil exports said currently only four trucks a day are carrying crude across the border to Turkey.
"This is an illegal and unconstitutional business that we will take the right decision against," said Faisal Abdullah, spokesman for Iraq's Deputy Prime Minister for Energy Hussein al-Shahristani.
"The Oil Ministry [in Baghdad] solely reserves the right to export crude oil, gas or oil products to other countries," Mr. Abdullah said.
Baghdad and Erbil, the capital of Iraq's Kurdistan, are at loggerheads over a number of issues, including who should control oil and gas produced in the region.
The central government argues that it should control all resources in the country, while the Kurds say that they are eligible to run their own resources in accordance with the country's new constitution.
The KRG said its crude would be refined in Turkey and sent back for local consumption, and that it was forced into this move because the central government hasn't been sending enough oil products to meet their needs.
The exported crude is a quantity-for-quantity barter arrangement to supply Kurdistan with oil products, mostly diesel, to fuel power stations, the Kurdish person said. The transit will continue according to need until the KRG receives its full entitlement of products from Baghdad, he added.
The KRG in April suspended crude-oil exports of nearly 100,000 barrels a day through a Baghdad-controlled export pipeline, protesting that the central government was delaying payment of around $1.5 billion that the region needs to pay to contracting companies.
This came after Iraq's central government reached an agreement that the Kurdish authorities would resume oil exports starting in February after a suspension of more than a year. The central government also agreed to pay exploration costs and expenses to foreign firms operating in the KRG region.
Tensions between Baghdad and the Kurdish region have risen since October, when U.S. energy companyExxon Mobil Corp. announced a deal with the KRG to explore for oil in Kurdistan. Baghdad warned the U.S. oil giant could risk its agreements with the central government.
Write to Hassan Hafidh at
Credit: By Hassan Hafidh
Subject: Exports; Petroleum industry; Oil sands; Crude oil
Location: Turkey Baghdad Iraq Kurdistan Iraq
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 9, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024157815
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024157815?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Norway Orders End to Oil-Worker Standoff
Author: Stoll, John D
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 July 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: The Norwegian government has stepped in to stop what would have been a crippling lockout in Norway's oil and gas industry, Statoil ASA said in a statement issued early Tuesday morning local time.
Statoil, along with dozens of other companies operating on the Norwegian continental shelf, was preparing to stop production entirely unless the government intervened to force arbitration between the companies and three unions representing about 6,500 offshore workers.
The move ensures that production of oil and gas will return to full steam within the next week, according to Statoil.
"Norwegian Minister of Labour Hanne Bjurstrøm has informed the parties in the offshore pay settlement that the government will propose to Parliament that the conflict be resolved by compulsory arbitration," the company said. "At the request of the minister the parties are to resume work as soon as possible."
Employees had been demanding better pension terms, and were unable to reach a deal with the association representing oil companies.
Crude futures had risen sharply Monday amid the work stoppage, with the New York Mercantile Exchange benchmark contract for August jumping 1.8%. Nymex crude fell 0.7% to $85.38 a barrel in electronic trading after news of the arbitration.
Brent, Europe's oil benchmark, also leapt. The contract for August rose $2.13, or 2.2%, to $100.32 a barrel on ICE Futures in London. The Brent futures structure is already in "backwardation," meaning potential buyers worry they may face supply disruptions.
Backwardation is when the price of the current contract is more expensive than those in the future.
A lockout would have led to tough financial consequences for major oil companies and suppliers doing business in the region, including Statoil, which is majority owned by the Norwegian government. It also could have dealt a blow to Norway's $600 billion sovereign wealth fund, which relies on oil and gas revenue.
The most immediate pain from the lockout was expected to have been felt in crude prices in the North Sea market and oil futures, with some traders predicting the market would have "become very, very, very tight."
Many observers, however--including Goldman Sachs--predicted the Norwegian government would eventually intervene in the dispute much like it did in 2004.
Norway was the world's 14th-largest supplier of oil in 2011, producing about 2.5% of the world's oil on a daily basis, most of which is tagged for export, according to the U.S. Energy Information Administration. The country's daily production is on par with Iraq, Kuwait and Venezuela.
By comparison, Saudi Arabia, the U.S. and Russia each produce more than 10% of the world's oil on a daily basis, the agency said.
A lockout would have affected all of the 50 or so companies with production on the Norwegian continental shelf, including Total SA, ConocoPhillips, Royal Dutch Shell PLC and BP PLC. Total production on the shelf is 3.8 million barrels of oil-equivalent a day, according to the Oil Industry Association, the value of which is estimated at 1.8 billion Norwegian kroner ($300 million).
Michael Kitchen contributed to this article.
Credit: By John D. Stoll
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 10, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024158061
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024158061?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Norway Orders End to Oil-Worker Standoff
Author: Stoll, John D
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]10 July 2012: C.4. [Duplicate]
ProQuest document link
Abstract:
A lockout would have affected all of the 50 or so companies with production on the Norwegian continental shelf, including Total SA, ConocoPhillips, Royal Dutch Shell PLC and BP PLC. Total production on the shelf is 3.8 million barrels of oil-equivalent a day, according to the Oil Industry Association, the value of which is estimated at 1.8 billion Norwegian kroner ($300 million). ---
Full text: The Norwegian government has stepped in to stop what would have been a crippling lockout in Norway's oil and gas industry, Statoil ASA said in a statement issued early Tuesday morning local time.
Statoil, along with dozens of other companies operating on the Norwegian continental shelf, was preparing to stop production entirely unless the government intervened to force arbitration between the companies and three unions representing about 6,500 offshore workers.
The move ensures that production of oil and gas will return to full steam within the next week, according to Statoil.
"Norwegian Minister of Labour Hanne Bjurstrom has informed the parties in the offshore pay settlement that the government will propose to Parliament that the conflict be resolved by compulsory arbitration," the company said. "At the request of the minister the parties are to resume work as soon as possible."
Employees had been demanding better pension terms, and were unable to reach a deal with the association representing oil companies.
Crude futures had risen sharply Monday amid the work stoppage, with the New York Mercantile Exchange benchmark contract for August jumping 1.8%. Nymex crude fell 0.7% to $85.38 a barrel in electronic trading after news of the arbitration.
Brent, Europe's oil benchmark, also leapt. The contract for August rose $2.13, or 2.2%, to $100.32 a barrel on ICE Futures in London. The Brent futures structure is already in "backwardation," meaning potential buyers worry they may face supply disruptions.
Backwardation is when the price of the current contract is more expensive than those in the future.
A lockout would have led to tough financial consequences for major oil companies and suppliers doing business in the region, including Statoil, which is majority owned by the Norwegian government. It also could have dealt a blow to Norway's $600 billion sovereign wealth fund, which relies on oil and gas revenue.
The most immediate pain from the lockout was expected to have been felt in crude prices in the North Sea market and oil futures, with some traders predicting the market would have "become very, very, very tight."
Many observers, however -- including Goldman Sachs -- predicted the Norwegian government would eventually intervene in the dispute much like it did in 2004.
Norway was the world's 14th-largest supplier of oil in 2011, producing about 2.5% of the world's oil on a daily basis, most of which is tagged for export, according to the U.S. Energy Information Administration. The country's daily production is on par with Iraq, Kuwait and Venezuela.
By comparison, Saudi Arabia, the U.S. and Russia each produce more than 10% of the world's oil on a daily basis, the agency said.
A lockout would have affected all of the 50 or so companies with production on the Norwegian continental shelf, including Total SA, ConocoPhillips, Royal Dutch Shell PLC and BP PLC. Total production on the shelf is 3.8 million barrels of oil-equivalent a day, according to the Oil Industry Association, the value of which is estimated at 1.8 billion Norwegian kroner ($300 million).
---
Michael Kitchen contributed to this article.
Credit: By John D. Stoll
Subject: Crude oil; Commodity prices
Location: Norway
Classification: 9175: Western Europe; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Jul 10, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024204373
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024204373?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
India Insurer to Cover Ships Carrying Iran Oil
Author: Chowdhury, Anirban
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 July 2012: n/a.
ProQuest document link
Abstract:
The offer bring some relief to Indian shipping companies that aren't getting covers from European insurers since July 1 for carrying shipments from Iran, which is facing sanctions from the U.S. and European Union for its decision to continue with an alleged nuclear weapons program.
Full text: MUMBAI--United India Insurance Co. has agreed to provide protection and indemnity cover to Indian tankers carrying oil from Iran with General Insurance Corp. offering reinsurance, two people with knowledge of the matter said Tuesday.
The offer bring some relief to Indian shipping companies that aren't getting covers from European insurers since July 1 for carrying shipments from Iran, which is facing sanctions from the U.S. and European Union for its decision to continue with an alleged nuclear weapons program.
"We (shipowners) had asked for and have been offered a P&I cover of $50 million," a senior executive at state-run Shipping Corp. of India Ltd. said.
While United India Insurance executives weren't available to comment, an executive from General Insurance Corp. said there will be a $50 million P&I cover and a separate amount for hull and machinery.
"The cover is for all Indian shipowners," the executive said.
Both insurers are state-owned. India's oil ministry has been asking the country's Ministry of Finance to push General Insurance to provide cover to cargo shippers dealing with Iran.
Indian refiners have reduced sourcing of crude oil from Iran -- until recently their second-largest supplier -- due to the western sanctions and their difficulty in charting ships.
The U.S. recently exempted India from the sanctions, after the South Asian nation reduced oil imports from Iran. Still, getting insurance cover to transport oil from the Middle Eastern nation is difficult.
Asian countries have been looking for ways to work around the problem as Iran accounts for a significant part of their oil imports.
Last month, Japan said its government would be able to back insurance plans for tankers carrying Iranian crude. South Korea, however, has indefinitely halted all oil imports from Iran.
In India, shipments from Iran fell 5.7% in the last financial year ended March 31 to 17.44 million metric tons, or about 348,800 barrels a day. The country aims to cut its imports from Iran by 11% to 15.5 million tons this financial year.
"There will be a meeting of shippers and the insurer tomorrow [Wednesday], in which we hope to get further clarity," the executive from Shipping Corp. said. The General Insurance Corp. executive said the meeting is "just a formality to finalize the cover."
Write to Anirban Chowdhury at
Credit: By Anirban Chowdhury
Subject: Petroleum industry; Sanctions; Crude oil
Location: United States--US India Iran
Company / organization: Name: Shipping Corp of India Ltd; NAICS: 483111; Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 10, 2012
column: India News
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024249181
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024249181?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Oil Drops After Norway Lockout Averted
Author: Assis, Claudia; Kitchen, Michael
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 July 2012: n/a.
ProQuest document link
Abstract:
Crude futures declined after Norway's government stepped in to avert an oil-industry lockout by stopping a strike and imposing arbitration early Tuesday.
Full text: Crude futures declined after Norway's government stepped in to avert an oil-industry lockout by stopping a strike and imposing arbitration early Tuesday.
The lockout was planned for midnight Oslo time in response to the strike by offshore workers, which had been in its third week. Instead, the parties will submit to a binding decision from a national wage-arbitration tribunal.
Crude for August delivery declined 74 cents, or 0.9%, to settle at $85.25 a barrel on the New York Mercantile Exchange, also feeling the pinch of a higher dollar.
Futures had risen sharply Monday amid the threat of a shutdown in Norway, one of the world's largest oil exporters. New York-traded oil ended 1.8% higher on Monday, while Europe's Brent jumped 2.2%.
August Brent declined $1.37, or 1.4%, at $98.94 a barrel on ICE Futures in London.
Norway's state-controlled oil firm Statoil ASA said it is preparing to resume production at its installations affected by the strike.
"Production from these installations will be resumed as quickly as possible. It may take from one to two days to get production started, and Statoil expects to have the fields back in full production within a week," the company said.
Among other energy futures, August natural gas declined 12 cents, or 4%, at $2.77 per million British thermal units, giving back Monday's sharp gains. Natural-gas futures advanced 3.9% in the previous session.
August gasoline turned higher, however, up less than 1 cent, or 0.3%, to $2.77 a gallon, while August heating oil kept its losses, down less than 1 cent, or 0.2%, at $2.74 a gallon.
Traders also awaited for minutes from the latest Federal Reserve rate-setting meeting, due Wednesday, and a first glimpse on weekly inventories.
The Energy Information Administration is scheduled to report official numbers on Wednesday. The American Petroleum Institute, a trade group, is slated to report later Tuesday.
Analysts polled by Platts expect crude stockpiles to be down 1.5 million barrels, while gasoline supplies are seen up 600,000 barrels. Distillates stocks are expected to increase 1 million barrels.
Write to Claudia Assis at
Credit: By Claudia Assis And Michael Kitchen
Subject: Petroleum industry; Futures; Oil sands
Location: Europe Norway New York
Company / organization: Name: ICE Futures; NAICS: 523210; Name: New York Mercantile Exchange; NAICS: 523210; Name: American Petroleum Institute; NAICS: 541820, 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 10, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024253427
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024253427?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Enbridge and U.S. Faulted for Michigan Oil Spill
Author: Welsch, Edward
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 July 2012: n/a.
ProQuest document link
Abstract:
Various safety failures by pipeline company Enbridge Inc. and "weak regulation" by U.S. government officials are to blame for the 2010 spill of 20,000 barrels of oil into Michigan's Kalamazoo River, the lead U.S. transportation regulator said Tuesday.
Full text: Various safety failures by pipeline company Enbridge Inc. and "weak regulation" by U.S. government officials are to blame for the 2010 spill of 20,000 barrels of oil into Michigan's Kalamazoo River, the lead U.S. transportation regulator said Tuesday.
Poorly trained staff in the Canadian company's control room and mistakes made during the first hours of the response caused oil to flow from an Enbridge pipeline near Marshall, Mich., for 17 hours after the rupture, according to the findings from the National Transportation Safety Board's investigation into the spill. The spill was ultimately detected by a local gas-utility worker.
In the meantime, Enbridge control-room personnel tried to restart the pipeline twice, which caused 80% of the spill volume.
"When we were examining Enbridge's poor handling of their response to this rupture, you can't help but think about the Keystone Kops," NTSB Chairwoman Deborah Hersman said at a public review of the board's findings, referring to the fictional team of bungling policemen from the silent-film era.
The oil spilled from Enbridge's Line 6B pipeline in July 2010 and flowed into a nearby creek and then into Michigan's major waterway, the Kalamazoo River. It was one of the worst oil spills ever in the Midwest, which is a crossroads for pipelines carrying oil from producers in Canada.
Enbridge, of Calgary, Alberta, had 19.40 billion Canadian dollars (US$19.05 billion) in revenue last year and has seen a total of US$765 million in expenses related to the spill.
Enbridge said in a statement that it has already made changes to improve its control-room operations and to enhance its spill prevention, detection and response programs. It said it would review the NTSB's findings to see if "further adjustments are appropriate."
"We believe that the experienced personnel involved in the decisions made at the time of the release were trying to do the right thing," Chief Executive Pat Daniel said in the statement. He added that the Kalamazoo River was reopened for recreational use last month and that wildlife has returned to the spill area.
Also coming under criticism were the U.S. Pipeline Hazardous Materials and Safety Administration, for what the NTSB called "weak regulation for sensing and repairing crack indications," and local firefighting personnel, which the board said weren't adequately trained to respond to the initial public reports of odors from the spill. PHMSA, in charge of pipeline safety, failed to follow up on signs of corrosion cracking in the pipeline that they found in previous investigations, the board said.
In a statement, PHMSA directed the blame toward Enbridge, saying the NTSB's findings support its own that Enbridge had "multiple violations of federal public-safety regulations and a lack of a safety culture at the company." It said it has proposed a record $3.7 million civil penalty for Enbridge.
The statement didn't address the NTSB's criticisms of PHMSA. A PHMSA representative didn't immediately respond to a request for comment.
The board issued 19 recommendations to government, industry and emergency-personnel groups to improve pipeline safety and spill-response standards and called for the creation of a set of federal standards for oil-spill response planning. Local firefighters didn't detect the spill--despite residents calling in to report odors--increasing the amount spilled, the NTSB said. It also laid part of the blame for that on Enbridge, saying it should have trained local first responders on how to deal with pipeline spills.
A spokeswoman for the International Association of Fire Chiefs, at which the NTSB directed one of its new safety recommendations, wasn't immediately available for comment.
Write to Edward Welsch at
Credit: By Edward Welsch
Subject: Pipelines; Oil spills; Regulation
Location: Michigan United States--US Kalamazoo River
People: Hersman, Deborah
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 10, 2012
Section: US
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024283155
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024283155?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. News: Michigan Oil Spill Blamed On Pipeline Firm, Regulators
Author: Dolan, Matthew; Welsch, Edward
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]11 July 2012: A.4.
ProQuest document link
Abstract:
Carl Weimer, executive director of the nonprofit Pipeline Safety Trust in Bellingham, Wash., said the results of the safety-board probe should serve as a warning about any new expansion of oil pipelines in the U.S. "It would be the same weak regulation that would govern Keystone," said Mr. Weimer, whose group opposes any pipeline expansion without strengthened federal oversight.
Full text: The National Transportation Safety Board on Tuesday blamed a July 2010 oil spill in Michigan on bungling by the pipeline's owner and lax oversight by federal regulators, a finding environmentalists seized on to bolster their case against the much larger Keystone XL pipeline project.
The five-member safety board said employees of Canadian energy company Enbridge Inc., the pipeline's owner, ignored cracks in the line and, when alarms signaled a possible leak, made matters worse by twice trying to restart the flow of crude instead of shutting the line down.
Of the oil that spilled into a creek connecting to the Kalamazoo River, 80% was traceable to those mistakes, the board said. The spill prompted the costliest onshore cleanup in U.S. history, the NTSB said, at more than $800 million. It was one of the worst oil spills ever in the Midwest, a crossroads for pipelines carrying oil from producers in Canada.
The board also faulted regulators for failing to address pipeline cracks and approving a faulty spill-response plan for the owner.
"When we were examining Enbridge's poor handling of their response to this rupture, you can't help but think about the Keystone Kops," NTSB Chairwoman Deborah Hersman said, referring to the fictional team of bungling policemen from the silent-film era.
Patrick Daniel, chief executive of Enbridge, of Calgary, Alberta, said company officials had tried to do the right thing.
"As with most such incidents, a series of unfortunate events and circumstances resulted in an outcome no one wanted," he said in a statement Tuesday.
Most of the damaged part of the river was reopened for recreational use last month.
The other Keystone in the picture is Keystone XL, which TransCanada Corp., also of Calgary, wants to build to ship oil from Canada's oil sands and the Bakken fields of North Dakota to refineries on the U.S. Gulf Coast. That expansion would add 830,000 barrels a day of oil-shipping capacity to the 591,000 barrels available on the original Keystone pipeline, which began operations last year.
TransCanada's Keystone system competes with Enbridge's Mainline. The Mainline, which includes the line that ruptured in Michigan, transports more than two million barrels of crude a day.
The Obama administration, citing environmental concerns, has refused to grant permits for the Keystone project. Republicans say President Barack Obama's policy is costing thousands of jobs and undermines U.S. energy security.
Carl Weimer, executive director of the nonprofit Pipeline Safety Trust in Bellingham, Wash., said the results of the safety-board probe should serve as a warning about any new expansion of oil pipelines in the U.S. "It would be the same weak regulation that would govern Keystone," said Mr. Weimer, whose group opposes any pipeline expansion without strengthened federal oversight.
The Natural Resources Defense Council said oil-sands crude is more corrosive to pipelines than regular oil. Pipeline companies and oil producers dispute that.
Industry officials said they heard no part of the safety-board findings that would imperil the drive to expand pipelines through the U.S., which they called a much safer mode of transportation of oil and natural gas than transport by trucks and trains.
"This was a good company that had a bad accident," said Andy Black, president and chief executive of the Association of Oil Pipe Lines, which represents owners and operators of pipelines, including Enbridge. He called current federal regulation of his industry comprehensive and robust, despite the criticism from the NTSB.
The NTSB criticized the federal Pipeline and Hazardous Materials Safety Administration for "weak regulation" and for failing to follow up on signs of corrosion cracking in the pipeline that they found in previous investigations.
In a statement, PHMSA blamed Enbridge and said "we will continue to take a hard look at internal operations, make improvements and hold operators accountable when they violate our regulations and put our communities and the environment at risk."
Credit: By Matthew Dolan and Edward Welsch
Subject: Pipelines; Petroleum industry; Oil sands; Oil spills
Location: Calgary Alberta Canada Michigan Canada
People: Obama, Barack Hersman, Deborah
Company / organization: Name: TransCanada Corp; NAICS: 486210; Name: Enbridge Inc; NAICS: 486110
Classification: 4310: Regulation; 8510: Petroleum industry; 9172: Canada; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.4
Publication year: 2012
Publication date: Jul 11, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024341917
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024341917?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
India Looks for Ways to Ship Iran Oil
Author: Choudhury, Santanu; Chowdhury, Anirban
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]11 July 2012: n/a.
ProQuest document link
Abstract:
Iranian oil output tumbled to its lowest level in more than 20 years last month as U.S. and European sanctions clamped down on the Islamic Republic's export markets, a monthly report from the Organization of Petroleum Exporting Countries showed Wednesday. According to data OPEC analysts gathered from secondary sources, U.S. and European sanctions drove Iran's oil production down by 188,500 barrels a day in June, to 2.96 million barrels a day.
Full text: NEW DELHI--India is seeking its own arrangements to insure its purchases of Iranian oil, even as it reduces imports under pressure from U.S. and European Union sanctions.
Indian state-owned insurers, shipping lines and government officials met in Mumbai on Wednesday to discuss the matter. India's state-run insurance firms have agreed to offer coverage of up to $50 million for each Indian ship carrying Iranian crude. The state-run General Insurance Corp. will reinsure the cargoes.
Such coverage is much lower than the up to $1 billion that European insurers would normally give per ship to cover third-party claims in the event of an oil spill or other accident.
But Indian industry executives involved in Wednesday's meeting said they had little other choice as European insurance companies pull out of the Iran oil trade with the imposition of EU sanctions this month that cut off Iranian oil imports.
"Our exposure would run into billions of dollars, but since there haven't been many insurance claims in the last several years, we have taken a pragmatic view," said Sabyasachi Hajara, chairman and managing director of state-owned Shipping Corp. of India, the country's biggest shipper of crude from Iran.
India is taking other steps, including asking Iran's state-owned shipping company to deliver oil in its vessels, but it is unlikely Iran will have sufficient spare capacity, industry executives say.
The problems facing India show the effectiveness of U.S. policies aimed at squeezing Iran financially in a bid to force the country to take measures that guarantee its nuclear program isn't being used for weapons development. Tehran says the program is for peaceful purposes.
Iranian oil output tumbled to its lowest level in more than 20 years last month as U.S. and European sanctions clamped down on the Islamic Republic's export markets, a monthly report from the Organization of Petroleum Exporting Countries showed Wednesday.
According to data OPEC analysts gathered from secondary sources, U.S. and European sanctions drove Iran's oil production down by 188,500 barrels a day in June, to 2.96 million barrels a day. The last time Iran's annual average production fell below three million barrels a day was 1990.
The International Energy Agency estimating lost production is costing the country $8 billion in lost revenue per quarter.
New OPEC forecasts also suggest world markets will be able to cope well with lower Iranian oil supplies through 2013.
The U.S. sanctions threaten to penalize buyers of Iranian crude if they fail to adequately cut back on imports of Iranian oil. India, China and other big buyers of Iranian oil have been granted exemptions by the U.S., which determined that these countries had complied.
Washington says it will reassess in six months whether countries have continued to reduce purchases.
The EU imposed its ban on Iranian oil imports from July 1. The ban also stops European firms from insuring Iranian shipments.
Indian shipments from Iran fell 5.7% in the financial year ended March 31 to 17.44 million tons, or 349,300 barrels a day. Iran is now India's fourth-largest supplier of crude, down from No. 2 last year.
The country aims to further cut Iranian imports by 11% to about 15.5 million tons in the year to end-March 2013. But officials say they need to still buy Iranian crude until they can ramp up alternative imports from nations like Saudi Arabia and Iraq.
Indian shippers, such as Shipping Corp. of India, Great Eastern Shipping Co. and Mercator Ltd., handled a total of about six to seven ships carrying Iranian crude every month before the EU ban, said Anil Devli, head of the Indian National Shipowners Association.
For some shipping companies, the new insurance cover is too low. A spokeswoman for Great Eastern Shipping, a private company, said it had stopped transporting Iranian crude from July 1 because of insurance concerns.
Others said the move to rely more on state-owned Indian insurance companies could be risky.
"I don't think anybody would like to compromise on the insurance cover," said Deepak Mahurkar, an oil and gas analyst with PricewaterhouseCoopers India. "So, I would say that companies would work overnight to ensure that covers are available from some of the other reinsurers."
An executive at an Indian private shipping company said India's attempts to insure vessels could work despite the low-level of insurance coverage.
"This figure is low but we can call it a workable solution," the executive said. "Liabilities in case of an accident in Indian or Iranian waters is also less than in U.S. waters."
The Indian shipping industry was also pushed to accept low insurance coverage because it doesn't want to see its business going to Iranian tankers, the executive said.
"The petroleum ministry wants to bring crude in Iranian vessels which will hurt business for Indian ships, so we accepted this figure," he said.
Sarah Kent and Summer Said contributed to this article.
Write to Santanu Choudhury at and Anirban Chowdhury at
Credit: By Santanu Choudhury And Anirban Chowdhury
Subject: Oil sands; Petroleum industry; Insurance claims; Sanctions; Bans
Location: India United States--US Iran Mumbai India
Company / organization: Name: European Union; NAICS: 926110, 928120; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 11, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024409239
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024409239?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Michigan Oil Spill Blamed On Pipeline Firm, Regulators
Author: Dolan, Matthew; Welsch, Edward
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]11 July 2012: n/a. [Duplicate]
ProQuest document link
Abstract:
Carl Weimer, executive director of the nonprofit Pipeline Safety Trust in Bellingham, Wash., said the results of the safety-board probe should serve as a warning about any new expansion of oil pipelines in the U.S. "It would be the same weak regulation that would govern Keystone," said Mr. Weimer, whose group opposes any pipeline expansion without strengthened federal oversight.
Full text: The National Transportation Safety Board on Tuesday blamed a July 2010 oil spill in Michigan on bungling by the pipeline's owner and lax oversight by federal regulators, a finding environmentalists seized on to bolster their case against the much larger Keystone XL pipeline project.
The five-member safety board said employees of Canadian energy company Enbridge Inc., the pipeline's owner, ignored cracks in the line and, when alarms signaled a possible leak, made matters worse by twice trying to restart the flow of crude instead of shutting the line down.
Of the oil that spilled into a creek connecting to the Kalamazoo River, 80% was traceable to those mistakes, the board said. The spill prompted the costliest onshore cleanup in U.S. history, the NTSB said, at more than $800 million. It was one of the worst oil spills ever in the Midwest, a crossroads for pipelines carrying oil from producers in Canada.
The board also faulted regulators for failing to address pipeline cracks and approving a faulty spill-response plan for the owner.
"When we were examining Enbridge's poor handling of their response to this rupture, you can't help but think about the Keystone Kops," NTSB Chairwoman Deborah Hersman said, referring to the fictional team of bungling policemen from the silent-film era.
Patrick Daniel, chief executive of Enbridge, of Calgary, Alberta, said company officials had tried to do the right thing.
"As with most such incidents, a series of unfortunate events and circumstances resulted in an outcome no one wanted," he said in a statement Tuesday.
Most of the damaged part of the river was reopened for recreational use last month.
The other Keystone in the picture is Keystone XL, which TransCanada Corp., also of Calgary, wants to build to ship oil from Canada's oil sands and the Bakken fields of North Dakota to refineries on the U.S. Gulf Coast. That expansion would add 830,000 barrels a day of oil-shipping capacity to the 591,000 barrels available on the original Keystone pipeline, which began operations last year.
TransCanada's Keystone system competes with Enbridge's Mainline. The Mainline, which includes the line that ruptured in Michigan, transports more than two million barrels of crude a day.
The Obama administration, citing environmental concerns, has refused to grant permits for the Keystone project. Republicans say President Barack Obama's policy is costing thousands of jobs and undermines U.S. energy security.
Carl Weimer, executive director of the nonprofit Pipeline Safety Trust in Bellingham, Wash., said the results of the safety-board probe should serve as a warning about any new expansion of oil pipelines in the U.S. "It would be the same weak regulation that would govern Keystone," said Mr. Weimer, whose group opposes any pipeline expansion without strengthened federal oversight.
The Natural Resources Defense Council says oil-sands crude is more corrosive to pipelines than regular oil. Pipeline companies and oil producers dispute that.
Industry officials said they heard no part of the safety-board findings that would imperil the drive to expand pipelines through the U.S., which they called a much safer mode of transportation of oil and natural gas than transport by trucks and trains.
"This was a good company that had a bad accident," said Andy Black, president and chief executive of the Association of Oil Pipe Lines, which represents owners and operators of pipelines, including Enbridge. He called current federal regulation of his industry comprehensive and robust, despite the criticism from the NTSB.
The NTSB criticized the federal Pipeline and Hazardous Materials Safety Administration for "weak regulation" and for failing to follow up on signs of corrosion cracking in the pipeline that they found in previous investigations.
In a statement, PHMSA blamed Enbridge and said "we will continue to take a hard look at internal operations, make improvements and hold operators accountable when they violate our regulations and put our communities and the environment at risk."
Write to Matthew Dolan at and Edward Welsch at
Credit: By Matthew Dolan and Edward Welsch
Subject: Pipelines; Petroleum industry; Oil sands; Oil spills
Location: Calgary Alberta Canada Michigan Canada
People: Obama, Barack Hersman, Deborah
Company / organization: Name: TransCanada Corp; NAICS: 486210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 11, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024426817
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024426817?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reprodu ction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Insurance Woes Slow India Deals for Iran Oil
Author: Choudhury, Santanu; Chowdhury, Anirban
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 July 2012: n/a.
ProQuest document link
Abstract:
India is taking other steps, including asking Iran's state-owned shipping company to deliver oil in its vessels, but it is unlikely Iran will have sufficient spare capacity, industry executives say. Iranian oil output tumbled to its lowest level in more than 20 years last month as U.S. and European sanctions clamped down on the Islamic Republic's export markets, a monthly report from the Organization of Petroleum Exporting Countries showed Wednesday.
Full text: NEW DELHI--India has been forced to seek its own arrangements to insure its purchases of Iranian oil, officials said, even as it reduces imports under pressure from U.S. and European Union sanctions.
Indian state-owned insurers, shipping lines and government officials met to discuss the situation in Mumbai on Wednesday. India's state-run insurance firms have agreed to offer coverage of up to $50 million for each Indian ship carrying Iranian crude. The state-run General Insurance Corp. will reinsure the cargoes. Such coverage is much lower than the up to $1 billion that European insurers would normally give per ship to cover third-party claims in the event of an oil spill or other accident.
But Indian industry executives involved in Wednesday's meeting said they had little other choice as European insurance companies have pulled out of the Iran oil trade. An EU embargo on Iranian oil imports, which took effect on July 1, also stops European firms from insuring Iranian shipments.
"Our exposure would run into billions of dollars, but since there haven't been many insurance claims in the last several years, we have taken a pragmatic view," said Sabyasachi Hajara, chairman and managing director of state-owned Shipping Corp. of India, the country's biggest shipper of crude from Iran.
India is taking other steps, including asking Iran's state-owned shipping company to deliver oil in its vessels, but it is unlikely Iran will have sufficient spare capacity, industry executives say.
The problems facing India show the effectiveness of policies aimed at squeezing Iran financially in a bid to force the country to take measures that guarantee its nuclear program isn't being used for weapons development. Tehran says the program is for peaceful purposes.
Iranian oil output tumbled to its lowest level in more than 20 years last month as U.S. and European sanctions clamped down on the Islamic Republic's export markets, a monthly report from the Organization of Petroleum Exporting Countries showed Wednesday.
U.S. and European sanctions drove Iran's oil production down by 188,500 barrels a day in June, to 2.96 million barrels a day, according to data OPEC analysts gathered from secondary sources. The last time Iran's annual average production fell below three million barrels a day was 1990. New OPEC forecasts suggest world markets will be able to cope well with lower Iranian oil supplies through 2013.
The International Energy Agency estimating lost production is costing the country $8 billion in lost revenue per quarter.
The U.S. sanctions threaten to penalize buyers of Iranian crude if they fail to adequately cut back on imports of Iranian oil. The U.S. determined that India, China and other big buyers of Iranian oil have complied.
Washington says it will reassess in six months whether countries have continued to reduce purchases.
Indian shipments from Iran fell 5.7% in the financial year ended March 31 to slightly under 350,000 barrels a day. Iran is now India's fourth-largest supplier of crude, down from No. 2 last year.
The country aims to further cut Iranian imports by 11% to about 15.5 million tons in the year to end March 2013. But officials say they need to still buy Iranian crude until they can ramp up alternative imports from nations such as Saudi Arabia and Iraq.
Indian shippers, such as Shipping Corp. of India, Great Eastern Shipping Co. and Mercator Ltd., handled a total of about six to seven ships carrying Iranian crude every month before the EU ban, said Anil Devli, head of the Indian National Shipowners Association.
For some Indian shipping companies, the new insurance coverage is too low. A spokeswoman for Great Eastern Shipping, a private company, said it had stopped transporting Iranian crude from July 1 because of insurance concerns.
Others said the move to rely more on state-owned Indian insurance companies could be risky. "I don't think anybody would like to compromise on the insurance cover," said Deepak Mahurkar, an oil and gas analyst with PricewaterhouseCoopers India. "So, I would say that companies would work overnight to ensure that covers are available from some of the other reinsurers."
An executive at an Indian private shipping company said India's attempts to insure vessels could work despite the $50 million insurance coverage.
"This figure is low but we can call it a workable solution," the executive said. "Liabilities in case of an accident in Indian or Iranian waters is also less than in U.S. waters."
The Indian shipping industry was also pushed to accept low insurance coverage because it doesn't want to see its business going to Iranian tankers, the executive said.
"The petroleum ministry wants to bring crude in Iranian vessels which will hurt business for Indian ships, so we accepted this figure," he said.
Sarah Kent and Summer Said contributed to this article.
Write to Santanu Choudhury at and Anirban Chowdhury at
Credit: By Santanu Choudhury And Anirban Chowdhury
Subject: Insurance claims; Petroleum industry; Oil sands; Insurance companies; Sanctions
Location: India Iran United States--US Mumbai India
Company / organization: Name: European Union; NAICS: 926110, 928120; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 12, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024455247
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024455247?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Insurance Woes Slow India Deals For Iran Oil
Author: Choudhury, Santanu; Chowdhury, Anirban
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]12 July 2012: A.12.
ProQuest document link
Abstract:
Iranian oil output tumbled to its lowest level in more than 20 years last month as U.S. and European sanctions clamped down on the Islamic Republic's export markets, a monthly report from the Organization of Petroleum Exporting Countries showed Wednesday.
Full text: NEW DELHI -- India has been forced to seek its own arrangements to insure its purchases of Iranian oil, officials said, even as it reduces imports under pressure from U.S. and European Union sanctions.
Indian state-owned insurers, shipping lines and government officials met to discuss the situation in Mumbai on Wednesday. India's state-run insurance firms have agreed to offer coverage of up to $50 million for each Indian ship carrying Iranian crude. The state-run General Insurance Corp. will reinsure the cargoes. Such coverage is much lower than the up to $1 billion that European insurers would normally give per ship to cover third-party claims in the event of an oil spill or other accident.
But Indian industry executives involved in Wednesday's meeting said they had little other choice as European insurance companies have pulled out of the Iran oil trade. An EU embargo on Iranian oil imports, which took effect on July 1, also stops European firms from insuring Iranian shipments.
"Our exposure would run into billions of dollars, but since there haven't been many insurance claims in the last several years, we have taken a pragmatic view," said Sabyasachi Hajara, chairman and managing director of state-owned Shipping Corp. of India, the country's biggest shipper of crude from Iran.
India is taking other steps, including asking Iran's state-owned shipping company to deliver oil in its vessels, but it is unlikely Iran will have sufficient spare capacity, industry executives say.
The problems facing India show the effectiveness of policies aimed at squeezing Iran financially in a bid to force the country to take measures that guarantee its nuclear program isn't being used for weapons development. Tehran says the program is for peaceful purposes.
Iranian oil output tumbled to its lowest level in more than 20 years last month as U.S. and European sanctions clamped down on the Islamic Republic's export markets, a monthly report from the Organization of Petroleum Exporting Countries showed Wednesday.
U.S. and European sanctions drove Iran's oil production down by 188,500 barrels a day in June, to 2.96 million barrels a day, according to data OPEC analysts gathered from secondary sources. The last time Iran's annual average production fell below three million barrels a day was 1990. New OPEC forecasts suggest world markets will be able to cope well with lower Iranian oil supplies through 2013.
The U.S. sanctions threaten to penalize buyers of Iranian crude if they fail to adequately cut back on imports of Iranian oil. The U.S. determined that India, China and other big buyers of Iranian oil have complied.
For some Indian shipping companies, the new insurance coverage is too low. A spokeswoman for Great Eastern Shipping, a private company, said it had stopped transporting Iranian crude from July 1 because of insurance concerns.
An executive at an Indian private shipping company said India's attempts to insure vessels could work despite the $50 million insurance coverage.
"This figure is low but we can call it a workable solution," the executive said.
The Indian shipping industry was also pushed to accept low insurance coverage because it doesn't want to see its business going to Iranian tankers, the executive said.
"The petroleum ministry wants to bring crude in Iranian vessels which will hurt business for Indian ships, so we accepted this figure," he said.
---
Sarah Kent and Summer Said contributed to this article.
Credit: By Santanu Choudhury and Anirban Chowdhury
Subject: Sanctions; Cargo insurance; Petroleum industry
Location: Iran India
Classification: 9179: Asia & the Pacific
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.12
Publication year: 2012
Publication date: Jul 12, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024469834
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024469834?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Qatar's Royals Buy Valentino; Purchase of Fashion House Reflects Oil-Rich State's Pursuit of Luxury Brands
Author: Masidlover, Nadya; Hodgson, Jessica
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 July 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Qatar's royal family is buying storied Italian fashion house Valentino, said a person familiar with the matter, in the latest sign of the tiny oil-rich country's appetite for prestigious luxury brands.
Valentino said Thursday it had been acquired by an investment vehicle called Mayhoola, which is backed by a private investor from Qatar. A person familiar with the matter said the buyer was the royal family of the Persian Gulf state.
The value of the acquisition wasn't disclosed, but the person said it was about [euro]600 million ($731 million). Private-equity firm Permira has owned a controlling stake in Valentino since 2007.
The acquisition is one of a series made by investors from the oil-rich country in the luxury-goods business, as the industry has continued to deliver strong growth despite increasing economic head winds.
Qatar has used its immense wealth from oil and natural-gas exports to buy strategic assets all over the world, including London luxury store Harrods and several luxury hotels in France. Earlier this year, it emerged that the Qatar Investment Authority had amassed just over a 1% stake in French luxury-goods behemoth LVMH Louis Vuitton Moët Hennessy.
The purchase of Valentino appears, however, to be a personal project for the royal family of one of the world's richest countries, rather than part of a wider investment strategy implemented by the Persian Gulf nation's sovereign-wealth fund.
A representative for Mayhoola said in a statement: "Valentino is ideally suited to form the basis for a global luxury goods powerhouse."
The brand, founded by fashion designer Valentino Garavani in 1960, has stores across the world from Singapore to Las Vegas and sells a range of high-end products including ready-to-wear garments, accessories and pricey haute couture outfits.
The trophy asset may not have all smooth sailing ahead. As the earnings season kicks off, the first luxury company to report its sales raised concerns among investors that the continuing luxury boom may be cooling. Burberry Group PLC, famed for its plaid-patterned accessories, reported an 11% rise in revenue for its fiscal first quarter, a much lower gain than a year earlier.
While luxury-goods makers generally have ridden out the financial crisis, Permira's ownership of Valentino has already undergone some volatility, with the company earlier renegotiating part of its debt.
Permira acquired in 2007 a controlling stake in Valentino Fashion Group, which included a majority holding in German company Hugo Boss AG, for about [euro]2.6 billion. The market value of Hugo Boss, which excludes Valentino, is now approximately [euro]6 billion.
The record of private investors and funds in the fashion world is patchy. Finding successful designers for fashion houses is difficult even for seasoned entrepreneurs, such as French luxury-goods titans Bernard Arnault and François Pinault. Permira struggled to find the right creative leadership for Valentino after founder Mr. Garavani retired in 2007, and while the label is still a red carpet favorite, it has never reclaimed the international cachet it once had.
"During the past few years, despite swings in the luxury markets, the company has operated with great intensity and remained focused on maximizing the potential of the Valentino brand," said Valentino Chief Executive Stefano Sassi, adding the company is "delighted" by the acquisition.
Marietta Cauchi and Paul Hodkinson contributed to this article.
Write to Nadya Masidlover at and Jessica Hodgson at
Credit: By Nadya Masidlover And Jessica Hodgson
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 12, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 102454 3459
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024543459?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
IEA Sees Rise in Global Oil Demand in 2013
Author: Williams, Selina
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 July 2012: n/a.
ProQuest document link
Abstract:
According to the report, which contains the IEA's first forecasts for 2013, global oil demand will be 1.1% higher than 2012, averaging 90.9 million barrels a day.
Full text: LONDON--Global oil demand is expected to rise by one million barrels a day next year, faster than growth this year, but "well below" the levels seen before the financial crisis as economic recovery remains muted, the International Energy Agency said Thursday.
The IEA also said that demand from emerging economies will for the first time next year overtake demand in the world's most industrialized nations, or the OECD. This trend is unlikely to be reversed as non-OECD countries, mainly in Asia, will continue to lead oil demand growth next year, the agency said in its closely watched monthly report.
That growth in emerging markets is driven by growth in population and income, as well as subsidized energy prices, said David Fyfe, the head of the IEA's oil markets division.
"Demand in the OECD is in structural decline and we're not expecting that to change," he said, adding that the IEA's forecasts do take into account recent weaker economic activity in the Asia-Pacific region.
According to the report, which contains the IEA's first forecasts for 2013, global oil demand will be 1.1% higher than 2012, averaging 90.9 million barrels a day.
The forecasts are more bullish than reports earlier this week from the U.S. Energy Information Administration and the Organization of Petroleum Exporting Countries, both of whom projected slower global oil demand growth in 2013 of 730,000 barrels a day and 800,000 barrels a day respectively.
The Paris-based agency, which advises industrialized countries on energy policy, made only a slight downward revision to its forecast for global oil demand in 2012 as the weaker economic backdrop was mostly offset by an upwards adjustment to its base data.
Oil prices have been volatile in the past few weeks as fears that sanctions against Iran could disrupt supplies have clashed with concerns about weaker oil demand due to economic problems caused by the euro-zone debt crisis.
The report said that while those economic risks may place a ceiling on oil prices, the latent potential of demand growth in emerging countries and the ongoing risk of supply surprises could keep prices stubbornly high.
"This arguably represents as much of a policy challenge as does the perceived bogeyman of price volatility," the report said.
The IEA said that in June, output from OPEC fell 140,000 barrels a day to 31.8 million barrels a day as near-record output from Saudi Arabia helped to offset production declines from Angola and Iran.
Saudi Arabia pumped 10.15 million barrels a day in June, the IEA said. Iranian oil output fell 100,000 barrels a day in June, compared with May, to 3.2 million barrels a day. This took the Islamic Republic's oil production almost to 22-year lows, due to U.S. and European Union sanctions aimed at pressuring Iran over its nuclear program.
The IEA forecast the need for OPEC oil in the second half of this year at 31 million barrels a day, compared with 29.9 million barrels a day in the first half.
Write to Selina Williams at
Credit: By Selina Williams
Subject: Petroleum industry; Cartels; Demand; Petroleum production; Crude oil prices; Volatility
Location: United States--US Iran Asia
Company / organization: Name: Organization for Economic Cooperation & Development; NAICS: 928120; Name: International Energy Agency; NAICS: 928120; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 12, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024562022
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024562022?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Overheard: Oil and High Society
Author: Anonymous
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]13 July 2012: C.10.
ProQuest document link
Abstract:
John Hofmeister, founder of Citizens for Affordable Energy and a former president of Shell Oil Co., said there are 100,000 jobs going begging in the U.S. oil industry for want of qualified personnel.
Full text: [Financial Analysis and Commentary]
"One just can't get the staff these days." That was a common complaint in well-to-do Edwardian drawing rooms. But it also is heard today in Texas and Louisiana, albeit likely in somewhat less-clipped tones.
That was the warning Thursday from a panelist at a New America Foundation discussion on energy independence in Washington. John Hofmeister, founder of Citizens for Affordable Energy and a former president of Shell Oil Co., said there are 100,000 jobs going begging in the U.S. oil industry for want of qualified personnel. Part of the problem is that educational institutions aren't churning out enough potential employees.
As ever, it isn't just a question of quantity, but also quality. Mr. Hofmeister said that talking to people in the oil patch, he hears them say they "can't find machinists, can't find truck drivers, can't find people who can pass the drug test." The latter was less of an issue in London a century ago. But it is especially unfortunate in a country that the last president -- an oil man himself -- said was "addicted to oil."
Subject: Petroleum industry
Location: United States--US Louisiana Texas
Company / organization: Name: Shell Oil Co; NAICS: 211111, 324110; Name: New America Foundation; NAICS: 813211
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.10
Publication year: 2012
Publication date: Jul 13, 2012
column: Heard on the Street
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024636201
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024636201?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Qatar's Royals Buy Valentino --- Purchase of Fashion House Reflects Oil-Rich State's Pursuit of Luxury Brands
Author: Masidlover, Nadya; Hodgson, Jessica
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]13 July 2012: B.4.
ProQuest document link
Abstract:
The brand, founded by fashion designer Valentino Garavani in 1960, has stores across the world from Singapore to Las Vegas and sells a range of high-end products including ready-to-wear garments, accessories and pricey haute couture outfits.
Full text: Qatar's royal family is buying storied Italian fashion house Valentino in the latest sign of the tiny oil-rich country's appetite for prestigious luxury brands.
Valentino said Thursday it had been acquired by an investment vehicle called Mayhoola, which is backed by a private investor from Qatar. A person familiar with the matter said the buyer was the royal family of the Persian Gulf state.
The value of the acquisition wasn't disclosed, but the person said it was about 600 million euros ($731 million). Private-equity firm Permira has owned a controlling stake in Valentino since 2007.
The acquisition is one of a series made by investors from the oil-rich country in the luxury-goods business, as the industry has continued to deliver strong growth despite increasing economic head winds.
Qatar has used its immense wealth from oil and natural-gas exports to buy assets all over the world, including London luxury store Harrods and luxury hotels in France. Earlier this year, it emerged that the Qatar Investment Authority had amassed just over a 1% stake in French luxury-goods behemoth LVMH Louis Vuitton Moet Hennessy.
The purchase of Valentino appears, however, to be a personal project for the royal family of one of the world's richest countries, rather than part of a wider investment strategy by the nation's sovereign-wealth fund.
A representative for Mayhoola said in a statement: "Valentino is ideally suited to form the basis for a global luxury goods powerhouse."
The brand, founded by fashion designer Valentino Garavani in 1960, has stores across the world from Singapore to Las Vegas and sells a range of high-end products including ready-to-wear garments, accessories and pricey haute couture outfits.
The trophy asset may not have all smooth sailing ahead. As the earnings season kicks off, the first luxury company to report its sales raised concerns among investors that the continuing luxury boom may be cooling. Burberry Group PLC, famed for its plaid-patterned accessories, reported an 11% rise in revenue for its fiscal first quarter, a much lower gain than a year earlier.
While luxury-goods makers generally have ridden out the financial crisis, Permira's ownership of Valentino has already undergone some volatility, with the company earlier renegotiating part of its debt.
Permira acquired in 2007 a controlling stake in Valentino Fashion Group, which included a majority holding in German company Hugo Boss AG, for about 2.6 billion euros. The market value of Hugo Boss, which excludes Valentino, is now approximately 6 billion euros.
The record of private investors and funds in the fashion world is patchy. Permira struggled to find the right creative leadership for Valentino after founder Mr. Garavani retired in 2007, and while the label is still a red carpet favorite, it has never reclaimed the international cachet it once had.
"During the past few years, despite swings in the luxury markets, the company has operated with great intensity and remained focused on maximizing the potential of the Valentino brand," said Valentino Chief Executive Stefano Sassi, adding the company is "delighted" by the acquisition.
---
Marietta Cauchi and Paul Hodkinson contributed to this article.
Credit: By Nadya Masidlover and Jessica Hodgson
Subject: Acquisitions & mergers; Families & family life; Royalty
Location: Italy Qatar
Company / organization: Name: Valentino; NAICS: 315211, 315212
Classification: 9180: International; 8620: Textile & apparel industries; 2330: Acquisitions & mergers
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.4
Publication year: 2012
Publication date: Jul 13, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024636717
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024636717?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Abu Dhabi Oil Pipeline Opens
Author: Said, Summer
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 July 2012: n/a.
ProQuest document link
Abstract:
The pipeline, which can transport 1.5 million barrels a day of crude, is expected to have a regular flow of oil by August, Ali Rashid Al Jarwan, chief executive of Abu Dhabi Marine Operating Co., or Adma-Opco, said earlier this month.
Full text: DUBAI--A new oil pipeline that bypasses the Strait of Hormuz opened Sunday, and the first cargo is heading to a refinery in Pakistan, officials and industry sources said.
"The official opening was today after the tests were completed, and the first cargo is going to Pakistan," an official, who asked not to be named, told Dow Jones Newswires.
News that the route is beginning operations will provide some relief to oil markets rattled by Iranian threats to block the strait, through which one-fifth of the world's oil is shipped.
The pipeline, which can transport 1.5 million barrels a day of crude, is expected to have a regular flow of oil by August, Ali Rashid Al Jarwan, chief executive of Abu Dhabi Marine Operating Co., or Adma-Opco, said earlier this month.
The 400-kilometer link, which cost about $4 billion to build, will enable Abu Dhabi, the largest United Arab Emirates sheikdom, to export as much as 70% of its crude from Fujairah, located outside the Persian Gulf on the Gulf of Oman, where tankers will be able to pick up the oil instead of sailing into the Persian Gulf via the Strait of Hormuz, the narrow waterway watched over by Iran.
It is known as Abu Dhabi Crude Oil Pipeline, or Adcop, and is being built for the Abu Dhabi government investment firm International Petroleum Investment Co., or IPIC.
Iran in recent months has ratcheted up threats to close the Strait of Hormuz if the European Union goes through with an embargo on Iranian oil, the latest step taken to pressure Tehran into giving up a nuclear program that the West suspects is aimed at securing atomic weapons.
The strait is one of the world's busiest tanker routes through which Persian Gulf oil producers ship their crude exports.
Write to Summer Said at
Credit: By Summer Said
Subject: Pipelines; Petroleum industry; Oil sands
Location: Iran Strait of Hormuz Pakistan Abu Dhabi United Arab Emirates United Arab Emirates Persian Gulf
Company / organization: Name: European Union; NAICS: 926110, 928120; Name: Dow Jones Newswires; NAICS: 519110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 15, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024872235
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024872235?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Dark Energy: Prices Undercut Oil Services
Author: González, Ángel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 July 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Schlumberger Ltd. and Baker Hughes Inc.'s results will kick off the second-quarter earnings season for oil-field services this Friday, as the industry ponders whether global economic woes will slow down what's been a robust and profitable quest for oil.
Oil-field service providers are technical guns-for-hire that exploration and production companies employ for the highly specialized art of oil and gas extraction. They enjoy a sellers' market when oil prices are high, because producers scramble to build new projects and pay a premium for their skills. But when oil prices contract, as occurred during the second quarter, they're the first to feel the burn.
Prices for U.S.-made West Texas Intermediate crude, which exceeded $100 per barrel in the first quarter, had prompted unfettered drilling in new shale formations, which require precise, and complex drilling techniques. But crude prices have fallen sharply amid the European debt crisis, and a slowdown in China triggered concerns about energy demand.
"I think there is considerably more uncertainty about the resilience of exploration and production capital spending" in North America, said Bill Herbert, an analyst with Simmons & Co. "That's the result of diminished cash flow and cash-flow expectations."
The uncertainty about oil prices eats away at the most important pillar of strength for the oil-field services industry in North America. Oil-directed activity absorbed many of the drilling rigs and crews that were pulled away from natural-gas operations when prices for that commodity were crushed last year by a market glut.
"All signs point to a continued weakening in the U.S. onshore [oil-field services] market," said analysts with Raymond James in a report.
Several companies have already warned investors not to expect stellar profits--not only because of falling oil prices, but also as a result of structural changes in the market. The massive migration from natural gas to oil drilling created moving costs and unexpected down time. Also, prices of guar gum, a material used in shale drilling, have risen unexpectedly due to guar shortages (guar is a bean that is mainly produced in India). The guar squeeze prompted Halliburton Co. to lower its earnings guidance; analysts polled by Thomson Reuters expect the company to earn 75 cents a share, down 7% from the same quarter last year. Analysts expect the company to collect $7 billion in revenue, up 17%.
The other North America-focused giant, Baker Hughes, is expected to post 78 cents a share in earnings this quarter, down 17% from the same quarter last year, on revenue of about $5.3 billion.
There are still bright spots, however. Most foreign crude fetches higher prices than oil produced in the U.S. and Canada, and activity overseas for the providers is still going strong.
That is also the case for the deep-water U.S. Gulf of Mexico, which is recovering from the lull that followed the Deepwater Horizon incident in 2010; the oil industry spent $1.7 billion in high bids for new exploration leases in the area last month. While the global slowdown is beginning to create some concerns, "pretty much everything related to deep water is still very positive," Mr. Herbert said.
Schlumberger, the world's largest oil-field services company, is less exposed to North America onshore drilling than the others--and has strong overseas and deep-water components. Analysts expect it to earn $1.01 a share, up 16% from the same quarter last year, on revenue of $10.5 billion. Schlumberger and Baker Hughes report on Friday; Halliburton reports on Monday, June 23.
The Week Ahead looks at coming corporate events.
Write to Angel Gonzalez at
Credit: By Ángel González
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 15, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024876490
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024876490?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News -- The Week Ahead: Dark Energy: Prices Undercut Oil Services
Author: Gonzalez, Angel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]16 July 2012: B.2.
ProQuest document link
Abstract:
Schlumberger Ltd. and Baker Hughes Inc.'s results will kick off the second-quarter earnings season for oil-field services this Friday, as the industry ponders whether global economic woes will slow down what's been a robust and profitable quest for oil.
Full text: Schlumberger Ltd. and Baker Hughes Inc.'s results will kick off the second-quarter earnings season for oil-field services this Friday, as the industry ponders whether global economic woes will slow down what's been a robust and profitable quest for oil.
Oil-field service providers are technical guns-for-hire that exploration and production companies employ for the highly specialized art of oil and gas extraction. They enjoy a sellers' market when oil prices are high, because producers scramble to build new projects and pay a premium for their skills. But when oil prices contract, as occurred during the second quarter, they're the first to feel the burn.
Prices for U.S.-made West Texas Intermediate crude, which exceeded $100 per barrel in the first quarter, had prompted unfettered drilling in new shale formations, which require precise, and complex drilling techniques. But crude prices have fallen sharply amid the European debt crisis, and a slowdown in China triggered concerns about energy demand.
"I think there is considerably more uncertainty about the resilience of exploration and production capital spending" in North America, said Bill Herbert, an analyst with Simmons & Co. "That's the result of diminished cash flow and cash-flow expectations."
The uncertainty about oil prices eats away at the most important pillar of strength for the oil-field services industry in North America. Oil-directed activity absorbed many of the drilling rigs and crews that were pulled away from natural-gas operations when prices for that commodity were crushed last year by a market glut.
"All signs point to a continued weakening in the U.S. onshore [oil-field services] market," said analysts with Raymond James in a report.
Several companies have already warned investors not to expect stellar profits -- not only because of falling oil prices, but also as a result of structural changes in the market. The massive migration from natural gas to oil drilling created moving costs and unexpected down time. Also, prices of guar gum, a material used in shale drilling, have risen unexpectedly due to guar shortages (guar is a bean that is mainly produced in India). The guar squeeze prompted Halliburton Co. to lower its earnings guidance; analysts polled by Thomson Reuters expect the company to earn 75 cents a share, down 7% from the same quarter last year. Analysts expect the company to collect $7 billion in revenue, up 17%.
The other North America-focused giant, Baker Hughes, is expected to post 78 cents a share in earnings this quarter, down 17% from the same quarter last year, on revenue of about $5.3 billion.
There are still bright spots, however. Most foreign crude fetches higher prices than oil produced in the U.S. and Canada, and activity overseas for the providers is still going strong.
That is also the case for the deep-water U.S. Gulf of Mexico, which is recovering from the lull that followed the Deepwater Horizon incident in 2010; the oil industry spent $1.7 billion in high bids for new exploration leases in the area last month. While the global slowdown is beginning to create some concerns, "pretty much everything related to deep water is still very positive," Mr. Herbert said.
Schlumberger, the world's largest oil-field services company, is less exposed to North America onshore drilling than the others -- and has strong overseas and deep-water components. Analysts expect it to earn $1.01 a share, up 16% from the same quarter last year, on revenue of $10.5 billion. Schlumberger and Baker Hughes report on Friday; Halliburton reports on Monday, June 23.
---
The Week Ahead looks at coming corporate events.
---
Happening This Week
MONDAY
Cloud Identity Summit starts in Vail, Colo.
OSCON, an open-source convention, starts in Portland, Ore.
IMF releases updated World Economic Outlook and Global Financial Stability Report.
Earnings: Cintas.
TUESDAY
Craft & Hobby Association conference gets under way in Rosemont, Ill.
Earnings: Biomet, Coca-Cola, CSX, Forest Laboratories, Goldman Sachs, Intel, Johnson & Johnson, M&T Bank, Mattel, Omnicom, State Street, TD Ameritrade, Yahoo.
WEDNESDAY
Earnings: Abbott Laboratories, American Express, Bank of America, Bank of New York Mellon, BlackRock, Citrix, Honeywell, IBM, Kinder Morgan, Northern Trust, PNC Financial, Qualcomm, St. Jude Medical, Stanley Black & Decker, Stryker.
THURSDAY
Earnings: Advanced Micro Devices, AutoNation, BB&T, Blackstone, Capital One, Chipotle Mexican Grill, Danaher, E*Trade, Fifth Third Bancorp, Google, Intuitive Surgical, KeyCorp, Microsoft, Morgan Stanley, Philip Morris, Southwest Airlines.
FRIDAY
Earnings: Baker Hughes, First Horizon, General Electric, Ingersoll-Rand, Manpower, Schlumberger, SunTrust Banks, Xerox.
Credit: By Angel Gonzalez
Subject: Petroleum industry; Earnings; Energy economics; Natural gas industry; Oilfield equipment & services
Location: United States--US North America
Company / organization: Name: Thomson Reuters; NAICS: 511110, 511140; Name: Baker Hughes Inc; NAICS: 213112, 333298, 333132; Name: Halliburton Co; NAICS: 213112, 237990; Name: Schlumberger Ltd; NAICS: 213111, 213112, 334419, 334513, 511210, 541512
Classification: 9190: United States; 8510: Petroleum industry; 3100: Capital & debt management
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.2
Publication year: 2012
Publication date: Jul 16, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 0099 9660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1024925660
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1024925660?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Rises 1.5% on Hope for Fed Stimulus
Author: Biers, John M
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 July 2012: n/a.
ProQuest document link
Abstract:
NEW YORK--Overriding some bearish new data on U.S. retail sales and weak overall Chinese sentiment, oil prices rose 1.5% Monday in anticipation of the Federal Reserve taking action to stimulate the economy.
Full text: NEW YORK--Overriding some bearish new data on U.S. retail sales and weak overall Chinese sentiment, oil prices rose 1.5% Monday in anticipation of the Federal Reserve taking action to stimulate the economy.
Markets have been buzzing in recent weeks with the prospect that the Fed may engage in another round of quantitative easing, where it buys bonds with an eye toward lowering long-term interest rates in order to stimulate the economy.
Past rounds of quantitative easing have boosted oil prices, which are traded in dollars. A weaker dollar following quantitative easing attracts buyers to the oil market because the commodity becomes less costly to other currencies.
"Expectations and hopes are building that we're going to see some intervention," said Matt Smith, analyst at Summit Energy, who predicts the market will be disappointed when Fed Chairman Ben Bernanke announces no new action.
Light, sweet crude for August delivery rose $1.33 to settle at $88.43 a barrel on the New York Mercantile Exchange.
Mr. Bernanke is scheduled to appear before congressional panels on Tuesday and Wednesday. The appearances come after the latest bit of weak news on the direction of the overall economy, which has seen poor jobs and consumer sentiment data in recent weeks.
U.S. retail sales fell for the third consecutive month in June, signaling slower economic growth as consumers rein in spending. Retail and food-service sales decreased 0.5% last month to a seasonally adjusted $401.52 billion, the Commerce Department reported Monday. That is the first time since the depths of the recession in 2008 that retail sales have fallen three months in a row. Economists surveyed by Dow Jones Newswires had forecast a 0.2% rise.
Analysts said China bears continued watching after Chinese Premier Wen Jiabao over the weekend warned that economic weakness would persist for a while longer. As the world's second-largest consumer of oil, after the U.S., China has been a major driver of world oil markets in recent years.
News of the China slowdown "would put more downward pressure on crude because that's the last place that's growing," said Tariq Zahir, a managing member for Tyche Capital Advisors.
Oil prices Monday rallied initially on reports that the U.S. had fired at a ship off the coast of the United Arab Emirates on speculation that the incident was spurred by lingering tensions between the West and Iran over its nuclear program. However, subsequent reports said the incident involved Indian fishermen.
Front-month reformulated gasoline blendstock, or RBOB, settled at $2.85 a gallon, up 3.8 cents. Front-month heating oil settled at $2.83 a gallon, up 4 cents.
Jeffrey Sparshott and Sarah Portlock contributed to this article.
Credit: By John M. Biers
Subject: Petroleum industry; Recessions; Crude oil prices; Economic conditions
Location: China United States--US
People: Wen Jiabao
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210; Name: Dow Jones Newswires; NAICS: 519110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 16, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1025725978
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1025725978?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Tullow Abandons Oil Well Off Guyana
Author: Flynn, Alexis
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 July 2012: n/a.
ProQuest document link
Abstract:
Tullow's caution, coming just weeks after the French government briefly suspended drilling offshore nearby French Guiana due to environmental concerns, underlines the intense scrutiny on the safety of offshore drilling since the disastrous Deepwater Horizon blowout and oil spill in the U.S. in 2010.
Full text: LONDON--U.K.-listed oil explorer Tullow Oil PLC said Monday it has decided to abandon a high-pressure oil well it was drilling off the coast of Guyana due to fears it could become unsafe.
The company said in a statement it had pre-emptively ended operations at the Jaguar-1 well, "after reaching a point in the well where the pressure design limits for safe operations prevented further drilling to the main objective."
Tullow's caution, coming just weeks after the French government briefly suspended drilling offshore nearby French Guiana due to environmental concerns, underlines the intense scrutiny on the safety of offshore drilling since the disastrous Deepwater Horizon blowout and oil spill in the U.S. in 2010.
It also underscores the risk and effort of developing a new offshore oil area. Oil companies are betting that the area off South America's northern coast could have oil fields similar to those discovered across the Atlantic in offshore West Africa. But the trouble with Jaguar-1 means that tapping the region is going to require "more difficult, more expensive drilling than was first expected," said Robert Gillon, an analyst with IHS Herold.
Despite not reaching its target depth, Tullow said early drilling had yielded some signs of light oil.
Tullow has spearheaded exploration off the largely ignored northeast coast of South America. It made the first major discovery offshore French Guiana in September 2011, along with partners Royal Dutch Shell PLC and Total SA. It has licensed large areas for exploration offshore neighboring Suriname and Guyana.
The Jaguar-1 well is one of 35 prospects that Tullow is appraising world-wide. The firm has carved out a reputation for exploration success, making more notable oil discoveries than many of its larger, better-known peers in recent years. However, Tullow earlier this month highlighted the cost of drilling unsuccessful wells, announcing it would write down some $440 million of oil and gas discoveries that had proved to be less lucrative than initially hoped.
Analysts at Bernstein Research played down the significance of the well abandonment. "Jaguar was one of the largest prospects in Tullow's pipeline this year...All that has changed is the likely timing of the well, and we now know that the basin is oil generating," Bernstein said.
Anish Kapadia, an analyst with Tudor, Pickering, Holt & Co., said this well cost about $160 million, and given the pressure issues, the next well could cost north of $200 million "and may cause a rethink of whether it makes sense to drill."
Tullow shares were down 3.3% at 1,386 pence ($21.59) a share, in a flat market. CGX Energy Inc., a Canadian firm that is a partner in the well and that owes a lot of the recent appreciation of its stock to its bet on offshore Guyana, saw its shares drop 40% to 26 Canadian cents.
James Herron and Angel Gonzalez contributed to this article.
Credit: By Alexis Flynn
Subject: Petroleum industry; Offshore drilling
Location: United States--US United Kingdom--UK Guyana French Guiana South America
Company / organization: Name: Tullow Oil PLC; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 16, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1025747199
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1025747199?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Traders Choose Optimism on Fed Stimulus, Bid Up Prices
Author: Biers, John M
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 July 2012: n/a.
ProQuest document link
Abstract:
According to estimates from 11 analysts surveyed by Dow Jones Newswires, crude-oil inventories declined by an average of 1.1 million barrels in the week ended July 13.
Full text: NEW YORK--The oil market eventually took an optimistic view on testimony by U.S. Federal Reserve Chairman Ben Bernanke and bid up oil prices on stronger oil demand and expectations of additional quantitative easing.
Front-month oil futures on the New York Mercantile Exchange rose 79 cents, or 0.9%, to settle at $89.22 a barrel. Tuesday's increase marked the fifth consecutive day Nymex futures have closed higher.
The oil market initially retreated on Mr. Bernanke's testimony, bidding oil to an intraday low when it became clear that the remarks contained no new concrete promises for quantitative easing. But following the initial disappointment, oil prices steadily gained throughout the session, peaking at $89.46 a barrel before receding somewhat.
Some Federal Reserve officials have previously expressed openness to another round of easing, although they have avoided specific plans for enacting it. Past rounds of quantitative easing have boosted oil prices, which are traded in dollars. A weaker dollar following quantitative easing attracts buyers to the oil market because the commodity becomes less costly to other currencies.
Carl Larry, president of Oil Outlooks and Opinions, a research and consultancy firm, said the overall tone of the Senate hearing suggested additional quantitative easing was "inevitable" given the headwinds facing the economy.
"There's no dismissing the fact that we need something," Mr. Larry said. Mr. Bernanke's "overall tone was that it's more likely than not to happen."
Oil prices were lent further support Tuesday in the aftermath of an incident Monday in which a U.S. ship fired on a fishing vessel near the Strait of Hormuz, killing one person and injuring three. Analysts said the incident forced markets to acknowledge the instability in the region given tensions between Iran and Western powers.
"The incident was a reminder to the market this region of the world remains very volatile with the possibility of a disruption in the supply of oil still a possibility at any time," said analyst Dominick Chirichella in a note. "Time will tell but for the short term the geopolitical risk is once again slowly building into the price of oil."
The market is also beginning to look ahead to Wednesday's release of U.S. oil-inventory results. According to estimates from 11 analysts surveyed by Dow Jones Newswires, crude-oil inventories declined by an average of 1.1 million barrels in the week ended July 13. The analysts projected an increase in refined products.
In economic news, industrial output rose 0.4% last month, the Federal Reserve said Tuesday. Capacity utilization increased slightly, as well, climbing to 78.9% from 78.7% the previous month. Those results were a mixed bag in comparison with expectations. Economists surveyed by Dow Jones Newswires forecast a 0.3% rise in output and capacity utilization of 79.2%.
Front-month reformulated gasoline blendstock, or RBOB, settled at a $2.845 per gallon, down 0.97 cents. Nymex heating-oil futures settled at $2.842 a gallon, up 1.45 cents.
Write to John M. Biers at
Credit: By John M. Biers
Subject: Petroleum industry; Oil sands; Prices
Location: United States--US
Company / organization: Name: Dow Jones Newswires; NAICS: 519110; Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 17, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1026558984
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1026558984?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Gains for Sixth Day in a Row
Author: Biers, John M
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 July 2012: n/a.
ProQuest document link
Abstract:
Federal Reserve Chairman Ben Bernanke told lawmakers Wednesday that it is "certainly possible" that the central bank could take new steps to support the economic recovery if the jobs market doesn't show gains.
Full text: Oil prices rose Wednesday, blowing past a mediocre oil inventory report to notch a higher closing price for the sixth consecutive day.
Light, sweet crude for August delivery rose 65 cents, or 0.7%, to settle at $89.87 a barrel on the New York Mercantile Exchange. Oil has gained 7.1% over the past six sessions, and 16% since June 28.
Analysts attribute crude's recent rise to a mix of geopolitical and seasonal factors. Wednesday's jump came after the U.S. Energy Information Administration released a weekly inventory report that analysts characterized as a mixed bag.
The EIA report showed that U.S. crude stocks fell by 800,000 barrels, less than the 1.1 million barrels drop forecast by analysts. Also on the bearish side, the build in distillate stocks of 2.6 million barrels was above the 1.3 million that had been projected. But analysts had projected an increase in gasoline of 800,000 barrels, and the report showed a decline of 1.8 million barrels.
On the geopolitical side, the commodity has occasionally jumped in recent weeks over headlines that suggested Western tensions with Iran could bubble over, or that reported new sanctions that could limit Iranian exports. Iran has slashed its exports of crude following sanctions, with some analysts projecting that as much as 1 million to 1.5 million barrels a day could be offline.
Aside from Iran, the current outlook has improved compared with a month ago, when markets feared a 2008-style retreat, said Eurasia Group analyst Greg Priddy. "There's not the fear we're about to come to a precipitous decline in demand," Mr. Priddy said. "There's just a recognition of weaker demand growth."
Some analysts also expect the U.S. Federal Reserve to take action later this year to spur the economy with another round of quantitative easing. Federal Reserve Chairman Ben Bernanke told lawmakers Wednesday that it is "certainly possible" that the central bank could take new steps to support the economic recovery if the jobs market doesn't show gains.
But some market watchers think oil's rally may soon lose steam. Tariq Zahir, a managing member at Tyche Capital Advisors, said the oil market is fundamentally "still very well supplied." Mr. Zahir thinks an additional rally into the $90s is unlikely without some shift from today's conditions, either a significant event in Iran or a hurricane or some other disruption that takes oil supply offline.
Front-month reformulated gasoline blendstock, or RBOB, settled at $2.883 a gallon, up 3.84 cents. Heating oil futures settled at $2.878 a gallon, up 3.54 cents.
Write to John M. Biers at
Credit: By John M. Biers
Subject: Oil sands; Geopolitics; Petroleum industry
Location: Iran United States--US
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210; Name: Eurasia Group; NAICS: 523930
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 18, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1026768833
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1026768833?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Chevron, Reliance Sign Kurdistan Oil Deal
Author: Hassan Hafidh; Lefebvre, Ben
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 July 2012: n/a.
ProQuest document link
Abstract:
The move underscores growing interest in Kurdistan from oil companies frustrated at the Iraqi government's insistence that they settle for lower-paying oil-production licenses rather than more-lucrative direct stakes in oil fields, said Fadel Gheit, senior energy analyst at Oppenheimer & Co. He added that the autonomous region is estimated to have vast oil wealth and provides foreign investors with better infrastructure than in other parts of Iraq.
Full text: BAGHDAD---Chevron Corp. said Thursday it signed a deal with Indian conglomerate Reliance Industries Ltd. that would see the California company take stakes in two oil-exploration blocks in the Kurdish region of Iraq.
Such a deal would make Chevron the second major Western oil company to enter Kurdistan, following Exxon Mobil Corp. last year. Chevron's move boosts the position of the Kurdish Regional Government, which has long fought with the Iraqi central government over who has the right to grant oil-exploration rights to foreign companies.
The move underscores growing interest in Kurdistan from oil companies frustrated at the Iraqi government's insistence that they settle for lower-paying oil-production licenses rather than more-lucrative direct stakes in oil fields, said Fadel Gheit, senior energy analyst at Oppenheimer & Co. He added that the autonomous region is estimated to have vast oil wealth and provides foreign investors with better infrastructure than in other parts of Iraq.
"This is potentially a very large oil-deposit area," Mr. Gheit said.
Under the agreement with Kurdistan, Chevron must drill two wells by November 2013, company spokesman Gareth Johnstone said.
The deal was signed in the last few days by both companies, said one person close to the Kurdish Ministry of Natural Resources. Reliance already holds the oil licenses in question, known as Rovi and Sarta. At the end of the deal, Chevron would have 80% of the blocks, joining with OMV Rovi GmbH and OMV Sarta GmbH, which would hold the remaining 20%.
Reliance said it was making the sale as part of a strategy to restructure its international holdings. The company "will continue to look for opportunities to invest globally," a Reliance spokesperson said.
Chevron has prequalified to bid for oil licenses in southern Iraq, but an official with the Iraqi central government said Chevron would be excluded if it completed a deal in Kurdistan. The Baghdad oil ministry would terminate its prequalification and wouldn't deal with it in any future projects, said the official, who didn't wish to be named.
Chevron, in disclosing its entry into Kurdistan, has tried to leave the door open for eventual rapprochement with Iraq.
"Chevron has expressed its interest in helping Iraq achieve its objectives for the oil and gas industry," Mr. Johnstone said. "It is our belief that Iraq will benefit from this agreement through local employment, technical training, technology transfer and revenue to the federal, regional and provisional governments."
Chevron's move may further escalate already high tensions between Kurdistan and Baghdad. Thanks to a far better security situation in the aftermath of the U.S. invasion of Iraq in 2003, Kurdistan has been successful in drawing in foreign oil companies. It has signed nearly 50 exploration deals, mostly with second-tier international oil companies or wildcat explorers. Baghdad maintains all these contracts are illegal.
A longstanding dispute over the level of payments from the central government to companies operating in the Kurdish region, for oil they have produced and exported, also remains unresolved. Earlier this week, Baghdad accused Turkey and the Kurdish region of engaging in illegal oil trade, arguing that only the central government has the right to control oil exports from Iraq.
In an example of how heated this issue has become, Iraqi Prime Minister Nuri al-Maliki said last month that contracts between the Kurdish Regional Government and foreign oil companies are dangerous and could lead to "wars."
Faisal Abdullah, spokesman of Iraq's federal deputy prime minister for energy, Hussein al-Shahristani, said "the federal government in Baghdad is the only party authorized by the law to sign contracts with foreign oil companies."
However, international oil companies are increasingly drawn to the region, as contracts to redevelop old oil fields and explore for new ones in southern Iraq turn out to be less attractive than anticipated.
"Even with the risk of what's going on in Kurdistan, ultimately it economically makes sense to get in there early and be well positioned in the long term," said Allen Good, analyst at Morningstar Inc. "They're betting that the politics get worked out."
In May, Norway's Statoil ASA pulled out of a project to redevelop the West Qurna 2 oil field, saying it would prefer to employ its capital elsewhere. Iraq's fourth round of bidding for oil licenses, held in May, resulted in just three of 12 blocks initially being awarded in May and a fourth in July, as tough contract terms deterred international oil companies.
The Kurdish region is thought to have fewer oil resources than southern Iraq, but it still has potential. Independent U.K.-listed oil explorer Gulf Keystone Petroleum Ltd. Thursday increased by 50% its estimate of the amount of oil held within its Shaikan discovery. The field is now thought to contain between 12.4 billion and 15 billion barrels of oil, making it a world-class resource, although how much of that can be recovered is unclear, due to technical challenges.
Exxon Mobil was the first major international company to enter Kurdistan, signing six oil licenses in November. However, it has agreed to freeze its operations there, after intense pressure from Baghdad. Despite that concession, it remains excluded from bidding for new oil-exploration licenses in southern Iraq.
James Herron in London, Rakesh Sharma in Delhi and Simon Hall in Singapore contributed to this article.
Write to Hassan Hafidh at
Credit: By Hassan Hafidh And Ben Lefebvre
Subject: Petroleum industry; Kurds; Energy policy; Oil fields; Licenses; Prime ministers
Location: California Kurdistan Iraq
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 19, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1026911113
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1026911113?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Lastupdated: 2017-11-19
Database: The Wall Street Journal
Mideast Tensions Drive Oil Back Above $90
Author: Biers, John M
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 July 2012: n/a.
ProQuest document link
Abstract:
Analysts and traders also said the market was concerned that Syrian rebels ruptured the inner circle of Syrian President Bashar al-Assad on Wednesday, killing three high-level officials with a bomb blast.
Full text: NEW YORK--Crude oil surged 3.1% Thursday on renewed fears about Middle East tensions following the latest flare-up between Israel and Iran.
Light, sweet crude for August delivery rose $2.79 to settle at $92.66 a barrel on the New York Mercantile Exchange.
Prices rose for the seventh consecutive session after Israel accused Iran of orchestrating a bombing attack at a resort in Bulgaria, frequented by Israelis, that killed at least six people and injured 30 others. Israeli Prime Minister Benjamin Netanyahu said Israel would "respond with force."
The possibility of a clash between the two Middle Eastern nations has rippled through the oil markets. Any conflict could escalate throughout the oil-producing region. Also, in the past, when Iran has been threatened, Iranian officials said they would close the Strait of Hormuz, a critical waterway for oil shipments.
"Probably the overriding concern is that there will be a war in Iran that will disrupt the Strait of Hormuz," said Phil Flynn, senior market analyst at the Price Futures Group in Chicago, a brokerage firm. He added that the chance of disrupted oil flows put a "risk premium" on crude prices.
Analysts and traders also said the market was concerned that Syrian rebels ruptured the inner circle of Syrian President Bashar al-Assad on Wednesday, killing three high-level officials with a bomb blast. That has fueled speculation that the regime may be close to falling.
Although Syria isn't a major oil producer, the country's proximity to other major oil producers has perturbed the market. The current Syrian regime is also allied with Iran.
Trader John Kilduff, with Again Capital, called it "A rough day out in the Middle East."
Mr. Kilduff said the prospect of the fall of the Syrian regime has also troubled Iran, which would lose a major ally in the region if the Assad regime falls. "There's a real apprehension about what would their (Iran's) act of desperation be," he said.
Analyst Dominick Chirichella said oil is "trying to establish a new trading range" in light of the rising tensions in the region. He said the incidents create "limited downside" for oil in the near-term.
"The market is back to being driven by the possibility of a supply interruption in the Middle East region of the world," Mr. Chirichella said in a note. "Whether or not any of the events that have occurred over the last twenty four hours will eventually change the supply dynamics of the region is certainly an unknown."
The resurgence of geopolitical risk overshadowed weak employment and manufacturing results released Thursday.
Initial U.S. jobless claims grew by 34,000 to a seasonally adjusted 386,000 in the week ended July 14, the Labor Department said Thursday. It was the largest weekly gain since April 2011. Economists surveyed by Dow Jones Newswires had forecast 365,000 new applications for jobless benefits last week.
Also Thursday, the Philadelphia Federal Reserve Bank's manufacturing index showed factory activity in its region contracting for the third straight month. The survey found that mid-Atlantic factory activity contracted, albeit at a slower pace, in July.
The index of manufacturing activity moved to negative-12.9 in July from negative-16.6 in June. The index had been expected to hit negative-9.0. In the survey, readings above zero indicate growth and negative readings indicate contraction.
Write to John M. Biers at
Credit: By John M. Biers
Subject: Oil sands; Petroleum industry; Manufacturing; Crude oil prices
Location: Israel Strait of Hormuz Bulgaria Iran Middle East
People: Netanyahu, Benjamin Assad, Bashar Al
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 19, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1026927830
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1026927830?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. Says Iran Plans to Disrupt Oil Trade; Officials Cite New Intelligence Pointing to Potential Attacks on Platforms, Tankers in Region; Tehran Is 'Very Unpredictable'
Author: Barnes, Julian E
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 July 2012: n/a.
ProQuest document link
Abstract:
The findings come as American officials closely watch Iran for its reaction to punishing international sanctions and to a drumbeat of Israeli threats to bomb Tehran's nuclear sites, while talks aimed at preventing Iran from developing nuclear weapons have slowed.
Full text: WASHINGTON--U.S. government officials, citing new intelligence, said Iran has developed plans to disrupt international oil trade, including through attacks on oil platforms and tankers.
Officials said the information suggests that Iran could take action against facilities both inside and outside the Persian Gulf, even absent an overt military conflict.
The findings come as American officials closely watch Iran for its reaction to punishing international sanctions and to a drumbeat of Israeli threats to bomb Tehran's nuclear sites, while talks aimed at preventing Iran from developing nuclear weapons have slowed.
Analysts say Iran, which denies it is developing nuclear weapons, may be looking for options to push back as it comes under growing pressure and finds its most critical ally, the Syrian regime, focused internally on its own struggle for survival.
The Pentagon several times has warned Tehran over its threats to close the Strait of Hormuz, a crucial oil-shipment point, and U.S. officials and analysts said Iranian officials apparently believe that mining the narrow strait would invite a U.S. attack on their forces.
But U.S. officials said some Iranians believe they could escape a direct counterattack by striking at other oil facilities, including those outside the Persian Gulf, perhaps by using its elite forces or external proxies.
"Iran is very unpredictable," said a senior defense official. "We have been very clear what we as well as the international community find unacceptable."
The latest findings underscore why many military officials continue to focus on Iran as potentially the most serious U.S. national-security concern in the region, even as the crisis in Syria has deepened and other conflicts, as in Libya, have raged.
Defense officials cautioned there is no evidence that Tehran has moved assets in position to disrupt tankers or attack other sites, but stressed that Iran's intent appears clear.
The officials wouldn't describe the intelligence or its sources, but analysts said statements in the Iranian press and by lawmakers in Tehran suggest the possibility of more-aggressive action in the Persian Gulf as a response to the new sanctions. Iranian oil sales have dropped and prices have remained low, pinching the government.
Spokesmen for the Defense Department and the Central Intelligence Agency declined to comment on the existence of any intelligence related to Iranian attacks on the oil industry. Iranian officials didn't respond to a request to comment.
The U.S. military has used the new intelligence in internal war-games exercises to simulate how the international community would respond to an attack on an oil tanker, refinery or other part of the energy-transportation system.
"It wouldn't be surprising to anyone if the Iranian regime was weighing a list of possible responses in the Gulf," said a U.S. official. "This doesn't mean they would do something, as there are significant costs the Iranians would have to consider, but this is something to keep an eye on."
The decision by officials to discuss the new intelligence privately is intended in part to deter Iran. Senior officials said Iranian officials would be making an error in judgment by disrupting energy markets.
"They have to know this would provoke some sort of response," said a senior defense official.
The Defense Department has taken several recent steps to bolster its presence in the region, including plans for a 20-nation antimine exercise in September and orders to beef up the presence of U.S. aircraft carriers.
Tehran has disrupted international oil supplies in the past, most notably during the Iran-Iraq war in the 1980s. In 1987, the U.S. began patrolling the Persian Gulf and Iran began mining the waters to slow warships and halt Arab oil exports.
Short of trying to close the strait, officials and analysts said Iran could restrict oil flows by attacking a new United Arab Emirates pipeline, Bahrain's oil refinery or Saudi ports.
"The worst-case scenario is the Iranians decide to attack shipping to spook the market and do it in such a way that would not generate an overwhelming response," said Christopher Harmer, a former planner with the U.S. Fifth Fleet and the senior naval analyst at the Institute for the Study of War.
Defense analysts said Iran has been training its Quds Force, a unit of the Revolutionary Guards, to conduct underwater terror attacks using frogmen. Tehran also could turn to Shiite militants in other countries including Iraq, Saudi Arabia, Bahrain and the U.A.E..
Some U.S. officials said they believe Iranian plans to disrupt the oil trade have intensified in the past month, as international sanctions now in place constrain their oil exports.
"Iran is in a worse situation as a result of sanctions [and] they have lower volume and lower prices," said Frank Verrastro, director of the Center for Security and International Studies' energy and national security program. The sanctions, he said, could bring Iran to the table, or it could push them over the edge. "And that is the delicate balance folks are concerned about."
Siobhan Gorman, Adam Entous and Jay Solomon contributed to this article.
Write to Julian E. Barnes at
Credit: By Julian E. Barnes
Subject: Petroleum industry; Nuclear weapons; Shipping industry; Petroleum refineries
Location: Iran United States--US
Company / organization: Name: Central Intelligence Agency--CIA; NAICS: 928110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 19, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1026947944
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1026947944?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
World News: U.S. Says Iran Plans to Disrupt Oil Trade --- Officials Cite New Intelligence Pointing to Potential Attacks on Platforms, Tankers in Region; Tehran Is 'Very Unpredictable'
Author: Barnes, Julian E
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]20 July 2012: A.6.
ProQuest document link
Abstract:
The U.S. military has used the new intelligence in internal war-games exercises to simulate how the international community would respond to an attack on an oil tanker, refinery or other part of the energy-transportation system.
Full text: WASHINGTON -- U.S. government officials, citing new intelligence, said Iran has developed plans to disrupt international oil trade, including through attacks on oil platforms and tankers.
Officials said the information suggests that Iran could take action against facilities both inside and outside the Persian Gulf, even absent an overt military conflict.
The findings come as American officials closely watch Iran for its reaction to punishing international sanctions and to a drumbeat of Israeli threats to bomb Tehran's nuclear sites, while talks aimed at preventing Iran from developing nuclear weapons have slowed.
Analysts say Iran, which denies it is developing nuclear weapons, may be looking for options to push back as it comes under growing pressure and finds its most critical ally, the Syrian regime, focused internally on its own struggle for survival.
The Pentagon several times has warned Tehran over its threats to close the Strait of Hormuz, a crucial oil-shipment point, and U.S. officials and analysts said Iranian officials apparently believe that mining the narrow strait would invite a U.S. attack on their forces.
But U.S. officials said some Iranians believe they could escape a direct counterattack by striking at other oil facilities, including those outside the Persian Gulf, perhaps by using its elite forces or external proxies.
"Iran is very unpredictable," said a senior defense official. "We have been very clear what we as well as the international community find unacceptable."
The latest findings underscore why many military officials continue to focus on Iran as potentially the most serious U.S. national-security concern in the region, even as the crisis in Syria has deepened and other conflicts, as in Libya, have raged.
Defense officials cautioned there is no evidence that Tehran has moved assets in position to disrupt tankers or attack other sites, but stressed that Iran's intent appears clear.
The officials wouldn't describe the intelligence or its sources, but analysts said statements in the Iranian press and by lawmakers in Tehran suggest the possibility of more-aggressive action.
Spokesmen for the Defense Department and the Central Intelligence Agency declined to comment on the existence of any intelligence related to Iranian attacks on the oil industry. Iranian officials didn't respond to a request to comment.
The U.S. military has used the new intelligence in internal war-games exercises to simulate how the international community would respond to an attack on an oil tanker, refinery or other part of the energy-transportation system.
"It wouldn't be surprising to anyone if the Iranian regime was weighing a list of possible responses in the Gulf," said a U.S. official. "This doesn't mean they would do something, as there are significant costs the Iranians would have to consider, but this is something to keep an eye on."
The decision by officials to discuss the new intelligence privately is intended in part to deter Iran.
"They have to know this would provoke some sort of response," said a senior defense official.
The Defense Department has taken several recent steps to bolster its presence in the region, including plans for a 20-nation antimine exercise in September and orders to beef up the presence of U.S. aircraft carriers.
Tehran has disrupted international oil supplies in the past, most notably during the Iran-Iraq war in the 1980s. In 1987, the U.S. began patrolling the Persian Gulf and Iran began mining the waters to slow warships and halt Arab oil exports.
Short of trying to close the strait, officials and analysts said Iran could restrict oil flows by attacking a new United Arab Emirates pipeline, Bahrain's oil refinery or Saudi ports.
"The worst-case scenario is the Iranians decide to attack shipping to spook the market and do it in such a way that would not generate an overwhelming response," said Christopher Harmer, a former planner with the U.S. Fifth Fleet and the senior naval analyst at the Institute for the Study of War.
Defense analysts said Iran has been training its Quds Force, a unit of the Revolutionary Guards, to conduct underwater terror attacks using frogmen. Tehran also could turn to Shiite militants in other countries including Iraq, Saudi Arabia, Bahrain and the U.A.E..
Some U.S. officials said they believe Iranian plans to disrupt the oil trade have intensified in the past month, as international sanctions now in place constrain their oil exports.
"Iran is in a worse situation as a result of sanctions they have lower volume and lower prices," said Frank Verrastro, director of the Center for Security and International Studies' energy and national security. The sanctions, he said, could bring Iran to the table, or it could push them over the edge. "And that is the delicate balance folks are concerned about."
---
Siobhan Gorman, Adam Entous and Jay Solomon contributed to this article.
---
Fueling Speculation
Defense analysts and officials say possible targets include:
-- The 'accidental' release of a mine in the Persian Gulf that strikes a tanker
-- Underwater attacks on tankers in port by frogmen from Quds Force
-- Attacks by small boats on tankers in the Arabian Sea
-- Attacks through proxies on Saudi oil facilities
-- Attack on oil refinery in Bahrain
-- Attack on oil pipeline, other oil facilities in the United Arab Emirates
Source: WSJ research
Subscribe to WSJ:
Credit: By Julian E. Barnes
Subject: Petroleum refineries; Intelligence gathering; Petroleum industry; International trade
Location: Iran
Company / organization: Name: Central Intelligence Agency--CIA; NAICS: 928110, 928120
Classification: 9178: Middle East; 8350: Transportation & travel industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.6
Publication year: 2012
Publication date: Jul 20, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027025285
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027025285?accountid=7117
Copyright: (c) 2 012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Retreats After 10% Run-Up
Author: Biers, John M
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 July 2012: n/a.
ProQuest document link
Abstract:
Weekly gains for heating oil reached 4.9%, up for two consecutive weeks. * August natural-gas futures rose 8 cents, or 2.7%, to $3.08 per million British thermal units, extending last session's gains after U.S. Energy Information Administration data showed weekly natural-gas inventories at the low end of an expected range.
Full text: After climbing more than 10% during a seven-session winning streak, crude prices retreated Friday.
Observers pointed to profit-taking, dollar strength and revived concerns about the euro zone as impetus for the downturn. Still, oil ended the week up 5% and is back within reach of $100 a barrel.
Front-month crude futures for August fell $1.22, or 1.3%, to settle at $91.44 a barrel on the New York Mercantile Exchange. The August contract expired Friday. September crude futures settled at $91.83, down $1.14 for the day.
The retreat follows seven consecutive sessions of higher crude prices, a rally built on geopolitical concerns about Iran and concerns about global economic growth.
Prices had traded at their highest level since mid-May, but on Friday some profit-taking was at work, said Matt Smith, an analyst with Summit Energy in Kentucky.
"The focus has swung away from geopolitical tension and back onto European woes," he said.
Spanish debt sold off, with yields pushing past 7%, a level considered unsustainable in the long run. That pushed the euro lower and helped propel the dollar. "We're seeing the euro get hammered, and it's just a flight from risk," Mr. Smith said.
A stronger dollar is a negative for dollar-denominated commodities such as oil as it makes them more expensive to holders of other currencies.
Still, while oil may have taken a breather from its run-up, the decline may be just a temporary reprieve from underlying price drivers.
"This morning's selloff appears heavily related to profit-taking, and a resumption of this month's strong advance would appear likely early next week on any fresh headlines out of the Middle East," said Jim Ritterbusch, president of the oil-trading advisory firm Ritterbusch & Associates, in a note.
In other energy markets:
* Gasoline for August delivery advanced less than 1 cent, or 0.1%, to settle at $2.94 a gallon, regaining some strength as the session progressed. On the week, gasoline rose 4.5%, up for four straight weeks.
* August heating oil declined 2 cents, or 0.8%, to $2.92 a gallon. Weekly gains for heating oil reached 4.9%, up for two consecutive weeks.
* August natural-gas futures rose 8 cents, or 2.7%, to $3.08 per million British thermal units, extending last session's gains after U.S. Energy Information Administration data showed weekly natural-gas inventories at the low end of an expected range. On the week, natural gas rallied 7.2%, its largest weekly gain in a month. Futures have posted gains for two straight weeks.
Claudia Assis and Michael Kitchen contributed to this article.
Write to John Biers at john.biers@dowjones.com
Credit: By John M. Biers
Subject: Crude oil prices; Natural gas; Profits; Futures; Energy industry; Geopolitics
Location: Iran
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 20 , 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027113964
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027113964?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil-Price Surge Is All About Iran
Author: Biers, John M
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 July 2012: n/a.
ProQuest document link
Abstract:
"Oil isn't trading on fundamentals the way some other commodities are because of the fact you have massive geopolitical concerns about the disruption of supply," said Ruchir Kadakia, director of global oil fundamentals for IHS Cambridge Energy Research Associates.
Full text: U.S. oil futures have rocketed up 18% over the past three weeks, sparked by escalating concerns about Iran.
The surge has outstripped advances for most other assets. Stocks and copper--which, like oil, are strongly tied to economic growth expectations--have seen much smaller gains. The Standard & Poor's-500 Index has increased 2.5% over that span, while Comex copper futures have climbed 3%.
But neither stocks nor copper are as dependant as oil on the Persian Gulf's Strait of Hormuz. Approximately 20% of the world's crude oil passes through the 24-mile-wide waterway near Iran. Tehran has said it will shut down the oil choke point if threatened.
A series of recent incidents have brought Iran back into the market's focus. Analysts and traders said crude prices have been bid up to account for the risk that Iran might try to cut off crude flows. They added that over the last few weeks, this risk has obscured more traditional fundamentals like anticipated global growth or the amount of barrels of crude available on the market.
"Oil isn't trading on fundamentals the way some other commodities are because of the fact you have massive geopolitical concerns about the disruption of supply," said Ruchir Kadakia, director of global oil fundamentals for IHS Cambridge Energy Research Associates.
Oil prices jumped nearly 5% on July 3 following reports of Iranian military tests and of a U.S. military buildup in the Persian Gulf. Prices rose 3.1% last Thursday after Israel accused Iran of being behind an attack that killed seven Israeli tourists in Bulgaria.
Over the past three weeks, smaller price rises have followed reports of additional U.S. warships being sent to the Gulf; the U.S. imposing additional sanctions--and even an Indian fisherman being killed after being fired on by a U.S. Navy ship when his boat got too close.
For the markets, "the overriding concern is that there will be a war in Iran that will disrupt the Strait of Hormuz," said Phil Flynn, senior market analyst at the Price Futures Group in Chicago, a brokerage firm.
The new tensions renewed an Iranian risk premium, which had eased this spring over optimism that negotiations with Iran might resolve the situation.
Also, anxieties about Iran were trumped by fears that about Greece's debt and the possible collapse of the euro zone. Such a collapse would lead to economic turmoil and undercut demand.
Futures fell 29% from this 2012 high on Feb. 24 to $77.69 a barrel on June 28, the low for 2012.
U.S. crude prices snapped a streak of seven consecutive sessions of gains last Friday, closing down 1.32% to $91.44.
Write to John M. Biers at
Credit: By John M. Biers
Subject: Petroleum industry; Futures; Copper
Location: United States--US Iran Strait of Hormuz Persian Gulf
Company / organization: Name: Standard & Poors Corp; NAICS: 511120, 523999, 541519, 561450; Name: Navy-US; NAICS: 928110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 22, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027379455
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027379455?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil-Price Surge Is All About Iran
Author: Biers, John M
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]23 July 2012: C.7.
ProQuest document link
Abstract:
"Oil isn't trading on fundamentals the way some other commodities are because of the fact you have massive geopolitical concerns about the disruption of supply," said Ruchir Kadakia, director of global oil fundamentals for IHS Cambridge Energy Research Associates.
Full text: U.S. oil futures have rocketed up 18% over the past three weeks, sparked by escalating concerns about Iran.
The surge has outstripped advances for most other assets. Stocks and copper -- which, like oil, are strongly tied to economic growth expectations -- have seen much smaller gains. The Standard & Poor's-500 Index has increased 2.5% over that span, while Comex copper futures have climbed 3%.
But neither stocks nor copper are as dependant as oil on the Persian Gulf's Strait of Hormuz. Approximately 20% of the world's crude oil passes through the 24-mile-wide waterway near Iran. Tehran has said it will shut down the oil choke point if threatened.
A series of recent incidents have brought Iran back into the market's focus. Analysts and traders said crude prices have been bid up to account for the risk that Iran might try to cut off crude flows. They added that over the last few weeks, this risk has obscured more traditional fundamentals like anticipated global growth or the amount of barrels of crude available on the market.
"Oil isn't trading on fundamentals the way some other commodities are because of the fact you have massive geopolitical concerns about the disruption of supply," said Ruchir Kadakia, director of global oil fundamentals for IHS Cambridge Energy Research Associates.
Oil prices jumped nearly 5% on July 3 following reports of Iranian military tests and of a U.S. military buildup in the Persian Gulf. Prices rose 3.1% last Thursday after Israel accused Iran of being behind an attack that killed seven Israeli tourists in Bulgaria.
Over the past three weeks, smaller price rises have followed reports of additional U.S. warships being sent to the Gulf; the U.S. imposing additional sanctions -- and even an Indian fisherman being killed after being fired on by a U.S. Navy ship when his boat got too close.
For the markets, "the overriding concern is that there will be a war in Iran that will disrupt the Strait of Hormuz," said Phil Flynn, senior market analyst at the Price Futures Group in Chicago, a brokerage firm.
The new tensions renewed an Iranian risk premium, which had eased this spring over optimism that negotiations with Iran might resolve the situation.
Also, anxieties about Iran were trumped by fears that about Greece's debt and the possible collapse of the euro zone. Such a collapse would lead to economic turmoil and undercut demand.
Futures fell 29% from this 2012 high on Feb. 24 to $77.69 a barrel on June 28, the low for 2012.
U.S. crude prices snapped a streak of seven consecutive sessions of gains last Friday, closing down 1.32% to $91.44.
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Credit: By John M. Biers
Subject: Futures trading; Commodity prices; Crude oil
Classification: 3400: Investment analysis & personal finance; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.7
Publication year: 2012
Publication date: Jul 23, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newsp apers
Language of publication: English
Document type: News
ProQuest document ID: 1027385581
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027385581?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
China Push in Canada Is Biggest Foreign Buy; Deal Could Help China Secure Oil And Gas Supplies
Author: Hall, Simon; Welsch, Edward; Dezember, Ryan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 July 2012: n/a.
ProQuest document link
Abstract:
In its earlier U.S. deals, including tie-ups with Chesapeake Energy Corp., as well as an investment in Nexen's own Gulf of Mexico properties, Cnooc took a back seat, helping to pay for drilling for some of the oil and gas that came out of the ground. Underscoring China's growing comfort level operating in the developed world, Chinese state-controlled oil producer China Petrochemical Corp., or Sinopec, separately agreed to acquire a 49% stake in U.K. North Sea assets owned by Canada's Talisman Energy Inc. for $1.5 billion.
Full text: Cnooc Ltd. swept into Canada with its biggest-ever overseas acquisition, a $15.1 billion deal to buy one of that country's largest energy producers that reignites a debate over the role of Chinese state players in North America's energy industry.
If completed, the deal for Canada's Nexen Inc., would mark China's most ambitious push into the continent's oil and natural-gas fields. It would give Cnooc a key role in technologies reshaping the energy landscape and open the door for it to operate in North American fields alongside such oil-and-gas giants as Exxon Mobil Corp. and Statoil ASA.
The deal, approved by Nexen's board, faces government and regulatory reviews in Ottawa and Washington, D.C. Nexen has considerable operations in the U.S. Gulf of Mexico, and U.S. officials are likely to scrutinize any change of ownership there.
Even in Canada, a country more accustomed to big Chinese investment in its oil patch, the deal could face heightened scrutiny. The offer is several times larger than any previous Chinese investment in Canada and nearly equivalent to total China investment in the province of Alberta, excluding real estate, according to Gordon Houlden, head of the University of Alberta's China Institute in Edmonton. "It is another order of magnitude" from previous deals, he said.
In recent years, North American energy producers have boosted output of oil and gas, capitalizing on a series of expensive and technologically challenging extraction methods. Those include oil-sands development--a costly, energy-intensive process for separating quartz sand from huge deposits of bitumen lying just below the surface of northern Alberta.
Meanwhile, producers in the U.S. and Canada have boosted natural-gas output through innovative drilling techniques in shale-rock fields once considered uneconomical. They're also pumping oil from deep beneath the sea in the Gulf of Mexico.
While a relatively small player on the world stage, Nexen operates in all of these frontiers. It has oil-sands development in Alberta, shale gas in British Columbia and deep water leases in the Gulf of Mexico.
Nexen's Gulf of Mexico beachhead would give Cnooc a level of entry into the U.S. oil patch that has long eluded Chinese companies. In its earlier U.S. deals, including tie-ups with Chesapeake Energy Corp., as well as an investment in Nexen's own Gulf of Mexico properties, Cnooc took a back seat, helping to pay for drilling for some of the oil and gas that came out of the ground. In acquiring Nexen, Cnooc would be in the driver's seat.
It views the Nexen acquisition as a platform from which to build a North American business beyond its current role as a financial backer, according to people familiar with the deal. Cnooc envisions additional deals to expand, one of these people said.
To help cement the deal, Cnooc agreed to base its North and Central American operations in Calgary, Nexen's hometown. Cnooc executives said their focus now is to complete the Nexen deal and expand the business.
In Nexen, Cnooc would be buying a significant player in the Gulf of Mexico, with at least partial stakes in exploration areas covering 2,142 square miles, according to Bureau of Ocean Energy Management data.
Cnooc would likely file for a review by the Committee on Foreign Investment in the U.S., a group that vets proposed foreign investment in strategic industries, according to legal experts. A CFIUS review is meant to examine a potential investment's possible impact on U.S. national security. Its focus is meant to be technical not political, but legal experts said that any purchase that put large amounts of U.S. energy assets in foreign hands could raise alarm bells.
The Treasury Department, which coordinates CFIUS reviews, declined to comment.
The deal also faces scrutiny by both parties on Capitol Hill and along the presidential campaign trail.
Canada's industry minister, who is in charge of vetting big foreign investment, also must review the deal. Cnooc had alerted the Canadian government that it planned to announce a deal, but didn't engage in talks about undertakings it was ready to make, said a person familiar with the transaction.
Globally, Chinese firms have disclosed 1,414 overseas acquisitions, valued at a total of about $235 billion, since January of 2008, according to researcher Dealogic. That includes Monday's Nexen offer. Of those deals, 198, or roughly $40.6 billion, have taken place this year.
Much of China's early overseas investment targeted the developing world. More recently, state-controlled companies have been buying in Canada, the U.S. and Europe, especially following the global economic and financial crisis.
Underscoring China's growing comfort level operating in the developed world, Chinese state-controlled oil producer China Petrochemical Corp., or Sinopec, separately agreed to acquire a 49% stake in U.K. North Sea assets owned by Canada's Talisman Energy Inc. for $1.5 billion.
The Nexen deal comes seven years after Cnooc's 2005 failure to acquire Unocal Corp. for $18.5 billion. That bid quieted Chinese deal making in the U.S. for years. Cnooc officials later acknowledged the failure taught it to do a better job dealing with lobbying and public relations.
Unocal is now part of Chevron Corp.
In an interview Monday in Calgary, Cnooc Chief Executive Li Fanrong said the company's friendly agreement to buy Nexen "is a different story, unique" from the Unocal deal.
He said Cnooc has learned from that aborted deal and others since, and is now comfortable investing and operating in advanced economies like North America.
"We [have] worked with almost every single major international energy company. We learned their management best practices. We learned their technology," he said. "So over the last 30 years we built confidence in ourselves."
Cnooc agreed to pay $27.50 per share for Nexen, representing a 61% premium to its closing price Friday on the New York Stock Exchange.
It also said it would seek to list on the Toronto Stock Exchange, in addition to its listings in China and New York. It said it would keep Nexen's management and staff in place and continue with Nexen's current capital-investment plans.
Those moves could help it win Canadian government approval, which requires a potential acquirer to demonstrate a "net benefit" to Canada's economy. Another factor in its favor: Cnooc chose a company going through a spate of recent troubles, potentially making its proposed premium and promise of sustained capital especially attractive, both to shareholders and the government.
Nexen has recently struggled with a number of production-related setbacks around the world, including the loss of a key concession in Yemen. The loss caused a shake-up at the company, with several executives leaving, including in January, former Chief Executive Marvin Romanow, who had held the top job at the company for three years.
The company also suffered major equipment malfunctions and disappointing production rates for several years at its Long Lake oil sands project in Alberta.
Cnooc's first investment in Canada was in 2005 through a 17% stake in oil-sands developer MEG Energy Inc. Then last year, it made a flurry of deals, including in a small shale company in the Yukon. In the summer, it announced a $2.1 billion purchase of Nexen's bankrupt partner in the Long Lake oil sands project, OPTI Canada Inc. It also said it would join in a joint venture with Nexen in the U.S. Gulf of Mexico.
Goldman Sachs Group Inc. last year began to help Nexen explore strategic alternatives, according to people familiar with the matter. Cnooc was among the companies contacted as part of that process, but a deal didn't materialize, according to one of these people. The Chinese company then came back to Nexen in early June 2012, after deciding it wanted to launch a North American business through Nexen, the people said.
Fang Zhi, CNOOC's president, said a year of working with Nexen on Long Lake and in the Gulf of Mexico, was like a "courting" process in which Cnooc became convinced of the long-term strength of Nexen's assets, including its Long Lake oil sands project in Alberta.
"When we came and proposed, it was not a surprise to them," Mr. Fang said in an interview.
Aaron Back, Paul Vieira, Prudence Ho and Liu Li contributed to this article.
Write to Simon Hall at and Edward Welsch at
|
Credit: By Simon Hall, Edward Welsch and Ryan Dezember
Subject: Oil sands; Petroleum industry; Foreign investment; Energy management; Natural gas; Acquisitions & mergers
Location: China Canada North America
Company / organization: Name: CNOOC Ltd; NAICS: 211111; Name: Chesapeake Energy Corp; NAICS: 211111; Name: University of Alberta; NAICS: 611310; Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 23, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027386027
Document URL: https://login.ezproxy.uta.edu/login?url=https://searc h.proquest.com/docview/1027386027?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Prices Tumble 4.2%
Author: Biers, John M
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 July 2012: n/a.
ProQuest document link
Abstract:
According to a Reuters report, the army and Colombia's state oil firm Ecopetrol SA said the 220,000-barrel-a-day pipeline was attacked Saturday by members of the Revolutionary Armed Forces of Colombia, or FARC.
Full text: The oil market fell sharply, turning away from worries about Iran and news of pipeline outages, on renewed concerns about the euro zone.
Front-month oil futures settled fell 4.2% to settle at $88.14, while Brent crude futures traded down $3.54 at $103.29 a barrel.
The retreat came amid renewed concerns about the euro zone following headlines about high bond yields in Spain and more difficulties in Greece.
Phil Flynn, senior market analyst for the Price Futures Group, a futures-trading firm, said recent headlines raised new doubts over the euro zone's viability, pushing aside geopolitical concerns that preoccupied the oil market last week.
"Based on what we're hearing, it's amazing we're not down more," Mr. Flynn said.
Spain's economy weakened further during the second quarter, hit by a sharp drop in domestic demand and by intense volatility in financial markets, the Bank of Spain said Monday. In its monthly economic report, the central bank said preliminary estimates show that Spain's gross domestic product contracted 0.4% in the second quarter from the first, and dropped 1% in annual terms.
Matt Smith, an analyst at Summit Energy, said that the combination of higher Spanish bond yields with news that the so-called troika--made up of European Commission, European Central Bank and International Monetary Fund--would visit Greece is setting a "huge negative tone to the day."
The euro-zone crisis has for months stood as an albatross on the oil market because it raises concerns about the economic growth needed for energy demand. A weaker euro relative to the dollar can also depress the price of oil, which is traded in dollars. On Monday, the dollar was stronger relative to the euro.
In ruminating about the euro-zone crisis, the market turned its eyes away from the Iran story, which dominated news last week, sending prices higher for seven days in a row.
After the recent trading, Iranian geopolitical concerns "have been priced in and some stability in the Iranian risk factor is expected," said James Ritterbusch, president of the oil-trading advisory firm Ritterbusch & Associates, in a note.
Mr. Ritterbusch said that while price lows had largely been reached, "we are also leaving open the chance of a significant price selloff that could easily negate as much as 80%-90% of this month's price advance within a 2-3 week time frame."
John Kilduff, a trader at Again Capital expects oil to trade within the $82-$92 range.
IAF Advisors' Kyle Cooper said the negative sentiment about the euro could send prices back down to the mid- or upper-$70 range if it persists.
Traders also gave scant attention to news of an explosion in Turkey of a pipeline that had been carrying Iraqi oil. By Monday, the line had been partially restored, flowing 300,000 barrels a day, compared with the normal flow of 400,000-450,000 barrels.
There were also reports that the Cano-Limon pipeline in Colombia was attacked by rebels who blew up a section of the line. According to a Reuters report, the army and Colombia's state oil firm Ecopetrol SA said the 220,000-barrel-a-day pipeline was attacked Saturday by members of the Revolutionary Armed Forces of Colombia, or FARC. The line usually pumps around 80,000 barrels a day, the report said.
Front-month reformulated gasoline blendstock, or RBOB, settled at $2.883 a gallon, down six cents, while heating oil settled at $2.819 a gallon, down 10.54 cents.
Write to John M. Biers at
Credit: By John M. Biers
Subject: Euro; Pipelines; Central banks; Futures; Eurozone; Economic growth; Gross Domestic Product--GDP; Geopolitics; Petroleum industry
Location: Iran Spain Greece
Company / organization: Name: International Monetary Fund--IMF; NAICS: 522298; Name: European Central Bank; NAICS: 521110; Name: European Commission; NAICS: 928120; Name: Banco de Espana; NAICS: 521110; Name: Revolutionary Armed Forces of Colombia; NAICS: 813940
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 23, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Bus iness And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027386068
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027386068?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Sudans Discuss Concession on Oil
Author: Gross, Jenny
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 July 2012: n/a.
ProQuest document link
Abstract:
If Sudan agrees to the proposal, South Sudan said it would instruct foreign oil companies and pipeline operators to resume production of crude oil within 14 days.
Full text: South Sudan offered concessions to Sudan that would waive billions of dollars in debt and increase the amount it is willing to pay to use Sudan's oil pipelines. But Sudan said Monday it wants to tackle security issues first.
The proposal, issued Sunday during the latest round of talks in Ethiopia between the two countries, raised the possibility that they will be able to work through a deadlock and reach an agreement by the United Nations Security Council's Aug. 2 deadline.
South Sudan in late January shut its roughly 350,000 barrels of day production amid a deadlock with Sudan over oil transit fees and disputed territory.
On Saturday, South Sudan accused Sudan of launching fresh aerial bombardments along its border after a lull in fighting, and the army warned of retaliation.
South Sudan seceded from Sudan last July, but the neighbors are still working out how to share oil revenue and define borders. The U.N. has threatened sanctions if the two countries don't resolve their issues.
Rabie Abdelaty, a spokesman for Sudan, said Sudan's delegates in Ethiopia would consult with the presidency and reply to South Sudan's proposal.
South Sudan, a landlocked country, said it is willing to increase its offer on transportation fees to $9.10 a barrel for use of one major pipeline that traverses Sudan and $7.26 a barrel for another.
This offer is an increase from less than $1 a barrel South Sudan had previously said it was willing to pay, in line with international norms, but short of the $36 a barrel Sudan has demanded.
"The distance is still far away," said Mr. Abdelaty "But South Sudan has gone from less than $1 barrel a day to $9, so they are going toward the logic. This is an improvement."
In addition to raising its offer on transit fees, South Sudan is also offering to pay Sudan a net cash transfer of $3.2 billion over a period of 3½ years. South Sudan said it would finance this cash transfer through the sale of oil.
"We have tabled the proposal and are waiting for their response," said Atif Kiir, a spokesman for Juba's delegation.
South Sudan also said it would waive $500 million in lost revenue resulting from what it called Sudan's "confiscations and diversions" of South Sudanese oil. Overall, South Sudan said it is forgiving $5 billion of debt owed to it by Sudan.
In the proposal, South Sudan said it reserved the right to construct and use alternative transportation infrastructure. South Sudan is seeking to build one pipeline through Kenya and another through Ethiopia and Djibouti to avoid total reliance on Sudan to export its oil to international markets.
The African Union issued a statement Monday saying action is "desperately needed" to resolve the unfolding humanitarian crisis in Sudan and South Sudan's border regions. Amid armed conflict between the two countries, civilians in the Blue Nile and Southern Kordofan states are experiencing hunger, disease and displacement and need urgent aid, the statement said.
Write to Jenny Gross at
Credit: By Jenny Gross
Subject: Pipelines; Petroleum industry; Energy economics
Location: Sudan Ethiopia South Sudan
Company / organization: Name: United Nations Security Council; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 23, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027404298
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027404298?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street J ournal
India's State-Run Oil Firms to Raise Gasoline Prices Tuesday
Author: Sharma, Rakesh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 July 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: NEW DELHI - State-run Indian oil companies will raise gasoline prices with effect Tuesday due to a rise in benchmark Singapore prices, Indian Oil Corp. said Monday.
The prices will go up by 0.70 rupees per liter excluding state levies, India's largest state-run fuel retailer said in a statement.
Gasoline currently sells at 67.78 rupees per liter ($1.23) in New Delhi, where the price of gasoline will rise by 0.70 rupees.
Movements in the Indian currency's exchange rate against the dollar have also influenced the decision, Indian Oil said.
India's state-run fuel retailers -- Indian Oil, Hindustan Petroleum and Bharat Petroleum -- review gasoline prices every fortnight.
Write to Rakesh Sharma at
Credit: By Rakesh Sharma
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 23, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027408613
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027408613?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Chinese Inroads Into U.K. Oil Assets Make Few Waves
Author: Flynn, Alexis
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 July 2012: n/a.
ProQuest document link
Abstract:
According to company reports, Nexen and Talisman's net share of production from their fields in the U.K. in the first quarter of this year were 114,000 barrels a day of oil equivalent and 132,000 barrels a day of oil equivalent, respectively, or around 11% of the country's total.
Full text: LONDON--Planned acquisitions by two state-backed Chinese companies totaling $16.6 billion would give them roughly an 11% share of the U.K.'s oil and natural-gas production, dramatically expanding China's presence in the country's resource sector.
The deals announced Monday are the latest in a string of acquisitions aimed at sating China's hunger for foreign energy assets, but unlike past takeovers that have provoked political opposition, U.K. government and industry have initially welcomed the companies' investments.
Cnooc Ltd. unveiled a $15.1 billion deal to take over Canadian-listed Nexen Corp., which is the U.K.'s largest oil producer. Within hours, a separate deal was announced by Talisman Energy Inc., which agreed to sell 49% of its U.K. business to China Petroleum & Chemical Corp., better known as Sinopec, for $1.5 billion.
If both acquisitions pass regulatory and shareholder approval, they would give the state-backed Chinese companies a significant role in the U.K. oil-and-gas industry.
According to company reports, Nexen and Talisman's net share of production from their fields in the U.K. in the first quarter of this year were 114,000 barrels a day of oil equivalent and 132,000 barrels a day of oil equivalent, respectively, or around 11% of the country's total.
Cnooc's acquisition of Nexen would give it a particularly dominant position. Nexen operates the U.K.'s largest oil field, Buzzard, which alone produced 193,000 barrels a day in March, 21% of total U.K. oil output, according to data from the U.K. Department of Energy and Climate Change. Buzzard is a major component of the Forties crude system, which in turn is the largest element of the international oil price benchmark Dated Brent. Nexen owns 43% of Buzzard.
Nevertheless, government and industry were quick to welcome the deals and played down any risks to the security of the country's energy supply.
"The U.K. is open for business and actively welcomes inward investment to our energy sector," the DECC said in a statement.
Malcolm Webb, chief executive of industry body Oil and Gas U.K., said the deals were further confirmation of the remaining potential held in the North Sea, which is one of the world's most intensively developed oil and gas basins.
"A diverse range of investors in the province will help maximize recovery of the U.K.'s substantial remaining oil and gas resource, to the benefit of British jobs, tax revenues, export earnings and energy security," said Mr. Webb.
"Collectively, we will invest more in the U.K. than Talisman would have on its own, leading to a stronger, more sustainable business," said Talisman Chief Executive John Manzoni.
The leader of the U.K.'s main offshore workers' union, Jake Molloy, also welcomed the deals, but stressed the need for the new firms to continue to invest in maintaining the structural integrity of some of the North Sea's oldest offshore installations.
Despite the scale and suddenness of the Chinese acquisitions, the government said the deals would be treated no differently. "All operators of U.K.-based oil and gas infrastructure are required to meet our tough domestic regulatory standards," the DECC said.
Paul Stevens, an energy expert at London think tank Chatham House, said fears that the deals posed a risk to U.K. security of energy supply were overblown.
Oil produced by the companies would simply go onto the open market, and wouldn't affect U.K. supplies any more than if Nexen and Talisman had done similar deals with other foreign firms, he said.
Chinese companies already have a significant presence in other U.K. resource sectors. In 2010, a Chinese consortium acquired three local U.K. electricity networks that distribute around a third of the power in the country.
Last year, a consortium led by Cheung Kong Infrastructure Holdings Ltd. bought the U.K.'s Northumbrian Water Group PLC, which provides water and sewerage services to 4.5 million people. Guangdong Nuclear Power Holding Co. of China and France's Areva SA are making a joint bid to develop nuclear power plants in the U.K.
Selina Williams and James Herron contributed to this article.
Credit: By Alexis Flynn
Subject: Acquisitions & mergers; Petroleum industry; Energy policy; Oil sands
Location: China United Kingdom--UK
Company / organization: Name: China Petroleum & Chemical Corp; NAICS: 211111; Name: Talisman Energy Inc; NAICS: 211111; Name: CNOOC Ltd; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 23, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027448258
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027448258?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The Hunt to Unlock Oil Sands; In Canada, Radiowaves and Heating Coils Are Among Efforts Used to Extract Sticky Petroleum From Rock
Author: Welsch, Edward
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 July 2012: n/a.
ProQuest document link
Abstract:
"If we postulated that 25% of that can be recovered, Canada could move to No. 1" in world oil reserves, said Glen Schmidt, chief executive of privately owned Calgary energy-technology company Laricina Energy Ltd. Laricina is one of several companies including Royal Dutch Shell PLC, Athabasca Oil Corp. and Husky Energy Inc. that are adapting SAGD technology to rock formations like the Grosmont and trying out new enhancements to cut the use of fresh water and energy, which will bring down the overall cost and greenhouse gas emissions of operations there.
Full text: ALBERTA, Canada--Ten years ago, new oil field technologies unlocked vast crude supplies from western Canada's oil-sands deposits, propelling America's northern neighbor to the top echelon of the world's petroleum repositories.
Now oil companies here are experimenting with technologies that could unlock even more reserves from what is some of the world's heaviest and stickiest petroleum. The new technologies could also drive down the cost of producing oil in Canada.
One consortium aims to get oil flowing to the surface by sending radio waves from huge antennae pushed through wells deep underground--adopting technology first developed for the U.S. government to eavesdrop on underground bunkers.
Another company is working on inserting electrical heating coils into wells to melt the oil, while other firms are tinkering with petroleum-based solvents they hope to pump into wells to get more oil out.
All the experimentation is aimed at improving a standard method of oil-sands extraction: so-called steam-assisted gravity drainage, or SAGD.
(That is pronounced "Sag-Dee" in industry parlance.) That technology is itself a recent breakthrough--essentially injecting superheated steam into wells to heat deposits of sticky bitumen, a form of petroleum, making it liquid enough to be pumped to the surface.
The technology was commercialized in Canada's northern Alberta province early last decade, and helped enable oil companies to tap deeper oil-sands reserves. For decades, most oil-sands development had more in common with strip mining than conventional oil drilling. Companies dig up a mix of bitumen and quartz sand and wash the sludge down with hot water to extract the bitumen.
SAGD quintupled the amount of bitumen that may be possible to recover in Canada, and helped lift Canada's overall recoverable oil reserves to No. 3 in the world, behind Saudi Arabia and Venezuela.
But those reserves are only a 10th of the 1.7 trillion barrels of bitumen found in Canada. Alberta's Energy Resources Conservation Board estimates there are also more than 400 billion barrels of bitumen trapped in carbonate rock formations in Alberta, mostly in a large formation called the Grosmont that stretches across the center of the province.
"If we postulated that 25% of that can be recovered, Canada could move to No. 1" in world oil reserves, said Glen Schmidt, chief executive of privately owned Calgary energy-technology company Laricina Energy Ltd.
Laricina is one of several companies including Royal Dutch Shell PLC, Athabasca Oil Corp. and Husky Energy Inc. that are adapting SAGD technology to rock formations like the Grosmont and trying out new enhancements to cut the use of fresh water and energy, which will bring down the overall cost and greenhouse gas emissions of operations there. While SAGD doesn't gobble up as much surface area as conventional oil-sands mining, it still uses lots of energy and water. That makes it expensive and carries a big greenhouse-gas footprint.
Basic SAGD technology uses two horizontal wells drilled parallel to each other, one above the other. Natural gas is used to boil water into steam, which is injected underground into the top well. The steam heats and softens the bitumen, separating it from the sand, causing it to drip down to the bottom well, which sucks it back up.
Laricina is part of a consortium including large Canadian energy companies Suncor Energy Inc. and Nexen Inc. that is testing replacing the steam with an antenna, developed by Melbourne, Fla., telecommunications-equipment manufacturer Harris Corp. After being fed down a well, the antenna blasts out heat, warming the bitumen.
Nexen announced Monday that Chinese international energy company Cnooc Ltd. plans to acquire it for $15.1 billion.
Mr. Schmidt said early tests show the technology could cut energy use by 40%. It also removes the high upfront costs of water treatment and steam generation facilities. That could cut the cost the cost of SAGD production, which is currently around $55 to $65 a barrel for most projects.
"If we eliminate steam, we eliminate potentially 60% of the cost of a facility, which is huge," he said. The technology could be ready as soon as 2019.
The antenna project got started back in 2008, when Harris was working on technology aimed at improving underground listening capabilities for the U.S. government.
As part of its research, Harris executives sought out oil field experts experienced in horizontal drilling techniques.
"We were trying to gain access to underground facilities, underground locations, so we had to bring in people who had specialties in horizontal drilling," Wes Covell, a Harris vice president, said. He declined to be more specific about what he said was a classified project.
Harris executives had an epiphany when the drilling experts mentioned the Canadian oil industry's problem of getting energy-efficient heat to travel down horizontal wells into the bitumen reservoirs deep underground.
Harris and other antenna designers try to reduce electromagnetic heat as much as possible to improve the efficiency of a radio antenna for communication. Harris "realized that we can take our antennae and instead of using them for communications, we can use them as a source of electromagnetic energy that generates heat," Mr. Covell said.
Athabasca Oil, another big Canadian oil producer, is testing a similar electric-heating technology to unlock bitumen from carbonate rock. The company inserts electric coils, made of the same material as heating elements on a stovetop, into wells. If tests are successful, Athabasca plans to start a commercial project for its technology by 2018.
Laricina and several other companies are also testing adding light hydrocarbon solvents to steam in SAGD wells to boost output. The solvent dilutes bitumen, making it easier to flow.
Cenovus Energy Inc. is working on a solvent project that could be rolled out commercially in 2017.
Jason Abbate, head of production engineering at one of Cenovus' projects, said solvent technology could increase oil production rates by up to 25% and cut the amount of steam and natural gas use by up to 30%. It could also improve the percentage of oil that producers can capture from bitumen deposits.
"If you can get 80% to 90% of that rather than the regular 70% with SAGD, there's a big economic benefit for us," Mr. Abbate said.
Write to Edward Welsch at
Credit: By Edward Welsch
Subject: Oil reserves; Oil sands; Petroleum industry
Location: United States--US Canada
Company / organization: Name: Husky Energy Inc; NAICS: 213111; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Laricina Energy Ltd; NAICS: 211111; Name: Energy Resources Conservation Board; NAICS: 924120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 23, 2012
column: Next in Tech
Section: Tech
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027448262
Document URL: https://logi n.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027448262?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
China Push in Canada Is Biggest Foreign Buy; Deal Could Help China Secure Oil And Gas Supplies
Author: Hall, Simon; Welsch, Edward; Dezember, Ryan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 July 2012: n/a.
ProQuest document link
Abstract:
In its earlier U.S. deals, including tie-ups with Chesapeake Energy Corp., as well as an investment in Nexen's own Gulf of Mexico properties, Cnooc took a back seat, helping to pay for drilling for some of the oil and gas that came out of the ground. Underscoring China's growing comfort level operating in the developed world, Chinese state-controlled oil producer China Petrochemical Corp., or Sinopec, separately agreed to acquire a 49% stake in U.K. North Sea assets owned by Canada's Talisman Energy Inc. for $1.5 billion.
Full text: Cnooc Ltd. swept into Canada with China's biggest overseas acquisition yet, a $15.1 billion deal to buy one of that country's largest energy producers that reignites a debate over the role of Chinese state players in North America's energy industry.
If completed, the deal for Canada's Nexen Inc., would mark China's most ambitious push into the continent's oil and natural-gas fields. It would give Cnooc a key role in technologies reshaping the energy landscape and open the door for it to operate in North American fields alongside such oil-and-gas giants as Exxon Mobil Corp. and Statoil ASA.
The deal, approved by Nexen's board, faces government and regulatory reviews in Ottawa and Washington, D.C. Nexen has considerable operations in the U.S. Gulf of Mexico, and U.S. officials are likely to scrutinize any change of ownership there.
Even in Canada, a country more accustomed to big Chinese investment in its oil patch, the deal could face heightened scrutiny. The offer is several times larger than any previous Chinese investment in Canada and nearly equivalent to total China investment in the province of Alberta, excluding real estate, according to Gordon Houlden, head of the University of Alberta's China Institute in Edmonton. "It is another order of magnitude" from previous deals, he said.
In recent years, North American energy producers have boosted output of oil and gas, capitalizing on a series of expensive and technologically challenging extraction methods. Those include oil-sands development--a costly, energy-intensive process for separating quartz sand from huge deposits of bitumen lying just below the surface of northern Alberta.
Meanwhile, producers in the U.S. and Canada have boosted natural-gas output through innovative drilling techniques in shale-rock fields once considered uneconomical. They are also pumping oil from deep beneath the sea in the Gulf of Mexico.
While a relatively small player on the world stage, Nexen operates in all of these frontiers. It has oil-sands development in Alberta, shale gas in British Columbia and deep water leases in the Gulf of Mexico.
Nexen's Gulf of Mexico beachhead would give Cnooc a level of entry into the U.S. oil patch that has long eluded Chinese companies. In its earlier U.S. deals, including tie-ups with Chesapeake Energy Corp., as well as an investment in Nexen's own Gulf of Mexico properties, Cnooc took a back seat, helping to pay for drilling for some of the oil and gas that came out of the ground. In acquiring Nexen, Cnooc would be in the driver's seat.
It views the Nexen acquisition as a platform from which to build a North American business beyond its current role as a financial backer, according to people familiar with the deal. Cnooc envisions additional deals to expand, one of these people said.
To help cement the deal, Cnooc agreed to base its North and Central American operations in Calgary, Nexen's hometown. Cnooc executives said their focus now is to complete the Nexen deal and expand the business.
In Nexen, Cnooc would be buying a significant player in the Gulf of Mexico, with at least partial stakes in exploration areas covering 2,142 square miles, according to Bureau of Ocean Energy Management data.
Cnooc would likely seek a review by the Committee on Foreign Investment in the U.S., a group that vets proposed foreign investment in strategic industries, according to legal experts. A CFIUS review is meant to examine a potential investment's possible impact on U.S. national security. Its focus is meant to be technical not political, but legal experts said that any purchase that put large amounts of U.S. energy assets in foreign hands could raise alarm bells.
The Treasury Department, which coordinates CFIUS reviews, declined to comment.
The deal also faces scrutiny by both parties on Capitol Hill and along the presidential campaign trail.
Canada's industry minister, who is in charge of vetting big foreign investment, also must review the deal. Cnooc had alerted the Canadian government that it planned to announce a deal, but didn't engage in talks about undertakings it was ready to make, said a person familiar with the transaction.
Globally, Chinese firms have disclosed 1,414 overseas acquisitions, valued at a total of about $235 billion, since January of 2008, according to researcher Dealogic. That includes Monday's Nexen offer. Of those deals, 198, or roughly $40.6 billion, have taken place this year.
Much of China's early overseas investment targeted the developing world. More recently, state-controlled companies have been buying in Canada, the U.S. and Europe, especially following the global economic and financial crisis.
Underscoring China's growing comfort level operating in the developed world, Chinese state-controlled oil producer China Petrochemical Corp., or Sinopec, separately agreed to acquire a 49% stake in U.K. North Sea assets owned by Canada's Talisman Energy Inc. for $1.5 billion.
The Nexen deal comes seven years after Cnooc's 2005 failure to acquire Unocal Corp. for $18.5 billion. That bid quieted Chinese deal making in the U.S. for years. Cnooc officials later acknowledged the failure taught it to do a better job dealing with lobbying and public relations.
Unocal is now part of Chevron Corp.
In an interview Monday in Calgary, Cnooc Chief Executive Li Fanrong said the company's friendly agreement to buy Nexen "is a different story, unique" from the Unocal deal.
He said Cnooc has learned from that aborted deal and others since, and is now comfortable investing and operating in advanced economies like North America.
"We [have] worked with almost every single major international energy company. We learned their management best practices. We learned their technology," he said. "So over the last 30 years we built confidence in ourselves."
Cnooc agreed to pay $27.50 per share for Nexen, representing a 61% premium to its closing price Friday on the New York Stock Exchange.
It also said it would seek to list on the Toronto Stock Exchange, in addition to its listings in China and New York. It said it would keep Nexen's management and staff in place and continue with Nexen's current capital-investment plans.
Those moves could help it win Canadian government approval, which requires a potential acquirer to demonstrate a "net benefit" to Canada's economy. Another factor in its favor: Cnooc chose a company going through a spate of recent troubles, potentially making its proposed premium and promise of sustained capital especially attractive, both to shareholders and the government.
Nexen has recently struggled with a number of production-related setbacks around the world, including the loss of a key concession in Yemen. The loss caused a shake-up at the company, with several executives leaving, including in January, former Chief Executive Marvin Romanow, who had held the top job at the company for three years.
The company also suffered major equipment malfunctions and disappointing production rates for several years at its Long Lake oil sands project in Alberta.
Cnooc's first investment in Canada was in 2005 through a 17% stake in oil-sands developer MEG Energy Inc. Then last year, it made a flurry of deals, including in a small shale company in the Yukon. In the summer, it announced a $2.1 billion purchase of Nexen's bankrupt partner in the Long Lake oil sands project, OPTI Canada Inc. It also said it would join in a joint venture with Nexen in the U.S. Gulf of Mexico.
Goldman Sachs Group Inc. last year began to help Nexen explore strategic alternatives, according to people familiar with the matter. Cnooc was among the companies contacted as part of that process, but a deal didn't materialize, according to one of these people. The Chinese company then came back to Nexen in early June 2012, after deciding it wanted to launch a North American business through Nexen, the people said.
Fang Zhi, CNOOC's president, said a year of working with Nexen on Long Lake and in the Gulf of Mexico, was like a "courting" process in which Cnooc became convinced of the long-term strength of Nexen's assets, including its Long Lake oil sands project in Alberta.
"When we came and proposed, it was not a surprise to them," Mr. Fang said in an interview.
Canadian Prime Minister Stephen Harper has actively courted Beijing recently, following a surprise rejection by the White House earlier this year of a pipeline expansion that would greatly increase Canadian crude exports to the U.S. Without a significant alternative market for Canada's fast-rising output, Mr. Harper's Conservative party government has pushed a number projects to pipe oil westward, where it could be loaded onto tankers bound for Asia.
Cnooc is China's largest offshore oil producer by output, but it has been less active on the deals front recently than rivals such as Sinopec and China National Petroleum Corp., or CNPC. Beijing last year shuffled the top ranks at the oil companies, shifting Chairman Wang Yilin from CNPC and sending former Cnooc head and deal maker Fu Chengyu to Sinopec, underscoring the heavy involvement Beijing's policy makers have in the companies' affairs.
Cnooc currently produces nearly 1 million barrels of oil and gas-equivalent a day, about a fifth of which comes from its overseas operations. The company is moving now under the leadership of a relatively new chairman and CEO. Unlike his predecessor, the deal-making, Western-educated former executive who last year became chairman of Sinopec, Mr. Wang holds a lower profile. He took on the top job in April 2011.
Mr. Li, the chief executive, was educated at least partly in the U.K. He has also interacted more with representatives from foreign companies, including Statoil and Chevron. A longtime Cnooc executive, Mr. Li, about 49 years old, was named chief executive in November.
Aaron Back, Paul Vieira, Prudence Ho and Liu Li contributed to this article.
Write to Simon Hall at and Chip Cummins at
|
Credit: By Simon Hall, Edward Welsch and Ryan Dezember
Subject: Oil sands; Petroleum industry; Foreign investment; Energy management; Natural gas; Acquisitions & mergers
Location: China Canada North America
Company / organization: Name: Chesapeake Energy Corp; NAICS: 211111; Name: University of Alberta; NAICS: 611310; Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 24, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027463454
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027463454?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Sudans Discuss Concession On Oil
Author: Gross, Jenny
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]24 July 2012: A.8.
ProQuest document link
Abstract:
The proposal, issued Sunday during the latest round of talks in Ethiopia between the two countries, raised the possibility that they will be able to work through a deadlock and reach an agreement by the United Nations Security Council's Aug. 2 deadline.
Full text: South Sudan offered concessions to Sudan that would waive billions of dollars in debt and increase the amount it is willing to pay to use Sudan's oil pipelines. But Sudan said Monday it wants to tackle security issues first.
The proposal, issued Sunday during the latest round of talks in Ethiopia between the two countries, raised the possibility that they will be able to work through a deadlock and reach an agreement by the United Nations Security Council's Aug. 2 deadline.
South Sudan in late January shut its roughly 350,000 barrels of day production amid a deadlock with Sudan over oil transit fees and disputed territory.
On Saturday, South Sudan accused Sudan of launching fresh aerial bombardments along its border after a lull in fighting, and the army warned of retaliation.
South Sudan seceded from Sudan last July, but the neighbors are still working out how to share oil revenue and define borders. The U.N. has threatened sanctions if the two countries don't resolve their issues.
Rabie Abdelaty, a spokesman for Sudan, said Sudan's delegates in Ethiopia would consult with the presidency and reply to South Sudan's proposal.
South Sudan, a landlocked country, said it is willing to increase its offer on transportation fees to $9.10 a barrel for use of one major pipeline that traverses Sudan and $7.26 a barrel for another.
This offer is an increase from less than $1 a barrel South Sudan had previously said it was willing to pay, in line with international norms, but short of the $36 a barrel Sudan has demanded.
"The distance is still far away," said Mr. Abdelaty "But South Sudan has gone from less than $1 barrel a day to $9, so they are going toward the logic. This is an improvement."
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Credit: By Jenny Gross
Subject: Petroleum industry; International relations
Location: Sudan Ethiopia South Sudan
Company / organization: Name: United Nations Security Council; NAICS: 928120
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.8
Publication year: 2012
Publication date: Jul 24, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027496968
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027496968?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-1 9
Database: The Wall Street Journal
Next In Tech: The Hunt for Better Ways to Unlock Oil Sands --- In Canada, Radio Waves and Heating Coils Are Among Efforts Used to Extract Sticky Petroleum From Rock
Author: Welsch, Edward
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]24 July 2012: B.7.
ProQuest document link
Abstract:
"If we postulated that 25% of that can be recovered, Canada could move to No. 1" in world oil reserves, said Glen Schmidt, chief executive of privately owned Calgary energy-technology company Laricina Energy Ltd. Laricina is one of several companies including Royal Dutch Shell PLC, Athabasca Oil Corp. and Husky Energy Inc. that are adapting SAGD technology to rock formations and trying out new enhancements to cut the use of fresh water and energy.
Full text: ALBERTA, Canada -- Ten years ago, new oil field technologies unlocked vast crude supplies from western Canada's oil-sands deposits, propelling America's northern neighbor to the top echelon of the world's petroleum repositories.
Now oil companies here are experimenting with technologies that could unlock even more reserves from what is some of the world's heaviest and stickiest petroleum. The new technologies could also drive down the cost of producing oil in Canada.
One consortium aims to get oil flowing to the surface by sending radio waves from huge antennae pushed through wells deep underground -- adopting technology first developed for the U.S. government to eavesdrop on underground bunkers.
Another company is working on inserting electrical heating coils into wells to melt the oil, while other firms are tinkering with petroleum-based solvents they hope to pump into wells to get more oil out.
All the experimentation is aimed at improving a standard method of oil-sands extraction: so-called steam-assisted gravity drainage, or SAGD.
That technology is itself a recent breakthrough -- essentially injecting superheated steam into wells to heat deposits of sticky bitumen, a form of petroleum, making it liquid enough to be pumped to the surface.
SAGD quintupled the amount of bitumen that may be possible to recover in Canada, and helped lift Canada's overall recoverable oil reserves to No. 3 in the world, behind Saudi Arabia and Venezuela.
But those reserves are only a 10th of the 1.7 trillion barrels of bitumen found in Canada. Alberta's Energy Resources Conservation Board estimates there are also more than 400 billion barrels of bitumen trapped in carbonate rock formations in Alberta.
"If we postulated that 25% of that can be recovered, Canada could move to No. 1" in world oil reserves, said Glen Schmidt, chief executive of privately owned Calgary energy-technology company Laricina Energy Ltd.
Laricina is one of several companies including Royal Dutch Shell PLC, Athabasca Oil Corp. and Husky Energy Inc. that are adapting SAGD technology to rock formations and trying out new enhancements to cut the use of fresh water and energy.
Laricina is part of a consortium including large Canadian energy companies Suncor Energy Inc. and Nexen Inc. that is testing replacing the steam with an antenna, developed by Melbourne, Fla., telecommunications-equipment manufacturer Harris Corp. After being fed down a well, the antenna blasts out heat, warming the bitumen.
Mr. Schmidt said early tests show the technology could cut energy use by 40%. It also removes the high upfront costs of water treatment and steam generation facilities. That could cut the cost the cost of SAGD production, which is currently around $55 to $65 a barrel for most projects.
The technology could be ready as soon as 2019.
The antenna project got started back in 2008, when Harris was working on technology aimed at improving underground listening capabilities for the U.S. government.
As part of its research, Harris executives sought out oil field experts experienced in horizontal drilling techniques.
Wes Covell, a Harris vice president, declined to be more specific about what he said was a classified project.
Harris executives had an epiphany when the drilling experts mentioned the Canadian oil industry's problem of getting energy-efficient heat to travel down horizontal wells into the bitumen reservoirs deep underground.
Harris "realized that we can take our antennae and instead of using them for communications, we can use them as a source of electromagnetic energy that generates heat," Mr. Covell said.
Athabasca Oil, another big Canadian oil producer, is testing a similar electric-heating technology to unlock bitumen from carbonate rock. The company inserts electric coils, made of the same material as heating elements on a stovetop, into wells. If tests are successful, Athabasca plans to start a commercial project for its technology by 2018.
Laricina and several other companies are also testing adding light hydrocarbon solvents to steam in SAGD wells to boost output. The solvent dilutes bitumen, making it easier to flow.
Cenovus Energy Inc. is working on a project that could be rolled out commercially in 2017.
Jason Abbate, head of production engineering at one of Cenovus' projects, said solvent technology could increase oil production rates by up to 25% and cut the amount of steam and natural gas use by up to 30%.
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Credit: By Edward Welsch
Subject: Oil reserves; Petroleum industry; Innovations; Oil sands; Enhanced oil recovery
Location: United States--US Canada
Company / organization: Name: Nexen Inc; NAICS: 211111; Name: Suncor Energy Inc; NAICS: 211111, 213112; Name: Husky Energy Inc; NAICS: 213111; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Energy Resources Con servation Board; NAICS: 924120; Name: Laricina Energy Ltd; NAICS: 211111
Classification: 9180: International; 5400: Research & development; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.7
Publication year: 2012
Publication date: Jul 24, 2012
Section: Technology
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027504624
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027504624?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The Hunt to Unlock Oil Sands; In Canada, Radiowaves and Heating Coils Are Among Efforts Used to Extract Sticky Petroleum From Rock
Author: Welsch, Edward
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 July 2012: n/a.
ProQuest document link
Abstract:
"If we postulated that 25% of that can be recovered, Canada could move to No. 1" in world oil reserves, said Glen Schmidt, chief executive of privately owned Calgary energy-technology company Laricina Energy Ltd. Laricina is one of several companies including Royal Dutch Shell PLC, Athabasca Oil Corp. and Husky Energy Inc. that are adapting SAGD technology to rock formations like the Grosmont and trying out new enhancements to cut the use of fresh water and energy, which will bring down the overall cost and greenhouse gas emissions of operations there.
Full text: ALBERTA, Canada--Ten years ago, new oil field technologies unlocked vast crude supplies from western Canada's oil-sands deposits, propelling America's northern neighbor to the top echelon of the world's petroleum repositories.
Now oil companies here are experimenting with technologies that could unlock even more reserves from what is some of the world's heaviest and stickiest petroleum. The new technologies could also drive down the cost of producing oil in Canada.
One consortium aims to get oil flowing to the surface by sending radio waves from huge antennae pushed through wells deep underground--adopting technology first developed for the U.S. government to eavesdrop on underground bunkers.
Another company is working on inserting electrical heating coils into wells to melt the oil, while other firms are tinkering with petroleum-based solvents they hope to pump into wells to get more oil out.
All the experimentation is aimed at improving a standard method of oil-sands extraction: so-called steam-assisted gravity drainage, or SAGD.
(That is pronounced "Sag-Dee" in industry parlance.) That technology is itself a recent breakthrough--essentially injecting superheated steam into wells to heat deposits of sticky bitumen, a form of petroleum, making it liquid enough to be pumped to the surface.
The technology was commercialized in Canada's northern Alberta province early last decade, and helped enable oil companies to tap deeper oil-sands reserves. For decades, most oil-sands development had more in common with strip mining than conventional oil drilling. Companies dig up a mix of bitumen and quartz sand and wash the sludge down with hot water to extract the bitumen.
SAGD quintupled the amount of bitumen that may be possible to recover in Canada, and helped lift Canada's overall recoverable oil reserves to No. 3 in the world, behind Saudi Arabia and Venezuela.
But those reserves are only a 10th of the 1.7 trillion barrels of bitumen found in Canada. Alberta's Energy Resources Conservation Board estimates there are also more than 400 billion barrels of bitumen trapped in carbonate rock formations in Alberta, mostly in a large formation called the Grosmont that stretches across the center of the province.
"If we postulated that 25% of that can be recovered, Canada could move to No. 1" in world oil reserves, said Glen Schmidt, chief executive of privately owned Calgary energy-technology company Laricina Energy Ltd.
Laricina is one of several companies including Royal Dutch Shell PLC, Athabasca Oil Corp. and Husky Energy Inc. that are adapting SAGD technology to rock formations like the Grosmont and trying out new enhancements to cut the use of fresh water and energy, which will bring down the overall cost and greenhouse gas emissions of operations there. While SAGD doesn't gobble up as much surface area as conventional oil-sands mining, it still uses lots of energy and water. That makes it expensive and carries a big greenhouse-gas footprint.
Basic SAGD technology uses two horizontal wells drilled parallel to each other, one above the other. Natural gas is used to boil water into steam, which is injected underground into the top well. The steam heats and softens the bitumen, separating it from the sand, causing it to drip down to the bottom well, which sucks it back up.
Laricina is part of a consortium including large Canadian energy companies Suncor Energy Inc. and Nexen Inc. that is testing replacing the steam with an antenna, developed by Melbourne, Fla., telecommunications-equipment manufacturer Harris Corp. After being fed down a well, the antenna blasts out heat, warming the bitumen.
Nexen announced Monday that Chinese international energy company Cnooc Ltd. plans to acquire it for $15.1 billion.
Mr. Schmidt said early tests show the technology could cut energy use by 40%. It also removes the high upfront costs of water treatment and steam generation facilities. That could cut the cost the cost of SAGD production, which is currently around $55 to $65 a barrel for most projects.
"If we eliminate steam, we eliminate potentially 60% of the cost of a facility, which is huge," he said. The technology could be ready as soon as 2019.
The antenna project got started back in 2008, when Harris was working on technology aimed at improving underground listening capabilities for the U.S. government.
As part of its research, Harris executives sought out oil field experts experienced in horizontal drilling techniques.
"We were trying to gain access to underground facilities, underground locations, so we had to bring in people who had specialties in horizontal drilling," Wes Covell, a Harris vice president, said. He declined to be more specific about what he said was a classified project.
Harris executives had an epiphany when the drilling experts mentioned the Canadian oil industry's problem of getting energy-efficient heat to travel down horizontal wells into the bitumen reservoirs deep underground.
Harris and other antenna designers try to reduce electromagnetic heat as much as possible to improve the efficiency of a radio antenna for communication. Harris "realized that we can take our antennae and instead of using them for communications, we can use them as a source of electromagnetic energy that generates heat," Mr. Covell said.
Athabasca Oil, another big Canadian oil producer, is testing a similar electric-heating technology to unlock bitumen from carbonate rock. The company inserts electric coils, made of the same material as heating elements on a stovetop, into wells. If tests are successful, Athabasca plans to start a commercial project for its technology by 2018.
Laricina and several other companies are also testing adding light hydrocarbon solvents to steam in SAGD wells to boost output. The solvent dilutes bitumen, making it easier to flow.
Cenovus Energy Inc. is working on a solvent project that could be rolled out commercially in 2017.
Jason Abbate, head of production engineering at one of Cenovus' projects, said solvent technology could increase oil production rates by up to 25% and cut the amount of steam and natural gas use by up to 30%. It could also improve the percentage of oil that producers can capture from bitumen deposits.
"If you can get 80% to 90% of that rather than the regular 70% with SAGD, there's a big economic benefit for us," Mr. Abbate said.
Write to Edward Welsch at
Credit: By Edward Welsch
Subject: Oil reserves; Oil sands; Petroleum industry
Location: United States--US Canada
Company / organization: Name: Husky Energy Inc; NAICS: 213111; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Laricina Energy Ltd; NAICS: 211111; Name: Energy Resources Conservation Board; NAICS: 924120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 24, 2012
column: Next in Tech
Section: Tech
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027596482
Document URL: https://logi n.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027596482?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Chinese Oil Companies' Deal Appetite to Grow
Author: Spegele, Brian; Ma, Wayne
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 July 2012: n/a.
ProQuest document link
Abstract:
The Chinese companies hope that over the long term they will gain the breadth of western rivals such as Exxon Mobil Corp. and BP PLC, which have assets around the globe and a presence in broad swaths of the business, from offshore oil production to cutting-edge sources like shale gas and refineries.
Full text: BEIJING--Cnooc Ltd. shook up the oil patch on Monday with its $15.1 billion deal to acquire Canada's Nexen Inc. There's likely to be more shaking to come.
China's other state-controlled oil and natural gas companies will likely seek their own increasingly ambitious deals amid stagnant energy supplies at home and pressure from both Beijing and investors to add to reserves, according to industry watchers. The result could be higher prices industrywide for lucrative producing properties, as sellers hold out for better offers.
"All the majors are looking to acquire, and if someone is out there being a lot more aggressive than you are, it makes people who are trying to sell hold on for a higher price, even if there's no chance the Chinese will buy them," said Laban Yu, head of oil and gas research at Jefferies Hong Kong Ltd., a securities and investment-banking firm. By overinvesting, he added, "China is essentially subsidizing oil for the whole world."
Deals are likely to focus on areas outside the Middle East and other oil-rich but potentially unstable regions, as Beijing's policy makers and Chinese oil-company executives alike worry about supply cutoffs. Roughly half of China's crude-oil imports come from the Middle East, and it is also heavily dependent on crude output from Angola, Venezuela and Russia.
Should it meet regulatory concerns in a number of countries and close the Nexen deal, Cnooc would win significant resources in Canada, the Gulf of Mexico, the North Sea and offshore western Africa.
The Nexen deal reflects Chinese state-controlled energy companies' desire to boost reserves immediately. Many of their major domestic initiatives remain years away. Cnooc's ambitions to drill in the South China Sea are complicated by drilling costs that can reach $100 million per deepwater well, according to analysts, as well as elevated political tensions over continuing territorial claims to the waters by China, Vietnam, the Philippines and others. China is also only in the earliest stages of exploring shale gas, which is trapped in rock formations and is plentiful but difficult to extract.
Cnooc has set a target to grow its oil-and-gas output by between 6% and 10% annually between 2011 and 2015. This means the company would need to produce between 419 million and 486 million barrels of oil and gas a year by 2015, up from 331.8 million barrels in 2011.
"If you completely rely on exploration, there could be a performance gap between Cnooc's maturing oil fields and the resumption of production growth," said Gordon Kwan, head of energy research for Mirae Asset Securities in Hong Kong.
A sustained focus on North American acquisitions also comes as Beijing has faced growing pressure from the U.S. and Europe to reduce imports from Iran, traditionally one of its most important suppliers.
The companies have more than China's energy needs in mind. While their strategic direction is guided by Beijing, Chinese oil-company executives also face pressure to increase profits and reserves for investors as well as a Chinese public that sees the companies as national assets. The U.S.-traded shares of Cnooc and its rivals, China Petroleum & Chemical Corp.--known as Sinopec--and PetroChina, the publicly traded arm of China National Petroleum Corp., are all down more than 10% over the past year, in part on growth concerns.
Cnooc's deal for Nexen suggests rising prices for energy-producing properties, though comparisons with past deals can be tricky because of the different conditions of the assets. The company's $2.1 billion deal last year for Calgary-based Opti Canada carried a value of about $11 per barrel in proven reserves, which compares with $17 for the Nexen deal, excluding debt. But analysts said the valuations behind the Nexen deal still made sense for Cnooc because it prices the reserves more cheaply than the ones Cnooc currently holds.
The Chinese companies hope that over the long term they will gain the breadth of western rivals such as Exxon Mobil Corp. and BP PLC, which have assets around the globe and a presence in broad swaths of the business, from offshore oil production to cutting-edge sources like shale gas and refineries. Though they have broadened their assets through deals and expansions in recent years, Cnooc and rivals Sinopec and CNPC are still more narrowly focused on particular facets of the industry, such as offshore production for Cnooc and refining for Sinopec.
China's overall crude output is stagnating. It rose just 0.3% to 203.65 million metric tons, or 1.49 billion barrels, in 2011 from a year earlier, according to customs data. The National Development and Reform Commission, China's main economic planning body, has projected that crude output will remain flat in 2012.
The latest Nexen deal is almost certain to reignite a long-running debate over China's role in the North American energy sector.
On one hand, Nexen's crude, particularly in the short term, will likely continue to be sold in local markets because it won't be as profitable to sell the crude back to China, according to analysts.
Canada, however, is in the process of building up its infrastructure, so it has the option of shipping production to its west coast with an eye toward exporting oil and gas to Asia.
Write to Brian Spegele at and Wayne Ma at
Credit: By Brian Spegele And Wayne Ma
Subject: Oil reserves; Petroleum industry; Energy policy; Prices; Energy economics; Natural gas utilities; Natural gas reserves
Location: China Canada Middle East
Company / organization: Name: CNOOC Ltd; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 24, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027600375
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027600375?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
China's Canadian Energy Play; Alberta's oil sands will be developed, no matter what U.S. greens say.
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 July 2012: n/a.
ProQuest document link
Abstract:
[...]as extraction technology has improved, Canada's proven oil reserves have climbed to at least 180 billion barrels, putting it behind only Saudi Arabia and Venezuela.
Full text: President Obama may not want to exploit the energy buried in Canada's Alberta oil sands, but China sure does. Think of Monday's $15.1 billion offer by China's state-owned Cnooc to buy Canadian energy giant Nexen as a post-Keystone XL Pipeline bid to replace the U.S. as Canada's biggest energy investor and market.
Nexen offers Cnooc a sweeping North American energy footprint, with assets from heavy oil and shale gas in Alberta to offshore leases in the Gulf of Mexico. Part of the bet is also on Canadian politics, which could block the investment on nationalist grounds but which so far hasn't been captured by the anticarbon fevers that dominate Washington.
Canada seems to understand that its resources are a gift that can raise national prosperity. And as extraction technology has improved, Canada's proven oil reserves have climbed to at least 180 billion barrels, putting it behind only Saudi Arabia and Venezuela.
Unlike the U.S., Ottawa cedes most energy decisions to the provinces, which have encouraged production. A decade ago Alberta reduced to 1% the royalty that companies must pay until they have earned back their capital costs; then the rate reverts to 25%. The incentive kick-started the oil sands investment boom.
Canada is also looking for oil from shale, drilling in the Arctic, and even producing in the Atlantic--offshore of Nova Scotia, within spitting distance of Maine. All of this has produced a gusher of oil, tax revenue and jobs. The oil sands alone are estimated to have accounted for one-third of Canada's economic growth in 2010 and 2011, according to Canada's national statistical agency.
Contrast that to the U.S., where President Obama has spent tens of billions on failed green energy schemes while making fossil-fuel exploration harder. This week the White House issued a veto threat against a House bill that would restore pre-Obama plans to allow greater offshore exploration. Alaska oil production is so low that there are worries about the viability of its pipeline. Shell Oil, which has plowed $4.5 billion into an Arctic investment, has been waiting the entire Obama Presidency for permits. The EPA is also waiting for a second term to impose national regulations on shale fracking.
Mr. Obama's rejection of the $7 billion Keystone XL has no doubt concentrated Chinese and Canadian minds. The pipeline would have moved oil from Canada and North Dakota to refineries on the Gulf Coast, and Mr. Obama's bow to American greens was a direct snub to Canada, which provides nearly 30% of U.S. imports. Prime Minister Stephen Harper promptly said that Canada needs to diversify its energy markets, perhaps by building a pipeline from Alberta to the West Coast to export to Asia.
Energy-hungry China couldn't be happier. Chinese bids for North American companies haven't always been welcomed--see the rejection last year of a Chinese consortium's $38.6 billion hostile bid for Canada's Potash Corp. But Cnooc executives might figure that Canadian regulators will be more welcoming to this nonhostile bid in the wake of the Keystone fiasco. Canada needs capital to exploit the oil sands and the markets to buy what is produced. Cnooc can help with both.
The lesson for America, and especially Democrats, is that Canada's oil sands will be developed, whether their green financiers like it or not. If the U.S. doesn't want the oil, China and the rest of Asia will gladly take it. The world wants to grow--must grow to reduce poverty--and it needs abundant, cheap energy to do it. Why is that so hard for some Americans to understand?
Subject: Oil sands; Pipelines; Petroleum industry; Oil reserves; Petroleum production; Hostile takeovers; Capital costs
Location: Arctic region China Canada United States--US Gulf of Mexico
Company / organization: Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: CNOOC Ltd; NAICS: 211111; Name: Environmental Protection Agency--EPA; NAICS: 924110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 24, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027609097
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027609097?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Gulf of Mexico Access Could Offer Oil Riches
Author: González, Ángel; Welsch, Edward
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 July 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: While Cnooc Ltd.'s $15.1-billion takeover offer for Nexen Inc. would give the Chinese energy producer operational control of a significant Canadian oil-sands field operator, the deal would also catapult it into the driver's seat in some of the Western world's richest frontiers, from the U.S. Gulf of Mexico to the North Sea.
The deal still faces a potentially lengthy regulatory and government review in Canada, and it could also attract scrutiny in the U.S., where Nexen is among the largest lease holders in the Gulf of Mexico.
But if the deal is consummated, Cnooc would be the first Chinese company to control and operate offshore oil fields in the Gulf region, a strategically and environmentally-sensitive area that is the source of roughly one quarter of U.S. crude oil production.
It is a prize Beijing-based Cnooc coveted as far back as 2005, when it launched an ultimately unsuccessful bid to buy U.S. oil production and refining company Unocal Corp., which was later swallowed up by Chevron Corp.
Energy consulting firm Wood Mackenzie pegs the value of Nexen's Gulf of Mexico operations at about 10% of the total value of Cnooc's offer price--about $1.6 billion. Currently, most of its participation is that of a passive partner with international oil companies such as Royal Dutch Shell PLC, Chevron, Norway's Statoil ASA and BHP Billiton.
But Cnooc executives aim to use those assets as a platform for further deals, according to people familiar with the situation.
Roughly half of its Gulf assets, by value, are located in the so-called Jurassic play--an emerging trend of deep-water discoveries. Nexen has worked together with Shell. Currently a frontier area, it could be a significant source of production for the central Gulf of Mexico, said Norm Pokutylowicz, a Wood Mackenzie analyst.
"By acquiring Nexen, Cnooc gets a foothold in the Jurassic development, which has a lot of upside potential," Mr. Pokutylowicz said.
Another big chunk of Nexen's Gulf assets--roughly a third of its holdings by value--lie in the Knotty Head development. Nexen operates its interests there--meaning it makes the project's big decisions on where to drill and how much oil to pump. It also takes on the lion's share of responsibility if anything goes wrong.
Nexen also is an active explorer in the Gulf, with stakes in over 200 blocks, mostly in the central Gulf of Mexico, which is where most of the Gulf's infrastructure lies.
Cnooc would also get Nexen's operations in the North Sea, which include the Buzzard oil platform. It produced 85,000 barrels of oil a day from the North Sea last year. The Golden Eagle platform under development in the North Sea is also expected to add 26,000 barrels of oil a day to Nexen's operations in 2014.
Nexen's Usan offshore oil platform off the West coast of Africa also began production this year. The project, a joint venture with France's Total SA, will provide up to 36,000 barrels of oil a day to Nexen.
Nexen also has shale gas properties under development in British Columbia, Colombia and Poland.
Ryan Dezember contributed to this article.
Write to Edward Welsch at
Credit: By Ángel González And Edward Welsch
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 24, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027613822
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027613822?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The Cnooc-Nexen Deal: Gulf of Mexico Access Could Offer Oil Riches
Author: Gonzalez, Angel; Welsch, Edward
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]25 July 2012: B.4.
ProQuest document link
Abstract:
While Cnooc Ltd.'s $15.1-billion takeover offer for Nexen Inc. would give the Chinese energy producer operational control of a significant Canadian oil-sands field operator, the deal would also catapult it into the driver's seat in some of the Western world's richest frontiers, from the U.S. Gulf of Mexico to the North Sea.
Full text: While Cnooc Ltd.'s $15.1-billion takeover offer for Nexen Inc. would give the Chinese energy producer operational control of a significant Canadian oil-sands field operator, the deal would also catapult it into the driver's seat in some of the Western world's richest frontiers, from the U.S. Gulf of Mexico to the North Sea.
The deal still faces a potentially lengthy regulatory and government review in Canada, and it could also attract scrutiny in the U.S., where Nexen is among the largest lease holders in the Gulf of Mexico.
But if the deal is consummated, Cnooc would be the first Chinese company to control and operate offshore oil fields in the Gulf region, a strategically and environmentally-sensitive area that is the source of roughly one quarter of U.S. crude oil production.
It is a prize Beijing-based Cnooc coveted as far back as 2005, when it launched an ultimately unsuccessful bid to buy U.S. oil production and refining company Unocal Corp., which was later swallowed up by Chevron Corp.
Energy consulting firm Wood Mackenzie pegs the value of Nexen's Gulf of Mexico operations at about 10% of the total value of Cnooc's offer price -- about $1.6 billion. Currently, most of its participation is that of a passive partner with international oil companies such as Royal Dutch Shell PLC, Chevron, Norway's Statoil ASA and BHP Billiton.
But Cnooc executives aim to use those assets as a platform for further deals, according to people familiar with the situation.
Roughly half of its Gulf assets, by value, are located in the so-called Jurassic play -- an emerging trend of deep-water discoveries. Nexen has worked together with Shell. Currently a frontier area, it could be a significant source of production for the central Gulf of Mexico, said Norm Pokutylowicz, a Wood Mackenzie analyst.
"By acquiring Nexen, Cnooc gets a foothold in the Jurassic development, which has a lot of upside potential," Mr. Pokutylowicz said.
Another big chunk of Nexen's Gulf assets -- roughly a third of its holdings by value -- lie in the Knotty Head development. Nexen operates its interests there -- meaning it makes the project's big decisions on where to drill and how much oil to pump. It also takes on the lion's share of responsibility if anything goes wrong.
Nexen also is an active explorer in the Gulf, with stakes in over 200 blocks, mostly in the central Gulf of Mexico, which is where most of the Gulf's infrastructure lies.
Cnooc would also get Nexen's operations in the North Sea, which include the Buzzard oil platform. It produced 85,000 barrels of oil a day from the North Sea last year. The Golden Eagle platform under development in the North Sea is also expected to add 26,000 barrels of oil a day to Nexen's operations in 2014.
Nexen's Usan offshore oil platform off the West coast of Africa also began production this year. The project, a joint venture with France's Total SA, will provide up to 36,000 barrels of oil a day to Nexen.
Nexen also has shale gas properties under development in British Columbia, Colombia and Poland.
---
Ryan Dezember contributed to this article.
Subscribe to WSJ:
Credit: By Angel Gonzalez and Edward Welsch
Subject: Petroleum industry; Oil sands; Tender offers
Location: United States--US Canada North Sea
Company / organization: Name: BHP Billiton; NAICS: 211111, 212231, 212234; Name: Royal Dutch Shell PLC; NAICS: 324110 , 213112, 221210; Name: Unocal Corp; NAICS: 211111, 324110; Name: CNOOC Ltd; NAICS: 211111; Name: Nexen Inc; NAICS: 211111
Classification: 9180: International; 2330: Acquisitions & mergers; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.4
Publication year: 2012
Publication date: Jul 25, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027664018
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027664018?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Tullow, Cnooc, Total Plan Africa Oil Hub
Author: Flynn, Alexis
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 July 2012: n/a.
ProQuest document link
Abstract:
LONDON--Tullow Oil PLC, China's Cnooc Ltd. and France's Total SA could invest up to $5 billion building pipelines to form a regional hub for transporting crude oil from Uganda and Kenya to world markets, Tullow said Wednesday.
Full text: LONDON--Tullow Oil PLC, China's Cnooc Ltd. and France's Total SA could invest up to $5 billion building pipelines to form a regional hub for transporting crude oil from Uganda and Kenya to world markets, Tullow said Wednesday.
The ambitious plans of U.K.-listed Tullow and its partners underscore East Africa's potential to become a major new exporter of energy later this decade. In addition to the oil found in Uganda and Kenya, major gas discoveries have been made in their southern neighbors Tanzania and Mozambique.
U.K.-listed Tullow, which also Wednesday reported a 66% surge in first-half net profit to $546.2 million, said the three oil companes are "studying potential routes and design for an export pipeline" with an anticipated total cost of "$2.5 billion to $5 billion, depending upon the route, design and throughput." The upper-range cost be for building a regional hub to transport crude from Uganda and Kenya to be exported from Africa's east coast, Tullow said.
Tullow in February concluded a long-delayed deal to sell Cnooc and Total each a one-third stake in three Ugandan exploration areas, paving the way for some $10 billion of investment in the country's nascent oil sector. The three companies are progressing in efforts to pump oil from the huge reserves discovered on the shores of Lake Albert. Early production is expected to start by 2013, with a major expansion phase in 2016.
Tullow said its plans for the export pipeline will also be influenced by a recent oil discovery in Kenya, where the Ngamia-1 well has so far delivered promising indications that the country holds crude reserves similar to those of its neighbor Uganda.
Tullow will expand its Kenyan exploration in light of these recent developments. It had originally scheduled a single drilling rig to be in operation there until the end of the year, but will now commission another two to probe around 100 prospects in the country, said head of exploration, Angus McCoss.
An export pipeline is "an integral part of the upstream development" in East Africa, said Tullow Chief Operating Officer Paul McDade, adding that a wide range of options are being considered.
"Cnooc and Total have a regional perspective, and we have to look at all options," he said. "The obvious route is through northern Kenya, with a spear to Lake Albert."
Total also has oil interests in South Sudan, which borders Uganda and Kenya.
Costs for developing the pipeline are likely to be split three ways, Mr. McDade said, given that each of the partners holds equity of a third in the Ugandan oil discoveries.
However, Tullow does not plan to invest in a 20,000 barrel-a-day refinery that the Ugandan government wants built to supply fuel to the local market.
"We've always said we don't want to be involved in the midstream and the downstream," said Mr. McDade. "Cnooc and Total have technical skills here that they could use [to develop the refinery]."
Tullow shares were lower in morning trading, off 4.1% as the market reacted to its reducing its estimates of recoverable oil at its TEN project in Ghana. Total was off 0.1% on Euronext. Cnooc ended trading in Hong Kong nearly unchanged on the day.
Write to Alexis Flynn at
Credit: By Alexis Flynn
Subject: Pipelines; Petroleum industry; Oil reserves; Oil sands
Location: China Tanzania France Mozambique United Kingdom--UK Uganda Kenya Lake Albert East Africa
Company / organization: Name: CNOOC Ltd; NAICS: 211111; Name: Tullow Oil PLC; NAICS: 211111; Name: Total SA; NAICS: 211111, 324110, 447190
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 25, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027717998
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027717998?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Shell, Cnooc to Explore for Oil Off China, Gabon
Author: Ma, Wayne; Flynn, Alexis
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 July 2012: n/a.
ProQuest document link
Abstract:
The offshore deals come on the heels of a megadeal on Monday by Cnooc's listed unit, Cnooc Ltd., to purchase Canadian oil-and-gas producer Nexen Inc. for $15.1 billion in part to gain operational expertise and to ensure China's energy security.
Full text: BEIJING--Royal Dutch Shell PLC Wednesday signaled its return to offshore exploration in China when it signed three deals with China National Offshore Oil Corp., or Cnooc Group, to explore for oil and gas off both China and West Africa.
The offshore deals come on the heels of a megadeal on Monday by Cnooc's listed unit, Cnooc Ltd., to purchase Canadian oil-and-gas producer Nexen Inc. for $15.1 billion in part to gain operational expertise and to ensure China's energy security.
Shell signed two production-sharing contracts with Cnooc to explore a pair of offshore oil blocks in the Yinggehai Basin, marking Shell's return to Chinese shores after nearly 10 years absence, Shell spokeswoman Li Lusha said.
The blocks, 62/02 and 62/17, lie between Vietnam and Hainan island in the highly contentious South China Sea. The blocks are on the Chinese side of the maritime boundary and aren't in disputed waters, Ms. Li said.
Meanwhile, Shell also signed an agreement to explore for oil and gas off the coast of Gabon in West Africa with Cnooc. Under the deal, whose financial terms weren't disclosed, Cnooc will acquire a 25% stake in a pair of offshore exploration blocks, BC9 and BCD10. Cnooc will reimburse Shell for a quarter of the western oil major's past exploration costs and partially pay for future exploration. The blocks are in water between 1,200 and 2,100 meters deep and are considered deep-water assets, Ms. Li said.
Shell, along with France's Total SA, is one of the biggest oil producers in the tiny nation of Gabon, which pumps around 240,000 barrels a day of crude. Shell has operated in the country since the early 1960s after it discovered oil in the Gamba area. It currently produces about 65,000 barrels a day of crude from five fields.
Cnooc has been trying to improve its deep-water expertise and technology by inviting foreign partners to jointly develop deep-water blocks in the South China Sea. In June, it made nine offshore blocks available for joint development with foreign companies. Analysts, however, were skeptical that foreign partners would participate because the blocks were located in what Vietnam said were disputed waters.
Cnooc also has been trying to develop its own deep-water abilities. In May, the company began operating its first deep-water drilling rig capable of operating at a depth of 3,000 meters.
Credit: By Wayne Ma And Alexis Flynn
Subject: Petroleum industry; Oil sands
Location: Vietnam China Gabon South China Sea West Africa
Company / organization: Name: Nexen Inc; NAICS: 211111; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Total SA; NAICS: 211111, 324110, 447190; Name: CNOOC Ltd; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 25, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027743589
DocumentURL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027743589?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
China's Canadian Energy Play; Alberta's oil sands will be developed, no matter what U.S. greens say.
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 July 2012: 9.
ProQuest document link
Abstract:
[...]as extraction technology has improved, Canada's proven oil reserves have climbed to at least 180 billion barrels, putting it behind only Saudi Arabia and Venezuela.
Full text: President Obama may not want to exploit the energy buried in Canada's Alberta oil sands, but China sure does. Think of Monday's $15.1 billion offer by China's state-owned Cnooc to buy Canadian energy giant Nexen as a post-Keystone XL Pipeline bid to replace the U.S. as Canada's biggest energy investor and market.
Nexen offers Cnooc a sweeping North American energy footprint, with assets from heavy oil and shale gas in Alberta to offshore leases in the Gulf of Mexico. Part of the bet is also on Canadian politics, which could block the investment on nationalist grounds but which so far hasn't been captured by the anticarbon fevers that dominate Washington.
Canada seems to understand that its resources are a gift that can raise national prosperity. And as extraction technology has improved, Canada's proven oil reserves have climbed to at least 180 billion barrels, putting it behind only Saudi Arabia and Venezuela.
Unlike the U.S., Ottawa cedes most energy decisions to the provinces, which have encouraged production. A decade ago Alberta reduced to 1% the royalty that companies must pay until they have earned back their capital costs; then the rate reverts to 25%. The incentive kick-started the oil sands investment boom.
Canada is also looking for oil from shale, drilling in the Arctic, and even producing in the Atlantic--offshore of Nova Scotia, within spitting distance of Maine. All of this has produced a gusher of oil, tax revenue and jobs. The oil sands alone are estimated to have accounted for one-third of Canada's economic growth in 2010 and 2011, according to Canada's national statistical agency.
Contrast that to the U.S., where President Obama has spent tens of billions on failed green energy schemes while making fossil-fuel exploration harder. This week the White House issued a veto threat against a House bill that would restore pre-Obama plans to allow greater offshore exploration. Alaska oil production is so low that there are worries about the viability of its pipeline. Shell Oil, which has plowed $4.5 billion into an Arctic investment, has been waiting the entire Obama Presidency for permits. The EPA is also waiting for a second term to impose national regulations on shale fracking.
Mr. Obama's rejection of the $7 billion Keystone XL has no doubt concentrated Chinese and Canadian minds. The pipeline would have moved oil from Canada and North Dakota to refineries on the Gulf Coast, and Mr. Obama's bow to American greens was a direct snub to Canada, which provides nearly 30% of U.S. imports. Prime Minister Stephen Harper promptly said that Canada needs to diversify its energy markets, perhaps by building a pipeline from Alberta to the West Coast to export to Asia.
Energy-hungry China couldn't be happier. Chinese bids for North American companies haven't always been welcomed--see the rejection last year of a Chinese consortium's $38.6 billion hostile bid for Canada's Potash Corp. But Cnooc executives might figure that Canadian regulators will be more welcoming to this nonhostile bid in the wake of the Keystone fiasco. Canada needs capital to exploit the oil sands and the markets to buy what is produced. Cnooc can help with both.
The lesson for America, and especially Democrats, is that Canada's oil sands will be developed, whether their green financiers like it or not. If the U.S. doesn't want the oil, China and the rest of Asia will gladly take it. The world wants to grow--must grow to reduce poverty--and it needs abundant, cheap energy to do it. Why is that so hard for some Americans to understand?
Subject: Oil sands; Pipelines; Petroleum industry; Oil reserves; Petroleum production; Hostile takeovers; Capital costs
Location: Arctic region China Canada United States--US Gulf of Mexico
Company / organization: Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: CNOOC Ltd; NAICS: 211111; Name: Environmental Protection Agency--EPA; NAICS: 924110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: 9
Publication year: 2012
Publication date: Jul 26, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027769923
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027769923?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Repsol Profit Falls on Lower Oil Prices
Author: Brat, Ilan; Guerrero, Jean
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 July 2012: n/a.
ProQuest document link
Abstract:
In early May, the government of Argentina, led by President Cristina Kirchner, nationalized 51% of YPF, the country's leading oil and gas company that was formerly controlled by Repsol, leaving the Spanish company with a 12% stake. Since the nationalization, Repsol has cut its dividend payout ratio and committed to slashing its debt load to protect its investment-grade credit rating.
Full text: MADRID--Spanish oil company Repsol SA said Thursday its second-quarter net profit, excluding the recently-nationalized Argentine unit, fell 45% on the year as higher production in Libya and elsewhere couldn't offset the effect of lower oil and gas prices.
The lower prices weighed on the value of Repsol's inventory, which pressured net profit. Excluding the discontinued operations of the nationalized YPF SA unit, net profit fell to [euro]274 million ($333 million) in the three months ended June 30 from [euro]495 million a year earlier, missing analysts' average forecast for [euro]411.5 million. Including the discontinued YPF operations, net profit fell 58% to [euro]244 million.
Total revenue was [euro]14.02 billion compared with [euro]13.1 billion a year earlier.
Repsol said production of oil and gas in the second quarter increased 8%, to 320,000 barrels of oil-equivalent a day, bolstered by the restoration of Libyan production and higher output in Bolivia.
Operations restarted late last year in Libya after ceasing in early 2011 for the duration of that country's civil war. Operations there have returned to prewar levels and are now at 47,000 barrels of oil-equivalent a day.
Recurring replacement-cost-adjusted net profit, the figure most closely watched by analysts because it strips out volatile swings in the value of inventories, increased 27% to [euro]481 million from [euro]380 million a year earlier, excluding YPF.
Repsol's higher production, and higher prices than the Henry Hub benchmark that Repsol is getting for its gas, helped spur the results. A weakening of the euro against the dollar year-on-year also contributed to better adjusted figures.
In early May, the government of Argentina, led by President Cristina Kirchner, nationalized 51% of YPF, the country's leading oil and gas company that was formerly controlled by Repsol, leaving the Spanish company with a 12% stake.
Since the nationalization, Repsol has cut its dividend payout ratio and committed to slashing its debt load to protect its investment-grade credit rating. The company said recently that it is studying the sale of some or all of its liquefied natural gas business.
Write to Ilan Brat and Jean Guerrero at ilan.brat@wsj.com and jean.guerrero@dowjones.com
Credit: By Ilan Brat and Jean Guerrero
Subject: Petroleum industry; Corporate profits; Nationalization
Location: Libya
Company / organization: Name: YPF SA; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 26, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027863372
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027863372?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
One-Time Gain Boosts Exxon's Net Profit
Author: González, Ángel; Stynes, Tess
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 July 2012: n/a.
ProQuest document link
Abstract:
ConocoPhillips on Wednesday reported its second-quarter earnings fell 33% during its first quarterly reporting period as a pure-play exploration and production company, as its performance was hit by lower oil and natural-gas prices.
Full text: Exxon Mobil Corp.'s second-quarter earnings rose 49% on a net gain related to divestments and tax-related items, though exploration and production profits fell on lower energy prices and production.
The world's largest publicly traded oil company reported earnings of $15.9 billion, or $3.41 a share, up from $10.68 billion, or $2.18 a share, a year earlier. The figure, a record for the company, includes $7.5 billion in gains from the sale of Japanese refining and chemical assets and tax-related items.
Revenue increased 1.5% to $127.36 billion.
Analysts polled by Thomson Reuters projected earnings of $1.95 a share on revenue of $115.08 billion. Analysts with Simmons & Co. said that after taking out the asset sales and tax bump, earnings of $1.80 per share were disappointing.
"Relative to our expectations, production volumes were disappointing and natural gas realizations lagged market indicators," the Simmons analysts said in a research note.
Big oil companies have been expected to report lower second-quarter earnings this week, as a global economic slowdown triggered a sharp drop in prices toward the end of the reporting period. And although the one-time items pushed Exxon's earnings higher, its earnings from the sale of oil and gas, down 2.4%, clearly followed that trend.
A decline in oil and gas production, down 5.6%, contributed to the drop, and so did a weak environment for natural-gas prices in the U.S. Irving, Texas-based Exxon, the largest natural-gas producer in the U.S. after its acquisition in 2010 of XTO Energy Inc., saw its U.S. oil and gas profits drop by more than half to $678 million from $1.4 billion in the same period last year. The drop was somewhat offset by an increase in international oil and gas earnings, which rose to $7.68 billion from $7.1 billion last year.
Downstream earnings saw a $5.3 billion bump from last year, entirely due to the restructuring of Exxon's Japan operations. Higher margins, which analysts expected to contribute significantly due to the drop in oil prices, were offset by operating expenses, foreign currency moves and one-time tax items.
Chemical earnings may have accounted for some of the earnings disappointment, said Raymond James analyst Pavel Molchanov. Disregarding asset-sales gains, the segment, which has been pushed up recently by low natural-gas prices in North America, brought in some $820 million, below Raymond James's expectations of $1.2 billion, Mr. Molchanov said. "If it were not for the chemicals issue, I think earnings would have been in line," he said.
The company said weaker margins, unfavorable foreign-currency effects and other items had an impact on chemical earnings.
Exxon, which has been criticized for its large bets on natural gas in the midst of a market glut for the commodity, reduced its capital spending in the U.S. significantly from last year. The company invested $2.6 billion in its U.S. upstream unit, down from $4 billion in the same period last year. In contrast, its international spending grew to $5.7 billion from $5.3 billion.
During the quarter, Exxon Mobil repurchased 60 million common shares at a cost of $5 billion to reduce shares outstanding.
ConocoPhillips Wednesday reported its second-quarter earnings fell 33% during its first quarterly reporting period as a pure-play exploration-and-production company. Its performance was hit by lower oil and natural-gas prices. Chevron Corp., the second largest U.S. oil company after Exxon, is set to report its second-quarter results Friday.
Meanwhile, Royal Dutch Shell PLC on Thursday posted worse-than-expected second-quarter earnings, as higher oil and gas output failed to compensate for weaker energy prices and slack consumer demand.
Brent-crude prices averaged 7% less than in the corresponding period last year, but it was lower U.S. natural-gas prices that particularly dented profit at Europe's largest energy firm.
London-based Shell blamed the poor global macroeconomic environment for the near 13% fall in adjusted profit. Net profit, meanwhile, fell 53.1% to $4.06 billion. The Anglo-Dutch energy company said its profit on the basis of clean current cost of supplies, a keenly watched figure that strips out gains or losses from inventories and other nonoperating items, was $5.72 billion in the three months ended June 30, compared with $6.55 billion in the second quarter of 2011. This was below expectations of $6.46 billion in a Dow Jones Newswires poll of eight analysts.
Revenue was $119.89 billion, compared with $124.56 billion in the second quarter of 2011.
Alexis Flynn contributed to this article.
Write to Tess Stynes at
Credit: By Ángel González And Tess Stynes
Subject: Petroleum industry; Stock prices; Financial performance; Corporate profits; Divestments
Location: United States--US Japan
Company / organization: Name: Chevron Corp; NAICS: 211111, 324110; Name: Thomson Reuters; NAICS: 511110, 511140; Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 26, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027869899
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027869899?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
For Exxon, Natural Gas Becomes a Costly Burden
Author: Fowler, Tom; Gold, Russell
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 July 2012: n/a.
ProQuest document link
Abstract:
The oil and natural-gas production boom sweeping the U.S. may be good for the country's economic health, but it hasn't recently been much help to energy giant Exxon Mobil Corp. Lackluster second-quarter financial results from Exxon's U.S. oil and natural-gas production cast a shadow on the record global profit the company reported Thursday.
Full text: The oil and natural-gas production boom sweeping the U.S. may be good for the country's economic health, but it hasn't recently been much help to energy giant Exxon Mobil Corp.
Lackluster second-quarter financial results from Exxon's U.S. oil and natural-gas production cast a shadow on the record global profit the company reported Thursday.
With its 2010 purchase of natural-gas driller XTO Energy, Exxon became the biggest gas producer in the country--shortly before natural-gas prices began heading toward 10-year lows. Exxon, based in Irving, Texas, said Thursday it believes its $31 billion purchase was a strong strategic move and is optimistic that natural-gas prices will rebound.
But analysts continue to question the deal as it weighed on the company's U.S. earnings and appears set to do the same for more quarters to come. Exxon spent about 29% of its capital expenditures on U.S. drilling operations but generated only 4% of its profit in this segment.
Exxon reported second-quarter net income of $15.9 billion, up from $10.68 billion a year earlier and a quarterly record for the company. It appears to be a record for any U.S. company under current accounting rules, according to Howard Silverblatt, a senior analyst with Standard & Poor's.
About $7.5 billion of that profit, however, came from asset sales--including the disposal of some of Exxon's Japanese refining business--and tax-related losses. Without those items, profit totaled $8.4 billion, or $1.80 per share, below most analysts' estimates.
Revenue rose 1.5% to $127.36 billion.
Exxon's U.S. exploration-and-production business reported profit down 53% to $678 million because of lower natural-gas and oil prices. Its U.S. refining business reported an improvement thanks in part to those same lower prices, with refining profit up 13.6% to $834 million. But chemical profit fell 20% to $494 million.
Exxon's XTO acquisition was meant to bolster its reserves and give it exposure to the growing business of extracting natural gas from shale formations in the U.S. Natural-gas prices have fallen due to excess domestic production, dipping below $2 per million British thermal units earlier this year before rebounding to just above $3.
The company said earlier this year it had made the purchase knowing that gas prices would decline, but Exxon CEO Rex Tillerson told analysts this spring he hadn't expected the persistence of the U.S. economic slump, which dented demand for natural gas.
Analysts have raised concerns about whether Exxon would have to write down the value of its natural-gas reserves given persistently low prices, as Encana Corp. of Canada did Wednesday to the tune of $1.7 billion.
David Rosenthal, Exxon's vice president of investor relations, said Thursday the company erred on the conservative side when valuing its reserves and didn't anticipate the need to revise them.
Other major oil and gas companies have been hurt by lower oil and gas prices, but few of the big diversified companies appear to be feeling the impact as much as Exxon, which reduced gas as a percentage of its overall energy production to under 47% in the second quarter, down from over 51% in the first quarter.
Chevron Corp., which reports earnings Friday, has just 31% of its U.S. production from natural gas, while BP PLC, which reports Tuesday, has 42%. About 45% of Royal Dutch Shell PLC 's U.S. production is natural gas; the company reported Thursday that its net profit fell 53% to $4.06 billion because of poor global economic conditions and lower oil and gas prices.
Exxon said most of the drilling rigs it had under contract in the U.S. during the second quarter were drilling for oil or liquids used in chemical manufacturing, rather than natural gas. The company emphasized that it was ramping up oil projects in the U.S., including in North Dakota's Bakken Shale, where it is now producing about 32,000 barrels of oil equivalent per day, double the output from a year ago.
The company continues to invest heavily in the U.S. despite declining production revenues. It spent $2.66 billion in the second quarter on oil-and-gas exploration in the U.S., down from $4.08 billion in the same quarter last year when Exxon expanded its stake in the Marcellus Shale in the eastern U.S., but up 23% from the third quarter of 2011. The company started drilling two exploration wells in the deepwater Gulf of Mexico.
Companies need to continue to invest in production, even when prices are weak, said Fadel Gheit, an analyst with Oppenheimer & Co.
"Most large companies are facing an uphill battle, maintaining, let alone growing production," Mr. Gheit said. "Replacing reserves at a competitive cost is the most critical issue facing these companies."
Exxon stock closed up 1.3% at $86.52 on the record global profit, lifting its market capitalization to $404.6 billion.
Alexis Flynn and Daniel Gilbert contributed to this story.
Write to Tom Fowler at and Russell Gold at
Credit: By Tom Fowler And Russell Gold
Subject: Oil reserves; Petroleum industry; Natural gas reserves; Oil sands
People: Tillerson, Rex W
Company / organization: Name: Standard & Poors Corp; NAICS: 511120, 523999, 541519, 561450; Name: Exxon Mobil Corp; NAICS: 211111, 447110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 26, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1027936821
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1027936821?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
For Exxon, Natural Gas Becomes a Costly Burden
Author: Fowler, Tom; Gold, Russell
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]27 July 2012: B.1.
ProQuest document link
Abstract:
The oil and natural-gas production boom sweeping the U.S. may be good for the country's economic health, but it hasn't recently been much help to energy giant Exxon Mobil Corp. Lackluster second-quarter financial results from Exxon's U.S. oil and natural-gas production cast a shadow on the record global profit the company reported Thursday.
Full text: The oil and natural-gas production boom sweeping the U.S. may be good for the country's economic health, but it hasn't recently been much help to energy giant Exxon Mobil Corp.
Lackluster second-quarter financial results from Exxon's U.S. oil and natural-gas production cast a shadow on the record global profit the company reported Thursday.
With its 2010 purchase of natural-gas driller XTO Energy, Exxon became the biggest gas producer in the country -- shortly before natural-gas prices began heading toward 10-year lows. Exxon, based in Irving, Texas, said it believes its $31 billion purchase was a strong strategic move and is optimistic that natural-gas prices will rebound.
But analysts continue to question the deal as it weighed on the company's U.S. earnings and appears set to do the same for more quarters to come. Exxon spent about 29% of its capital expenditures on U.S. drilling operations but generated only 4% of its profit in this segment.
Exxon reported second-quarter net income of $15.9 billion, up from $10.68 billion a year earlier and a quarterly record for the company. It appears to be a record for any U.S. company under current accounting rules, according to Howard Silverblatt, a Standard & Poor's analyst.
About $7.5 billion of that profit, however, came from asset sales -- including the disposal of some of Exxon's Japanese refining business -- and tax-related losses. Without those items, profit totaled $8.4 billion, or $1.80 per share, below most analysts' estimates.
Revenue rose 1.5% to $127.36 billion.
Exxon's U.S. exploration-and-production business reported profit down 53% to $678 million because of lower natural-gas and oil prices.
Exxon's XTO acquisition was meant to bolster its reserves and give it exposure to the growing business of extracting natural gas from shale formations in the U.S. Natural-gas prices have fallen due to excess domestic production, dipping below $2 per million British thermal units earlier this year before rebounding to just above $3.
The company said earlier this year it had made the purchase knowing that gas prices would decline, but Exxon CEO Rex Tillerson told analysts this spring he hadn't expected the persistence of the U.S. economic slump, which dented demand for natural gas.
Analysts have raised concerns about whether Exxon would have to write down the value of its natural-gas reserves given persistently low prices, as Encana Corp. of Canada did Wednesday to the tune of $1.7 billion.
David Rosenthal, Exxon's vice president of investor relations, said Thursday the company erred on the conservative side when valuing its reserves and didn't anticipate the need to revise them.
Other major oil and gas companies have been hurt by lower prices, but few of the big diversified companies appear to be feeling the impact as much as Exxon, which reduced gas as a percentage of its overall energy production to under 47% in the second quarter, down from over 51% in the first quarter.
Chevron Corp., which reports earnings Friday, has just 31% of its U.S. production from natural gas, while BP PLC, which reports Tuesday, has 42%. About 45% of Royal Dutch Shell PLC 's U.S. production is natural gas; the company reported Thursday that its net profit fell 53% to $4.06 billion because of poor global economic conditions and lower oil and gas prices.
Exxon emphasized that it was ramping up oil projects in the U.S., including in North Dakota's Bakken Shale, where it is now producing about 32,000 barrels of oil equivalent per day, double the output from a year ago.
The company continues to invest heavily in the U.S. despite declining production revenues. It spent $2.66 billion in the second quarter on oil-and-gas exploration in the U.S., down from $4.08 billion in the same quarter last year when Exxon expanded its stake in the Marcellus Shale, but up 23% from the third quarter of 2011.
Companies need to continue to invest in production, even when prices are weak, said Fadel Gheit, an analyst with Oppenheimer & Co.
"Most large companies are facing an uphill battle, maintaining, let alone growing production," Mr. Gheit said. "Replacing reserves at a competitive cost is the most critical issue facing these companies."
Exxon stock closed up 1.3% at $86.52 on the record global profit, lifting its market capitalization to $404.6 billion.
---
Alexis Flynn and Daniel Gilbert contributed to this story.
Subscribe to WSJ:
Credit: By Tom Fowler and Russell Gold
Subject: Oil reserves; Petroleum industry; Natural gas reserves; Financial performance; Corporate profits; Natural gas
Location: United States--US
People: Tillerson, Rex W
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Classification: 9190: United States; 8510: Petroleum industry; 3400: Investment analysis & personal finance
Publication title: Wall Street Jo urnal, Eastern edition; New York, N.Y.
Pages: B.1
Publication year: 2012
Publication date: Jul 27, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1028004195
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1028004195?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
China Moves to Contain Cooking-Oil Prices
Author: Chuin-Wei Yap; Chun Han Wong
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 July 2012: n/a.
ProQuest document link
Abstract:
The government remains watchful that pork prices in China may rebound in the second half of the year as corn and soymeal costs soar, said Ma Wenfeng, an analyst with Beijing Orient Agri-business Consultant Co. In November 2010, the National Development and Reform Commission asked edible-oil producers to cap prices in an informal moratorium that eventually lasted 10 months, part of efforts to roll back inflation.\n
Full text: BEIJING--China is taking steps to contain the price of cooking oil, according to a major producer, in a sign of Beijing's unease amid a slowing economy and political uncertainty.
Singapore-based producer Wilmar International Ltd. said on Friday that the Chinese government has advised edible-oil producers in China to avoid raising prices "unless absolutely necessary." Wilmar and another company, state-owned China National Cereals, Oils & Foodstuffs Corp., known as Cofco, control about 70% of China's retail cooking oil market.
"There is no control on cooking oil prices," said a spokeswoman for Wilmar, which operates in China as Yihai Kerry Group. "However, the government has advised that companies should avoid increasing prices unless it is absolutely necessary."
The move falls short of an outright price cap like the one officials put in place two years ago, when inflation was surging. But price growth has been ebbing since. In June, China's consumer-price increase slowed to 2.2%, including 3.8% for food.
Still, the government's move signals it is again wary of resurgent food prices--of which cooking oil is a bellwether--after a sharp rally in U.S. grain prices late last week drove up Chinese soybeans. Chinese soybean prices rose late last week, gaining 2% as reports of a U.S. Midwest drought sent global grain markets soaring.
Beijing has cut interest rates twice this year and is widely expected to undertake more cuts in the second half to revive its flagging economy. But it could be forced to constrain its efforts to reinvigorate growth if inflation should flare up again.
"The euro-zone crisis, the weather problems in the U.S. and the 18th Communist Party Congress are very important things to China right now," said Xiao Jun, analyst with Shanghai JC Intelligence Co., an influential grain-industry consulting firm, referring to the beginning of a coming once-a-decade leadership change. "The government hopes to keep prices of basic products stable in this period."
Edible-oil prices have been fairly stable this year. Soy-oil retail prices have risen by 0.22 yuan a liter from their lowest point this year in early March to about 12.25 yuan a liter, the Ministry of Commerce said.
Chinese agriculture demand has been one of the more resilient sectors amid a flagging economy this year. Soybean prices on China's Dalian Commodity Exchange have risen about 6% this year, leading to soy-oil increases of 2.9% and corn's 4.3% rise. Chicago soybeans have risen even higher, up 32%, so far this year.
"Our edible-oil manufacturers raised their prices because they saw rising U.S. soybean prices and projected that these were going to cut into their bottom lines in the near future," Mr. Xiao said.
Analysts mostly say the recent bout of surging global food prices may boost inflation but its impact can be contained. A key difference from 2007-08, when global food-commodity prices soared on the back of drought and rising energy costs, is that oil prices are falling and--critically for Asia--rice and government grain stockpiles remain in plentiful supply.
The government remains watchful that pork prices in China may rebound in the second half of the year as corn and soymeal costs soar, said Ma Wenfeng, an analyst with Beijing Orient Agri-business Consultant Co.
In November 2010, the National Development and Reform Commission asked edible-oil producers to cap prices in an informal moratorium that eventually lasted 10 months, part of efforts to roll back inflation.
Write to Chun Han Wong at
Credit: By Chuin-Wei Yap And Chun Han Wong
Subject: Food; Commodity prices; Soybeans; Food prices; Inflation; Cooking
Location: United States--US China
Company / organization: Name: Dalian Commodity Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 27, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1028089175
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1028089175?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Argentina Mandates Annual Oil-Investment Plans
Author: Romig, Shane
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 July 2012: n/a.
ProQuest document link
Abstract:
[...]Mr. Kicillof's office will set reference prices for every cost and sales price for oil and gas sales, "which will allow [companies] to cover production costs and obtain a reasonable margin," according to the resolution.
Full text: BUENOS AIRES--Argentina will require oil companies operating in the country to submit an annual investment plan for official approval as the government strives to boost production after years of declining output and investment.
Companies will have to submit a plan to President Cristina Kirchner's top economic adviser, Deputy Economy Minister Axel Kicillof, by Sept. 30 of each year.
If the government isn't satisfied, it will send the plan back to the company for revision, according to new rules published Friday in the Official Bulletin. Failure to have the plan approved will result in expulsion from a registry required to operate in the company's oil-and-gas sector.
The move seems set to affect companies such as Apache Corp., Chevron Corp., Petrobras Argentina, the local unit of Brazil's Petroleo Brasileiro and Pan American Energy LLC.
BP PLC owns a 60% stake in Pan American. The remaining 40% is equally split between Argentina's Bridas Energy Holdings Ltd. and China's Cnooc Ltd..
In addition, Mr. Kicillof's office will set reference prices for every cost and sales price for oil and gas sales, "which will allow [companies] to cover production costs and obtain a reasonable margin," according to the resolution.
Companies affected by the new policy couldn't be reached or declined to comment on the record for this article. It appeared the government hadn't spoken with any of them before announcing the policy changes.
The recently nationalized oil-and-gas producer YPF SA also declined to comment.
"We can't comment on this. We didn't know anything about it. We'll have to study the rules and analyze their impact," said an official at an oil-and-gas company who declined to be named.
Carlos Pierro, an energy analyst and former YPF president, said the rules could negatively affect the sector.
"Every time they move ahead with policies like this, the only thing they achieve is to discourage investment," Mr. Pierro said.
The move is the latest in a series of steps by the government to exert more control on the energy industry.
In May, the government nationalized a 51% stake in the country's top oil producer, YPF, from Spain's Repsol YPF SA in a dispute over investment and lower production. The government also declared oil production to be in the national interest, setting the stage for much broader intervention in the energy industry.
Ms. Kirchner accused Repsol of underinvesting in exploration and production, which she said has forced the government to import billions of dollars worth of fuel every year.
Indeed, last year, Argentina became a net energy importer for the first time in 17 years, and it is on track to import even more in coming years as demand outstrips production.
Companies say price caps and constantly shifting policies have stifled investment instead of encouraging it.
Taos Turner contributed to this article.
Credit: By Shane Romig
Subject: Petroleum industry; Energy industry; Oil sands
Location: Argentina
People: Kicillof, Axel
Company / organization: Name: Bridas Energy Holdings Ltd; NAICS: 211111, 551112; Name: Chevron Corp; NAICS: 211111, 324110; Name: BP PLC; NAICS: 324110, 447110, 211111; Name: CNOOC Ltd; NAICS: 211111; Name: Apache Corp; NAICS: 211111, 213112, 324110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 27, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United St ates, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1029869942
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1029869942?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Enbridge Says Wisconsin Oil Spill Is Contained
Author: King, Carolyn
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 July 2012: n/a.
ProQuest document link
Abstract:
The Canadian company's Houston-based affiliate, Enbridge Energy Partners LP, reported earlier that no one was injured in the spill on its Line 14, which released an estimated 1,200 barrels of oil near Grand Marsh, Wis.
Full text: Enbridge Inc. said that it is making progress in cleaning up the site of an oil spill that occurred Friday in Wisconsin and that it expects to make repairs to the affected pipeline later Saturday.
The Canadian company's Houston-based affiliate, Enbridge Energy Partners LP, reported earlier that no one was injured in the spill on its Line 14, which released an estimated 1,200 barrels of oil near Grand Marsh, Wis.
In an update Saturday, Enbridge said representatives from the Environmental Protection Agency, the Pipeline and Hazardous Materials Safety Administration, and the Wisconsin Department of Natural Resources are on site.
The company said it is still working to determine the cause of the spill and can't estimate a restart time for Line 14.
The incident comes two years after an oil spill from an Enbridge pipeline in Michigan, one of the worst oil spills ever in the U.S. Midwest. The July 2010 spill led to one of the costliest onshore cleanups in U.S. history.
An Enbridge pipeline spilled about 1,450 barrels of oil in Alberta last month.
"Enbridge is treating this situation as a top priority," Richard Adams, vice president of U.S. Operations for Enbridge, said in a company statement issued late Friday. "We are bringing all necessary resources to bear. Our immediate focus is on keeping our workers and the public safe as we work to remove the oil and clean up the site."
Line 14, which has a capacity of 317,600 barrels a day, moves light crude oil to Chicago-area refineries and is part of Enbridge's Lakehead System.
Write to Carolyn King at
Credit: By Carolyn King
Subject: Oil spills; Pipelines; Petroleum industry; Environmental protection
Location: Michigan United States--US Wisconsin
Company / organization: Name: Department of Natural Resources-Wisconsin; NAICS: 924120; Name: Environmental Protection Agency--EPA; NAICS: 924110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 28, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1029927114
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1029927114?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Market Finds Itself in 'No Man's Land'
Author: Kent, Sarah
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 July 2012: n/a.
ProQuest document link
Abstract:
According to data from IntercontinentalExchange, published last week, the total number of outstanding contracts in Brent futures and options fell nearly 8% since peaking in early June, to its lowest level since mid-May, in the week ended July 17, highlighting investors' reluctance to leave themselves exposed to price fluctuations.
Full text: Seesawing oil prices have become the new norm this summer as the market grapples with competing concerns over the global economy and tensions in the Middle East.
The volatility has prompted many investors to take a back seat until the situation is clearer, market participants said.
According to data from IntercontinentalExchange, published last week, the total number of outstanding contracts in Brent futures and options fell nearly 8% since peaking in early June, to its lowest level since mid-May, in the week ended July 17, highlighting investors' reluctance to leave themselves exposed to price fluctuations.
"[The market] is in no man's land at the moment....It's very difficult to give any advice," said one futures broker.
Indeed, the price of Brent plummeted 30% from a high of $125.97 a barrel hit at the beginning of April to $89.23 on June 21, it lowest settlement price this year. On Friday, Brent crude rose $1.21, or 1.1%, to $106.47 a barrel on ICE Futures U.S.
The impact of an event on either the macroeconomic or geopolitical stage could result in a swing in oil prices. In a note published in June, Credit Suisse outlined an "Armageddon" scenario that could see Brent crude hit $50 a barrel in the event of another global recession.
On the other hand, analysts have said the price of oil could rise $15 to $20 a barrel if Iran blocks the Strait of Hormuz, a strategic shipping route in the Middle East that is used to transport about a fifth of the world's oil. Iran has threatened to block the shipping lane in response to Western sanctions implemented to deter Tehran from developing nuclear weapons.
However, most analysts see these two scenarios as extreme. Determining which direction the market will take is the million-dollar question that has investors scrambling to cope with a whipsawing market. The answer hangs on how the global economy performs in the second half of the year, which will dictate oil demand, and the situation in the Middle East, which will dictate supply.
"Markets are very unsure where to go. Investors will be playing it from the short side and suddenly the market just pops back up," said Rob Montefusco, senior commodities broker at Sucden Financial.
Comments by European Central Bank President Mario Draghi, reiterating the ECB's commitment to the euro, were enough to buoy Brent this past Thursday, despite the fact that the central banker outlined no concrete plan of action. Even lackluster economic data from the U.S. last week couldn't damp oil prices, as investors interpreted signs of weak economic growth as increasing the likelihood the Federal Reserve and other central banks would enact more economic stimulus.
Previous rounds of stimulus have weighed on the dollar, helping to strengthened the oil price, because it made the dollar-denominated commodity cheaper for holders of other currencies. However, as market behavior in recent months has shown, sentiment has a habit of switching and sending prices plummeting as fast as any rally.
"The market's really just trying to work out which leg to stand on," said Ole Hansen, head of commodity strategy at Saxo Bank. "There's hesitancy about getting too involved on the long side while the economy is struggling."
Still, tensions in the Mideast have kept a floor under prices and will continue to do so, likely supporting the price of Brent above $100 a barrel, Mr. Hansen said.
The prospect that the war in Syria could spread to neighboring countries, including major oil producers, has increased concerns over security of supply, while Israel's stance toward Iran remains a wild card, and prices could rise in the event of a clash between the two countries.
The result of this uncertainty, according to many analysts, will be increased volatility within a relatively stable range.
Write to Sarah Kent at
Credit: By Sarah Kent
Subject: Central banks; American dollar; Recessions; Futures; Petroleum industry
Location: Iran Middle East
Company / organization: Name: IntercontinentalExchange Inc; NAICS: 523210; Name: Credit Suisse Group; NAICS: 522110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 29, 2012
column: Market Focus
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1030021654
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1030021654?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Enbridge to Replace Part of Oil Pipeline That Leaked
Author: Cameron, Doug; King, Carolyn
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 July 2012: n/a.
ProQuest document link
Abstract:
Enbridge Inc. said it planned on Monday to replace a section of an oil pipeline in Wisconsin that leaked Friday, though the company didn't have a restart date for the artery carrying Canadian crude to the U.S. The Calgary, Alberta, company reopened three other pipelines Saturday that had been shut after the spill from the Line 14 pipe, which released an estimated 1,200 barrels of oil near Grand Marsh, Wis.
Full text: Enbridge Inc. said it planned on Monday to replace a section of an oil pipeline in Wisconsin that leaked Friday, though the company didn't have a restart date for the artery carrying Canadian crude to the U.S.
The Calgary, Alberta, company reopened three other pipelines Saturday that had been shut after the spill from the Line 14 pipe, which released an estimated 1,200 barrels of oil near Grand Marsh, Wis.
The Wisconsin incident is being investigated by Enbridge and U.S. regulators, and comes at a sensitive time as the company presses ahead with expansion plans two years after a much larger spill from a pipeline in Michigan.
Enbridge said Sunday that it exposed the damaged pipe in Wisconsin and moved a majority of the contaminated soil. "A new section of pipe is tentatively scheduled to be installed on July 30," said Enbridge spokeswoman Lorraine Little in an email.
Line 14 is operated by Houston-based affiliate Enbridge Energy Partners LP, and has a capacity of 317,600 barrels a day, moving light crude oil to Chicago area refineries.
Enbridge said Saturday that representatives from the Environmental Protection Agency, the Pipeline and Hazardous Materials Safety Administration, and the Wisconsin Department of Natural Resources are on site.
"At this time, Enbridge does not have an estimated time for restart for Line 14. Line 13 was restarted late Saturday evening. Lines 6A and 61 were safely returned to service early Saturday morning," said Ms Little.
The incident comes two years after an oil spill from an Enbridge pipeline in Michigan, one of the worst oil spills ever in the Midwest. The July 2010 spill led to one of the costliest ever onshore cleanups in U.S. history.
An Enbridge pipeline spilled about 1,450 barrels of oil in Alberta last month.
Write to Doug Cameron at and Carolyn King at
Credit: By Doug Cameron And Carolyn King
Subject: Oil spills; Pipelines; Oil sands; Repair & maintenance; Petroleum industry
Location: United States--US Wisconsin Michigan
Company / organization: Name: Department of Natural Resources-Wisconsin; NAICS: 924120; Name: Environmental Protection Agency--EPA; NAICS: 924110; Name: Enbridge Energy Partners LP; NAICS: 486110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 29, 2012
Section: Business
Publisher: Dow Jones & Co mpany Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1030025654
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1030025654?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Cnooc Deal Shows China's Sway in Oil
Author: Spegele, Brian; Ma, Wayne
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 July 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: BEIJING--China's state-controlled oil producers are targeting struggling energy companies and projects world-wide, opening up production that might not otherwise happen.
In the latest deal, Cnooc Ltd. last week said it would buy one of Canada's largest oil producers for $15.1 billion. If the acquisition of Nexen Inc. passes regulatory hurdles in Washington and Ottawa, it would join more than $50 billion in overseas oil-and-gas deals completed by Chinese companies since 2009, according to data provided by securities firm Jefferies Hong Kong Ltd. That is in addition to tens of billions of dollars in loan-for-oil programs in Venezuela, Brazil, Kazakhstan and elsewhere.
Including Nexen's output, a conservative tally of publicly available data on foreign production for major Chinese oil companies would be in the neighborhood of the total output of Norway, the world's No. 15 crude-oil producer.
In many cases, China's oil producers have targeted struggling and underfunded oil-and-gas operations abroad, helping to support supplies amid tight credit markets and a natural-gas glut in North America. Nexen Chief Executive Marvin Romanow resigned in January amid production-related setbacks around the world, including at the company's Long Lake oil-sands project in Canada.
Analysts said Chinese capital investment has helped put downward pressure on energy prices even as demand from China and other parts of the developing world skyrockets.
"Projects are being developed that wouldn't be if China wasn't in the game," said Laban Yu, head of oil-and-gas research at Jefferies.
Mr. Yu cited China Petrochemical Corp.'s recent $2.5 billion investment in five U.S. shale blocks owned by Oklahoma-based Devon Energy Corp. The Chinese company, known as Sinopec, owns just a 33% stake in the blocks but is responsible for funding about 80% of the exploration activity.
In other cases, Chinese capital has helped boost output of existing projects. Sinopec said in May that its Addax Petroleum unit, acquired in 2009 for $7.2 billion, had boosted crude-oil output to 8.4 million metric tons from 6.8 million tons in 2009. At the time of the takeover, Geneva-based Addax's crude output was declining because of low reserves and a lack of drilling rigs, the company said.
Sinopec in 2010 acquired 40% of the Brazilian assets of Spain's Repsol YPF SA for $7.1 billion. The deal provided funding for the Spanish company's oil-and-gas exploration and production off Brazil. Since then, the companies have announced discoveries in the Campos, Espírito Santo and Santos basins off shore.
Chinese investment also has spurred supply in regions where few companies had dared tread. The country has emerged as a competitor in Sudan's oil industry despite conflict there.
The world's oil-supply growth is expected to keep pace with demand next year, the International Energy Agency has said, largely because of new supplies from Canadian oil sands, U.S. shale oil and Brazil's Campos and Santos basins--all of which China is heavily involved in.
Cnooc and other Chinese oil companies are under government orders to make their operations more international. Beijing is concerned that domestic oil and gas production is stagnating and that initiatives to develop unconventional reserves like shale gas in western China and deep-water reserves in the South China Sea remain years away. The government also hopes to reduce its dependence on the Middle East.
Overseas output has compensated for a domestic lag. Sinopec has said it plans to double its share of oil output from overseas projects to more than 50 million metric tons by 2015 from 22.9 million tons last year. PetroChina Co., the listed arm of China National Petroleum Corp., the country's largest oil and gas producer, has said it would spend $60 billion this decade to boost overseas oil production.
PetroChina, whose combined overseas and domestic crude-oil output surpassed that of Exxon Mobil Corp. last year, has said its overseas oil-and-gas production more than doubled since 2007 to 120.8 million barrels last year. The figures don't include output from politically sensitive countries like Iran and Sudan, where operations are controlled by state-controlled CNPC.
Cnooc's acquisition of Nexen would mark an uptick in Chinese involvement in North America, where China has been relegated mostly to serving as a financial backer to U.S. and international oil companies. Nexen holds sizable assets in the Gulf of Mexico, and a successful acquisition would further open the door for Chinese companies to operate in North American oil and gas fields alongside established energy giants like Exxon Mobil.
Analysts have said that acquiring U.S. assets by way of a third country is a less politically dicey way to make U.S. inroads than buying American companies outright.
"Gaining an operating role in the United States via the acquisition of a Canadian company is a smart approach," said Erica Downs, who analyzes Chinese energy policy at the Brookings Institution in Washington. "If Cnooc was attempting to buy an American energy company for $15 billion, I would be much less optimistic about the transaction getting a green light."
Write to Brian Spegele at and Wayne Ma at
Credit: By Brian Spegele And Wayne Ma
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 30, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1030138164
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1030138164?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Saudi Oil Output on Pace for Record High
Author: Said, Summer
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 July 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: DUBAI--Saudi Arabia is on track to surpass its record oil output this year, analysts said Monday, offsetting a decline from Iran because of international sanctions, despite pressure from other oil exporters to cut back and help bolster world oil prices.
High Saudi output helps keep oil prices down, which is good news for fragile economies in the U.S. and Europe, which rely on the kingdom to help keep up supply as they implement sanctions intended to press Iran over its nuclear program.
The country shows no sign of letting up from its average production levels of 9.94 million barrels a day in the first half of 2012. Output averaged 9.9 million to 10 million barrels a day in July, industry analysts and shippers said, as the country increased exports and burned more crude to meet an increase in domestic demand for electricity, which surges in the summer months.
That puts the top oil exporter in line to exceed its record oil output of 9.901 million barrels a day in 1980, when the country opened the taps to make up for a sharp fall in Iranian output after its 1979 revolution.
"If the loss in Iranian barrels proves to be as large as what it is now, then Saudi Arabia's output will remain elevated throughout the year," said Amrita Sen, an analyst at Barclays. The kingdom usually releases official figures for its monthly output seven weeks after the end of each month.
Iranian oil production has fallen to 3.2 million barrels a day from 3.7 million barrels in June, and could fall lower by year-end under tightening sanctions, according to the International Energy Agency.
Saudi officials have said they aren't seeking to replace Iranian supplies. They also say they are ready to supply customers with all the crude they need.
That amounts to much the same thing, said Ms. Sen, with Iranian customers in South Korea, Japan, South Africa, Turkey and Malaysia turning to the Saudis for supplies as they cut back purchases from Iran in order to head off U.S. sanctions.
"Our data shows that Saudi Arabia is actively going out there trying to take up Iran's market share," said an analyst at a firm that closely tracks global oil exports and shipments.
At the last meeting of the Organization of Petroleum Exporting Countries in June, the Saudis fought back against pressure from Iran and other OPEC hawks to curb output.
Although the meeting ended with an agreement to limit OPEC output to 30 million barrels per day, Saudi Arabia and its allies in OPEC have shown they have no intention of curbing output.
Toward the end of the meeting in June, and in response to demands that the kingdom curb its output, Saudi Oil Minister Ali al-Naimi forced the issue by insisting he would only be willing to cut production if others cut back first, according to people present at the meeting.
When he looked around the table of OPEC delegates and asked which nation would be the first to make a cut, his question was met by silence, the people present said. Mr. Naimi and other Saudi oil officials weren't available to comment.
In late June, the Asharq Al-Awsat newspaper, which is owned by the Saudi royal family, reported Saudi output was likely to range from 9.7 million to 10 million barrels a day for the next three months. "The current demand encourages maintaining the current production levels," a Saudi official said, the newspaper reported.
The Saudis are burning as much as 800,000 to 1 million barrels a day of crude oil equivalent during the hot summer months to fire electricity plants to meet soaring peak demand for air conditioning. That is higher than the 730,000 to 800,000 barrels a day average last summer and 250,000 to 300,000 barrels a day in winter.
Some analysts question whether the kingdom could pump at much higher than current levels on a consistent basis.
Saudi Arabia's full capacity is 12.5 million barrels a day, but some analysts have argued that the country's comfortable production level isn't much higher than the current level.
"Saudi Arabia is pumping at its comfortable operational production limits and may not be willing to pump much higher than the current levels for a long period as it does not want to drain its spare capacity," said Samuel Ciszuk, an analyst at consultancy KBC Energy Economics.
"But the kingdom may do so temporarily to make up for shortages that arise in the market," he added.
James Herron and Benoît Faucon contributed to this article.
Write to Summer Said at
Credit: By Summer Said
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 30, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1030149279
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1030149279?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
China Fuels Oil Production; Cnooc Deal for Canada's Nexen Is Latest Investment in a Struggling Energy Firm
Author: Spegele, Brian; Ma, Wayne
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]31 July 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: BEIJING--China's state-controlled oil producers are targeting struggling energy companies and projects world-wide, opening up production that might not otherwise happen.
In the latest deal, Cnooc Ltd. last week said it would buy one of Canada's largest oil producers for $15.1 billion. If the acquisition of Nexen Inc. passes regulatory hurdles in Washington and Ottawa, it would join more than $50 billion in overseas oil-and-gas deals completed by Chinese companies since 2009, according to data provided by securities firm Jefferies Hong Kong Ltd. That is in addition to tens of billions of dollars in loan-for-oil programs in Venezuela, Brazil, Kazakhstan and elsewhere.
Including Nexen's output, a conservative tally of publicly available data on foreign production for major Chinese oil companies would be in the neighborhood of the total output of Norway, the world's No. 15 crude-oil producer.
In many cases, China's oil producers have targeted struggling and underfunded oil-and-gas operations abroad, helping to support supplies amid tight credit markets and a natural-gas glut in North America. Nexen Chief Executive Marvin Romanow resigned in January amid production-related setbacks around the world, including at the company's Long Lake oil-sands project in Canada.
Analysts said Chinese capital investment has helped put downward pressure on energy prices even as demand from China and other parts of the developing world skyrockets.
"Projects are being developed that wouldn't be if China wasn't in the game," said Laban Yu, head of oil-and-gas research at Jefferies.
Mr. Yu cited China Petrochemical Corp.'s recent $2.5 billion investment in five U.S. shale blocks owned by Oklahoma-based Devon Energy Corp. The Chinese company, known as Sinopec, owns just a 33% stake in the blocks but is responsible for funding about 80% of the exploration activity.
In other cases, Chinese capital has helped boost output of existing projects. Sinopec said in May that its Addax Petroleum unit, acquired in 2009 for $7.2 billion, had boosted crude-oil output to 8.4 million metric tons from 6.8 million tons in 2009. At the time of the takeover, Geneva-based Addax's crude output was declining because of low reserves and a lack of drilling rigs, the company said.
Sinopec in 2010 acquired 40% of the Brazilian assets of Spain's Repsol YPF SA for $7.1 billion. The deal provided funding for the Spanish company's oil-and-gas exploration and production off Brazil. Since then, the companies have announced discoveries in the Campos, Espírito Santo and Santos basins off shore.
Chinese investment also has spurred supply in regions where few companies had dared tread. The country has emerged as a competitor in Sudan's oil industry despite conflict there.
The world's oil-supply growth is expected to keep pace with demand next year, the International Energy Agency has said, largely because of new supplies from Canadian oil sands, U.S. shale oil and Brazil's Campos and Santos basins--all of which China is heavily involved in.
Cnooc and other Chinese oil companies are under government orders to make their operations more international. Beijing is concerned that domestic oil and gas production is stagnating and that initiatives to develop unconventional reserves like shale gas in western China and deep-water reserves in the South China Sea remain years away. The government also hopes to reduce its dependence on the Middle East.
Overseas output has compensated for a domestic lag. Sinopec has said it plans to double its share of oil output from overseas projects to more than 50 million metric tons by 2015 from 22.9 million tons last year. PetroChina Co., the listed arm of China National Petroleum Corp., the country's largest oil and gas producer, has said it would spend $60 billion this decade to boost overseas oil production.
PetroChina, whose combined overseas and domestic crude-oil output surpassed that of Exxon Mobil Corp. last year, has said its overseas oil-and-gas production more than doubled since 2007 to 120.8 million barrels last year. The figures don't include output from politically sensitive countries like Iran and Sudan, where operations are controlled by state-controlled CNPC.
Cnooc's acquisition of Nexen would mark an uptick in Chinese involvement in North America, where China has been relegated mostly to serving as a financial backer to U.S. and international oil companies. Nexen holds sizable assets in the Gulf of Mexico, and a successful acquisition would further open the door for Chinese companies to operate in North American oil and gas fields alongside established energy giants like Exxon Mobil.
Analysts have said that acquiring U.S. assets by way of a third country is a less politically dicey way to make U.S. inroads than buying American companies outright.
"Gaining an operating role in the United States via the acquisition of a Canadian company is a smart approach," said Erica Downs, who analyzes Chinese energy policy at the Brookings Institution in Washington. "If Cnooc was attempting to buy an American energy company for $15 billion, I would be much less optimistic about the transaction getting a green light."
Write to Brian Spegele at and Wayne Ma at
Credit: By Brian Spegele and Wayne Ma
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Jul 31, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1030161721
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1030161721?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: China Fuels Oil Production --- Cnooc Deal for Canada's Nexen Is Latest Investment in a Struggling Energy Firm
Author: Spegele, Brian; Ma, Wayne
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]31 July 2012: B.3.
ProQuest document link
Abstract:
PetroChina, whose combined overseas and domestic crude-oil output surpassed that of Exxon Mobil Corp. last year, has said its overseas oil-and-gas production more than doubled since 2007 to 120.8 million barrels last year.
Full text: BEIJING -- China's state-controlled oil producers are targeting struggling energy companies and projects world-wide, opening up production that might not otherwise happen.
In the latest deal, Cnooc Ltd. last week said it would buy one of Canada's largest oil producers for $15.1 billion. If the acquisition of Nexen Inc. passes regulatory hurdles in Washington and Ottawa, it would join more than $50 billion in overseas oil-and-gas deals completed by Chinese companies since 2009, according to data provided by securities firm Jefferies Hong Kong Ltd. That is in addition to tens of billions of dollars in loan-for-oil programs in Venezuela, Brazil, Kazakhstan and elsewhere.
Including Nexen's output, a conservative tally of publicly available data on foreign production for major Chinese oil companies would be in the neighborhood of the total output of Norway, the world's No. 15 crude-oil producer.
In many cases, China's oil producers have targeted struggling and underfunded oil-and-gas operations abroad, helping to support supplies amid tight credit markets and a natural-gas glut in North America. Nexen Chief Executive Marvin Romanow resigned in January amid production-related setbacks around the world, including at the company's Long Lake oil-sands project in Canada.
Analysts said Chinese capital investment has helped put downward pressure on energy prices even as demand from China and other parts of the developing world skyrockets.
"Projects are being developed that wouldn't be if China wasn't in the game," said Laban Yu, head of oil-and-gas research at Jefferies.
Mr. Yu cited China Petrochemical Corp.'s recent $2.5 billion investment in five U.S. shale blocks owned by Oklahoma-based Devon Energy Corp. The Chinese company, known as Sinopec, owns just a 33% stake in the blocks but is responsible for funding about 80% of the exploration activity.
In other cases, Chinese capital has helped boost output of existing projects. Sinopec said in May that its Addax Petroleum unit, acquired in 2009 for $7.2 billion, had boosted crude-oil output to 8.4 million metric tons from 6.8 million tons in 2009. At the time of the takeover, Geneva-based Addax's crude output was declining because of low reserves and a lack of drilling rigs, the company said.
Sinopec in 2010 acquired 40% of the Brazilian assets of Spain's Repsol YPF SA for $7.1 billion. The deal provided funding for the Spanish company's oil-and-gas exploration and production off Brazil. Since then, the companies have announced discoveries in the Campos, Espirito Santo and Santos basins off shore.
Chinese investment also has spurred supply in regions where few companies had dared tread. The country has emerged as a competitor in Sudan's oil industry despite conflict there.
The world's oil-supply growth is expected to keep pace with demand next year, the International Energy Agency has said, largely because of new supplies from Canadian oil sands, U.S. shale oil and Brazil's Campos and Santos basins -- all of which China is heavily involved in.
Cnooc and other Chinese oil companies are under government orders to make their operations more international. Beijing is concerned that domestic oil and gas production is stagnating and that initiatives to develop unconventional reserves like shale gas in western China and deep-water reserves in the South China Sea remain years away. The government also hopes to reduce its dependence on the Middle East.
Overseas output has compensated for a domestic lag. Sinopec has said it plans to double its share of oil output from overseas projects to more than 50 million metric tons by 2015 from 22.9 million tons last year. PetroChina Co., the listed arm of China National Petroleum Corp., the country's largest oil and gas producer, has said it would spend $60 billion this decade to boost overseas oil production.
PetroChina, whose combined overseas and domestic crude-oil output surpassed that of Exxon Mobil Corp. last year, has said its overseas oil-and-gas production more than doubled since 2007 to 120.8 million barrels last year. The figures don't include output from politically sensitive countries like Iran and Sudan, where operations are controlled by state-controlled CNPC.
Cnooc's acquisition of Nexen would mark an uptick in Chinese involvement in North America, where China has been relegated mostly to serving as a financial backer to U.S. and international oil companies. Nexen holds sizable assets in the Gulf of Mexico, and a successful acquisition would further open the door for Chinese companies to operate in North American oil and gas fields alongside established energy giants like Exxon Mobil.
Analysts have said that acquiring U.S. assets by way of a third country is a less politically dicey way to make U.S. inroads than buying American companies outright.
"Gaining an operating role in the United States via the acquisition of a Canadian company is a smart approach," said Erica Downs, who analyzes Chinese energy policy at the Brookings Institution in Washington. "If Cnooc was attempting to buy an American energy company for $15 billion, I would be much less optimistic about the transaction getting a green light."
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Credit: By Brian Spegele and Wayne Ma
Subject: Petroleum industry; Acquisitions & mergers; Petroleum production
Location: China Canada United States--US
Company / organization: Name: Nexen Inc; NAICS: 211111; Name: China Petrochemical Corp; NAICS: 324110; Name: CNOOC Ltd; NAICS: 211111
Classification: 8510: Petroleum industry; 2330: Acquisitions & mergers; 9180: International
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.3
Publication year: 2012
Publication date: Jul 31, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1030189810
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1030189810?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Saudi Oil Output Seen at Record Pace, Offsetting Iran
Author: Said, Summer
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]31 July 2012: A.14.
ProQuest document link
Abstract:
Saudi Arabia is on track to surpass its record oil output this year, analysts said Monday, offsetting a decline from Iran because of international sanctions, despite pressure from other oil exporters to cut back and help bolster world oil prices.
Full text: DUBAI -- Saudi Arabia is on track to surpass its record oil output this year, analysts said Monday, offsetting a decline from Iran because of international sanctions, despite pressure from other oil exporters to cut back and help bolster world oil prices.
High Saudi output helps keep oil prices down, which is good news for fragile economies in the U.S. and Europe, which rely on the kingdom to help keep up supply as they implement sanctions intended to press Iran over its nuclear program.
The country shows no sign of letting up from its average production levels of 9.94 million barrels a day in the first half of 2012. Output averaged 9.9 million to 10 million barrels a day in July, industry analysts and shippers said, as the country increased exports and burned more crude to meet an increase in domestic demand for electricity, which surges in the summer months.
That puts the top oil exporter in line to exceed its record oil output of 9.901 million barrels a day in 1980, when the country opened the taps to make up for a sharp fall in Iranian output after its 1979 revolution.
"If the loss in Iranian barrels proves to be as large as what it is now, then Saudi Arabia's output will remain elevated throughout the year," said Amrita Sen, an analyst at Barclays. The kingdom usually releases official figures for its monthly output seven weeks after the end of each month.
Iranian oil production has fallen to 3.2 million barrels a day from 3.7 million barrels in June, and could fall lower by year-end under tightening sanctions, according to the International Energy Agency.
Saudi officials have said they aren't seeking to replace Iranian supplies. They also say they are ready to supply customers with all the crude they need.
That amounts to much the same thing, said Ms. Sen, with Iranian customers in South Korea, Japan, South Africa, Turkey and Malaysia turning to the Saudis for supplies as they cut back purchases from Iran in order to head off U.S. sanctions.
"Our data shows that Saudi Arabia is actively going out there trying to take up Iran's market share," said an analyst at a firm that closely tracks global oil exports and shipments. At the last meeting of the Organization of Petroleum Exporting Countries in June, the Saudis fought back against pressure from Iran and other OPEC hawks to curb output.
Although the meeting ended with an agreement to limit OPEC output to 30 million barrels per day, Saudi Arabia and its allies in OPEC have shown they have no intention of curbing output.
Toward the end of the meeting in June, and in response to demands that the kingdom curb its output, Saudi Oil Minister Ali al-Naimi forced the issue by insisting he would only be willing to cut production if others cut back first, according to people present at the meeting.
When he looked around the table of OPEC delegates and asked which nation would be the first to make a cut, his question was met by silence, the people present said. Mr. Naimi and other Saudi oil officials weren't available to comment.
In late June, the Asharq Al-Awsat newspaper, which is owned by the Saudi royal family, reported Saudi output was likely to range from 9.7 million to 10 million barrels a day for the next three months. "The current demand encourages maintaining the current production levels," a Saudi official said, the newspaper reported.
The Saudis are burning as much as 800,000 to 1 million barrels a day of crude oil equivalent during the hot summer months to fire electricity plants to meet soaring peak demand for air conditioning. That is higher than the 730,000 to 800,000 barrels a day average last summer and 250,000 to 300,000 barrels a day in winter.
Saudi Arabia's full capacity is 12.5 million barrels a day, but some analysts have argued that the country's comfortable production level isn't much higher than the current level.
"Saudi Arabia is pumping at its comfortable operational production limits and may not be willing to pump much higher than the current levels for a long period as it does not want to drain its spare capacity," said Samuel Ciszuk, an analyst at consultancy KBC Energy Economics.
"But the kingdom may do so temporarily to make up for shortages that arise in the market," he added.
---
James Herron and Benoit Faucon contributed to this article.
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Credit: By Summer Said
Subject: Sanctions; Exports; Market shares; Petroleum production
Location: Iran Saudi Arabia
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: International Energy Agency; NAICS: 928120
Classification: 8510: Petroleum industry; 9178: Middle East
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.14
Publication year: 2012
Publication date: Jul 31, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1030196394
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1030196394?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. Oil Reserves Jumped in 2010
Author: Tracy, Tennille
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]01 Aug 2012: n/a.
ProQuest document link
Abstract:
U.S. energy officials estimate that oil and natural-gas reserves jumped in 2010 by the highest margin in at least three decades, lending weight to the idea that the U.S. can meet more of its own energy demand.
Full text: U.S. energy officials estimate that oil and natural-gas reserves jumped in 2010 by the highest margin in at least three decades, lending weight to the idea that the U.S. can meet more of its own energy demand.
The Energy Information Administration said in its annual report that proven reserves of crude oil jumped by 13%, with the highest increases seen in Texas, North Dakota and the Gulf of Mexico. Proven reserves of natural gas rose by 12%.
The increases were the highest recorded by EIA since it began publishing the estimates in 1977. "These reserves increases underscore the potential of a growing role for domestically produced hydrocarbons in meeting both current and projected U.S. energy demands," EIA chief Adam Sieminski said in testimony prepared for a House of Representatives hearing Thursday.
The EIA's estimates identify how much oil or natural gas can be produced with reasonable certainty, given current economics and existing technology. Higher oil prices, which make it profitable to do more types of drilling, helped to boost the oil reserves in 2010. The increased use of hydraulic fracturing, meanwhile, helped to buoy the amount of natural-gas reserves by allowing operators to tap into supplies locked in shale-rock formations.
The jump in energy reserves comes as lawmakers are debating how quickly the U.S. should be expanding domestic production. Earlier this year, Republicans criticized the Obama administration for keeping a lock on offshore drilling in the Atlantic and Pacific oceans. The administration says it wants to promote oil drilling in areas where resources are known to exist and production already takes place.
The EIA estimates show 25.2 billion barrels of oil could be recovered in the U.S., up from the previous estimate of 22.3 billion barrels. Current U.S. petroleum consumption is about seven billion barrels annually.
Natural-gas reserves are estimated at 318 trillion cubic feet, up from the previous estimate of 284 trillion cubic feet. Annual U.S. natural-gas consumption is about 24 trillion cubic feet.
"The report is further proof that we have more oil and natural gas than anyone thought possible even a few years ago," said Erik Milito of the American Petroleum Institute. "We are sitting on a lottery ticket that could spur millions of jobs, billions of dollars in revenue for the government, and more than 100 years of energy for our country."
While the report points to a stockpile of domestic fossil fuels, "it's important that we don't forget the significant amount of low-carbon or carbon-free resources in the U.S.," Environmental Defense Fund analyst Colin Meehan said.
Write to Tennille Tracy at
Credit: By Tennille Tracy
Subject: Natural gas; Oil reserves; Petroleum industry; Oil sands; Energy policy; Natural gas reserves
Location: United States--US Texas Gulf of Mexico North Dakota
Company / organization: Name: American Petroleum Institute; NAICS: 541820, 813910; Name: House of Representatives; NAI CS: 921120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 1, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Languageof publication: English
Document type: News
ProQuest document ID: 1030445773
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1030445773?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Companies Provide Different Shale Accounts
Author: Peaple, Andrew
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 Aug 2012: n/a.
ProQuest document link
Abstract:
The European approach, governed by international financial reporting standards, means companies better reflect actual U.S. gas-industry conditions.
Full text: How much are oil companies' shale-gas assets worth?
The answer depends on where the company is based. BP and BG Group both took large write-downs to their U.S. shale reserves in the second quarter, ruining their reported profits. But Exxon Mobil, whose heavy shale investment includes its $35 billion acquisition of XTO Energy in 2010, took no hit at all. That's thanks to the respective rules for measuring asset impairment in Europe and the U.S., two continents still divided by different accounting languages.
The European approach, governed by international financial reporting standards, means companies better reflect actual U.S. gas-industry conditions. After a review in May, BG Group lowered its long-term Henry Hub natural-gas-price assumption to $4.25 a million British thermal units from $5. Applying the lower price to BG's expected future discounted cash flows from its shale-gas assets resulted in a $1.3 billion impairment charge, equivalent to two-thirds of its second-quarter operating profit.
But U.S. generally accepted accounting principles allow companies like Exxon Mobil an escape. It is subject to the same gas-price moves. But when estimating its gas assets' current value, it doesn't have to discount future cash flows. As long as the assets' gross expected cash returns exceed their current value in Exxon's books, no write-down is required.
By ignoring the time value of money, the U.S. GAAP rules make little economic sense. Worse is the difficulty created for investors trying to compare companies' performance. The IFRS approach actually could boost BG and BP in the future: Write-downs reduce their capital, while lower-valued assets will have smaller depreciation charges. That could improve the companies' return on capital. But there are downsides, beyond the effect on second-quarter earnings. BP saw its net debt-to-capital ratio rise to 21.9% from 19.9% largely thanks to its $2.1 billion shale-related impairment.
With the U.S. still delaying a decision on whether to adopt IFRS, confusing accounting differences will persist. The U.S. and international accounting boards aren't even working on a plan to converge their asset-impairment rules, as they are in other areas. On current progress, the U.S. shale boom could be over before the U.S. and Europe agree on how to account for it.
Write to Andrew Peaple at
Credit: By Andrew Peaple
Subject: Impaired assets; Writedowns; Natural gas
Location: United States--US Europe
Company / organization: Name: BG Group; NAICS: 486210; Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: XTO Energy Inc; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 2, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1030732201
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1030732201?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Who Really Gets Rich Off High Gas Prices? Exxon made seven cents per gallon in 2011. Federal, state and local governments siphoned off 50 cents in taxes.
Author: Johnson, Drew
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 Aug 2012: n/a.
ProQuest document link
Abstract:
Crude oil costs make up about 76% of the cost of gasoline, according to U.S. Energy Information Administration (EIA). [...]2.66 of a $3.50 gallon of gasoline is set before the oil is even refined.
Full text: With the average price of gas in America hovering around $3.50 per gallon for regular unleaded, it costs more than $50 to fill a typical car's 15-gallon tank this summer. Why does gas cost so much?
You may blame high gas prices on rich oil company executives or greedy gas station owners. The truth is that governments rake in a larger profit at the pump than anyone--and with gas taxes on the rise in many parts of the country, there's no relief in sight.
The price of a gallon of gas is based on the combination of four costs: that of crude oil, of refining gas, of distribution and marketing, and of taxes.
Crude oil costs make up about 76% of the cost of gasoline, according to U.S. Energy Information Administration (EIA). Thus $2.66 of a $3.50 gallon of gasoline is set before the oil is even refined. Global markets, reacting to supply and demand, determine the cost of crude oil. Just like any commodity, from gold to corn, a shortage in supply or an increase in demand leads to a rise in prices.
Refining oil is the next step in the process--and the next expense for drivers. Gasoline is extracted from crude oil and additives, including lubricants and detergents to reduce engine deposits, are added. As of January 2012, the EIA found that refining was responsible for 6% of the cost of gasoline.
Distribution and marketing--the part of the process most apparent to consumers--constitutes another 6% of gas prices. That portion of the cost includes the shipping and transportation of the gasoline, a markup to cover retailers' expenses, and any advertising created to appeal to customers.
The remaining 12%--or almost 50 cents per gallon today--goes directly to federal, state and local governments in an array of sales and excise taxes. The federal gas tax is 18.4 cents on every gallon of gasoline sold in America. State gas-tax rates vary from a low of eight cents per gallon in Alaska to a jarring 49 cents per gallon in New York. Other states where it's steep to fill up include California and Connecticut--each with 48.6-cent-per-gallon gas taxes--and Hawaii, at 47.1 cents per gallon.
Some local governments have gotten in on the act, too. In California, local sales and excise taxes on gasoline average 3.1%, according to the Los Angeles Times. That works out to about 12 cents in local taxes for each gallon of gas, based on the state's current average of $3.80 per gallon.
Skokie, Ill., a suburb north of Chicago, levies a gas tax of three cents per gallon. You'll pay an extra nickel per gallon at gas stations in Eugene, Ore. And the next time you're gambling in Las Vegas, you'll need plenty of cash left over to cover Clark County's 10 cent local tax on a gallon of gas. In Florida, Brevard County (home to the Kennedy Space Center) expects to siphon more than $15 million from motorists this year, according to the newspaper Florida Today.
Put this all together, and government makes far more from gas sales than all of the oil companies put together. Exxon, for example, made only seven cents per gallon of gasoline in 2011. That's a drop in the bucket compared to the nearly 50 cents per gallon that federal, state and local governments rake in on an average gallon of gas pumped in the U.S.
Most people have to drive--whether to work, to the grocery store, to pick up kids from school or for dozens of other reasons. For some families struggling to make ends meet, paying 50 cents per gallon in taxes may be the difference between driving to work and putting dinner on the table.
So the next time you begin to blame oil companies, speculators or service stations for high gas prices, remember that no one get richer off of gasoline than government.
Mr. Johnson is a senior fellow at the Taxpayers Protection Alliance.
Credit: By Drew Johnson
Subject: Gasoline prices; Gasoline taxes; Costs; Tax rates; Price increases
Location: California United States--US
Company / organization: Name: Los Angeles Times; NAICS: 511110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 2, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1030788320
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1030788320?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Majors Provide Differing Accounts of Shale-Gas Story
Author: Peaple, Andrew
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]03 Aug 2012: C.8.
ProQuest document link
Abstract:
Applying the lower price to BG's expected future discounted cash flows from its shale-gas assets resulted in a $1.3 billion impairment charge, equivalent to two-thirds of its second-quarter operating profit.
Full text: [Financial Analysis and Commentary]
How much are oil companies' shale-gas assets worth?
The answer depends on where the company is based. BP and BG Group both took large write-downs to their U.S. shale reserves in the second quarter, ruining their reported profits. But Exxon Mobil, whose heavy shale investment includes its $35 billion acquisition of XTO Energy in 2010, took no hit at all. That is thanks to the respective rules for measuring asset impairment in Europe and the U.S., two continents still divided by different accounting languages.
The European approach, governed by international financial-reporting standards, means companies better reflect actual U.S. gas-industry conditions. After a review in May, BG Group lowered its long-term Henry Hub natural-gas-price assumption to $4.25 per million British thermal units from $5. Applying the lower price to BG's expected future discounted cash flows from its shale-gas assets resulted in a $1.3 billion impairment charge, equivalent to two-thirds of its second-quarter operating profit.
But U.S. generally accepted accounting principles allow companies like Exxon Mobil an escape. Exxon is subject to the same gas-price moves. But when estimating its gas assets' current value, Exxon doesn't have to discount future cash flows. As long as the assets' gross expected cash returns exceed their current value in Exxon's books, no write-down is required.
By ignoring the time value of money, the U.S. GAAP rules make little economic sense. Worse is the difficulty created for investors trying to compare companies' performance.
The IFRS approach actually could boost BG and BP in the future: Write-downs reduce their capital, while lower-valued assets will have smaller depreciation charges. That could improve the companies' return on capital.
But there are drawbacks, beyond the effect on second-quarter earnings. BP saw its net debt-to-capital ratio rise to 21.9% from 19.9% largely thanks to its $2.1 billion shale-related impairment.
With the U.S. still delaying a decision on whether to adopt IFRS, confusing accounting differences will persist. The U.S. and international accounting boards aren't even working on a plan to converge their asset-impairment rules, as they are in other areas. On current progress, the U.S. shale boom could be over before the U.S. and Europe agree on how to account for it.
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Credit: By Andrew Peaple
Subject: Writedowns; Petroleum industry; Impaired assets
Location: United States--US Europe
Company / organization: Name: BG Group; NAICS: 486210; Name: Exxon Mobil Corp; NAICS: 211111, 447110; Name: XTO Energy Inc; NAICS: 211111
Classification: 9190: United States; 9175: Western Europe; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.8
Publication year: 2012
Publication date: Aug 3, 2012
column: Heard on the Street
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1030831463
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1030831463?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Loonie's Link With Oil Overshoots Reality
Author: Cottle, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 Aug 2012: n/a.
ProQuest document link
Abstract:
The price spread between the two can be substantial as well. [...]Canada is reliant on production from oil sands.
Full text: It probably isn't news to you that oil and the Canadian dollar are closely correlated bedfellows.
Why wouldn't they be? Canada's an oil producer, the loonie is a commodity currency and Canada exports oil. Of course the two are close.
Indeed, the six-month rolling correlation between USD/CAD and the West Texas Intermediate crude benchmark hit a record -0.8 in June.
But think about that relationship for a moment. For one thing, Canada obviously doesn't produce WTI. West Texas does. Canada's oil benchmark is Western Canada Select. It's different from WTI both in terms of quality and the logistics of getting it from field to refinery. The price spread between the two can be substantial as well.
Moreover, Canada is reliant on production from oil sands. That becomes a much riskier economic proposition when world benchmark prices get below $100 per barrel. Societe Generale's analysts say the oil sands business works below its operating costs when prices are under that mark.
But none of this nuance matters one whit to the correlation between the Canadian dollar and what is actually American oil.
What the market has done here, it seems, is taken a relationship which seems basically sound, but latched on to the simplest, most liquid way to trade it, via USD/CAD and WTI, even if that approach plays fast and loose with reality.
"The tendency for markets to trade a currency as a function of a commodity, with each using the other as a guide, can push the correlation artificially high," as SocGen puts it.
This addiction to simplicity and liquidity means the correlation between USD/CAD and WTI is far greater than, say, that of USD/CAD with the commodity basket compiled by the Bank of Canada, which provides a more nuanced overview of Canada's commodity production.
This is not to say that the Canadian dollar's oil correlation is entirely worthless. But it's more of a market construct than it appears at first glance, and perhaps says less about either market than you might have thought.
The link between WTI and the loonie looks like a rock-solid, real-world economic play, but it's really just a very broad proxy for the true relationship underlying it.
Write to David Cottle at david.cottle@dowjones.com or on Twitter @DCottleDJN
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Write to David Cottle at
Credit: By David Cottle
Subject: Canadian dollar; Oil sands; Energy economics
Location: Canada
Company / organization: Name: Societe Generale; NAICS: 522110, 522120, 523110, 523120; Name: Bank of Canada; NAICS: 521110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 3, 2012
column: DJ FX Trader
Section: Forex
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1030832257
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1030832257?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Refiners Ready to Take On the World
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 Aug 2012: n/a.
ProQuest document link
Abstract:
[...]benchmark crack spreads (a proxy for refining margins) have swung as low as $2 a barrel and as high as $38 in just the past four years.
Full text: Entrepreneurs are racing to exploit the U.S. oil-and-gas revival with shiny new petrochemical plants and pipelines. But one group of old stalwarts is there already: refiners.
In the same week, Freeport LNG Development announced new supply agreements for the liquefied-natural-gas export terminal it hopes to start building next year, and Marathon Petroleum, Valero Energy and Phillips 66 announced second-quarter results.
All three reported increases in the amount of gasoline and diesel they exported; Phillips's doubled year on year. In the 12 months ending in May, the U.S. exported an average 2.6 million barrels a day of refined products, almost double the rate at the start of 2008.
The rise in exports is an expression of a big shift in refiners' fortunes and their appeal as investments.
When it comes to cyclicality, refiners wrote the book. They process one highly volatile commodity, oil, into a range of other highly volatile commodities. Consequently, benchmark crack spreads (a proxy for refining margins) have swung as low as $2 a barrel and as high as $38 in just the past four years.
But, whisper it, U.S. refiners seem to have gained a structural edge. Rising production of oil and gas from shale and sands deposits combined with infrastructure bottlenecks have weakened the link between North American energy prices and the rest of the world. U.S. natural gas trades for $3.16 a million British thermal units, while the Europeans and Japanese pay more like $10 and $17, respectively, hence Freeport LNG's plans. Meanwhile, oil grades such as Western Canada Select now trade at a discount to West Texas Intermediate of $20 a barrel or more and more than $37 below Brent crude.
Cheaper oil means lower raw-material costs for refiners, while cheap gas brings down their energy bill. Paul Cheng at Barclays estimates a typical Gulf Coast refinery last year enjoyed a cost advantage against competitors in Europe and the Asian-Pacific region of $3.60 and $9.50 a barrel, respectively. By 2015, he expects that gap to have widened to $8.10 and $14.
This isn't just an advantage when exporting product. It can also help at home; for example, gasoline sold in New York tracks closer to global benchmarks like Brent. But being able to export does help offset another cyclical factor in the refining business: being tied to domestic demand overall. With U.S. oil consumption still weak after the last recession and facing structural headwinds in the form of better fuel efficiency, having an outlet to growth markets elsewhere helps. Exports to Brazil, for example, have almost tripled since 2008.
U.S. refiners haven't disconnected from global ups and downs. But they look much better able to deal with them. Reporting earnings Wednesday, Phillips Chief Executive Greg Garland said he wants "to look back in 10 years and say we increased the dividend every year." It is a mark of how things have changed that this now looks possible.
Write to Liam Denning at
Credit: By Liam Denning
Subject: Exports; Petroleum industry; Oil sands; Energy policy
Location: United States--US
Company / organization: Name: Valero Energy Corp; NAICS: 211111, 324110, 486210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 3, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1030944532
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1030944532?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Chavez Says Opposition Oil Plan Would End Social Programs
Author: Vyas, Kejal
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]04 Aug 2012: n/a.
ProQuest document link
Abstract:
CARACAS--Venezuelan President Hugo Chavez shot back Friday at his rival's plan to stop preferential oil deals with other countries by saying such a measure would mean an end to the social programs enjoyed by the poor enacted during his 13-year tenure.
Full text: CARACAS--Venezuelan President Hugo Chavez shot back Friday at his rival's plan to stop preferential oil deals with other countries by saying such a measure would mean an end to the social programs enjoyed by the poor enacted during his 13-year tenure.
The socialist president, in particular, said agreements with China, which has given more than $32 billion in development loans, and Cuba, which sends around 30,000 doctors to service Venezuelan slums in return for oil, would be sacrificed.
"If we didn't gift the oil to other countries, as [the opposition says], all the [programs] would end," Mr. Chavez said during a Friday night rally in Caracas.
The future of state-run social programs, known locally as "missions," is a hot topic ahead of the Oct. 7 presidential elections. Mr. Chavez frequently accuses his youthful opponent, Henrique Capriles, of representing Venezuela's "bourgeois" past and aiming to exploit the poor, despite Mr. Capriles' insistence that he doesn't want to end social programs.
Mr. Capriles vowed Wednesday to revise accords signed by Mr. Chavez with allied leftist countries around the world, which cost Venezuela nearly $7 billion in lost revenue in 2011.
"Not a single barrel of oil will be gifted to another country," the 40-year-old candidate said during a rally, outlining a broad set of initiatives he said would boost the nationalized oil industry's production and earnings.
Mr. Capriles said that he wanted to continue using oil revenue for social projects but added that it needs to be done with more efficiency, noting that he frequently gets complaints from Venezuelans that some programs, like the one that employs Cuban doctors, are broken.
Venezuela uses nearly half the 460,000 barrels of oil it sends to China each day to pay for loans it received from the Asian giant. Venezuela has another regional alliance with partner countries called PetroCaribe, through which Venezuela exports around 100,000 barrels a day in exchange for food and other goods.
"They say I'm squandering the money but this is social justice and, in addition, I am a Christian," Mr. Chavez said.
He said that ending the oil deals would also mean no more "hospitals, which, thanks to China, we are constructing and modifying."
Mr. Chavez holds a double-digit lead over Mr. Capriles in many local polls, but one major pollster, Datanalisis, recently declared more than a fifth of Venezuelans undecided. Analysts say this election will be Mr. Chavez's toughest since taking office in 1999.
The firebrand socialist leader, who repeated his plans to deliver "a knockout" to Mr. Capriles in the election, told his rival that if he wants to be president "it will have to be on Mars because it's not happening here."
Write to Kejal Vyas at
Credit: By Kejal Vyas
Subject: Petroleum industry; Presidential elections; Presidents
Location: Venezuela Cuba China
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 4, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1030979024
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1030979024?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Sudan Oil Deal Hits Snag Over Security
Author: Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 Aug 2012: n/a.
ProQuest document link
Abstract:
Mutrif Siddiq, spokesman for the Sudanese negotiating team in Ethiopia, said that despite reaching the African Union-mediated deal on oil-transit fees, "no agreement will be signed" until a deal is agreed on the restoration of security in Sudan's three restive border states, where Sudanese forces are battling multiple rebel groups, allegedly backed by the South.
Full text: KAMPALA, Uganda--The recently agreed deal between oil-producing South Sudan and Sudan, which was expected to allow the resumption of vital oil shipments through Sudanese pipelines and ports, is under threat due to lingering tensions along the two nations' common border, officials said Sunday.
Mutrif Siddiq, spokesman for the Sudanese negotiating team in Ethiopia, said that despite reaching the African Union-mediated deal on oil-transit fees, "no agreement will be signed" until a deal is agreed on the restoration of security in Sudan's three restive border states, where Sudanese forces are battling multiple rebel groups, allegedly backed by the South.
"Any agreement on oil shall be subject to the implementation of a full and final agreement on security matters," Mr. Siddiq said.
The Sudanese stance watered down South Sudan's prospects of resuming its 350,000 barrels-a-day oil output, halted in January when the transit-fees feud flared up, threatening the economies of two oil-producing nations.
"We are still talking but our desire is to resume oil output as soon as possible," said Barnaba Benjamin, South Sudan's information minister.
The two formerly united nations are yet to decide the precise position of their 1,120-mile, oil-rich common border following a messy separation in July last year, which saw South Sudan break away with as much as 75% of Sudanese oil fields.
Talks over border security are continuing, but a final deal isn't envisaged until Ramadan ends at the end of August, Sudanese officials say.
Prospects of a quick breakthrough remain murky after Sudan rejected an AU-proposed map last week to set up a demilitarized zone along the border to ease tensions between the two countries, which edged closer to an all-out war in April, after weeks of cross-border skirmishes.
South Sudan has to urgently restart output in order to bolster its foreign-exchange reserves, which have nearly been depleted after months of the border feud. The United Nations Security Council had given the two states until Aug. 2 to resolve all outstanding disputes or face sanctions.
The Security Council is now expected to hold a meeting Aug. 9 to discuss the progress made in the process and to decide the way forward.
The oil deal, which came after months of back and forth negotiations, was reached at a time when U.S. Secretary of State Hillary Clinton became the most senior diplomat to visit South Sudan. Before her visit to Juba, Mrs. Clinton made a phone call to Sudan's foreign minister, where she urged a quick resolution of the oil spat.
"This (oil) agreement reflects leadership and a new spirit of compromise on both sides," Mrs. Clinton said Saturday.
Write to Nicholas Bariyo at
Credit: By Nicholas Bariyo
Subject: Petroleum industry; Oil sands; Agreements
Location: Uganda Sudan Ethiopia South Sudan
Company / organization: Name: United Nations Security Council; NAICS: 928120; Name: African Union; NAICS: 813940
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 5, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1031089988
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1031089988?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Europe's Oil Majors Plead for Patience
Author: Flynn, Alexis
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 Aug 2012: n/a.
ProQuest document link
Abstract:
With international oil firms no longer having easy, cheap access to the giant fields in Saudi Arabia and Russia, a greater share of their production now comes from unconventional sources, like Shell's giant Pearl plant in Qatar, which turns natural gas into more valuable oil-linked fuel products like diesel.
Full text: Downbeat quarterly earnings from Europe's major energy companies are a reminder that the bumper returns of two years ago are a long way from returning, as the sector expends time and money trying to secure new oil and gas fields.
While the market was braced for a drop in profits from a year ago, given that crude prices averaged 7% less than in the corresponding period in 2011, the scale of the future challenge faced by companies like BP PLC, Royal Dutch Shell PLC, Total SA and Eni SpA was yet again in evidence, analysts said.
The impact was particularly pronounced in the profit margin per barrel produced and sold in the U.S., as the cumulative effect of lower gas prices and lower margins per barrel of oil produced ate into the bottom line. Shell's profit per barrel there all but disappeared, falling to just $1 from $9 three months earlier, an analysis from RBC Capital showed. That of BP halved to $11 from $24, while that of Statoil slid to $13, from $30.
Although the long-term outlook for "Big Oil" still remains attractive, energy firms are balancing investor impatience, a weak consumer environment and the cost of adding fresh production to their diminishing reserves.
"These companies invest with a long-time frame in mind," said Jason Kenney, an Edinburgh-based analyst with Spanish bank Santander. "Over a 10-year or seven-year period, returns look positive, but not in the next two to three years when you consider the ongoing lags in the downstream, bleak macro picture, gas asset structural shift.... The outlook for energy demand use isn't certain."
Across the European oil sector, only Repsol SA beat analysts' expectations for earnings, said Peter Hutton, an analyst at RBC Capital.
He said that while companies are starting to have more success boosting output than in the past, profits are being stymied by higher costs.
"Volume growth across the sector was the highest for five years, but despite operational momentum, this was a quarter of earnings misses," he said.
This is in part because firms are still paying the higher costs of hiring drilling rigs and other services when crude prices were much higher a few months ago. Those prices are only likely to translate into cheaper costs, if current price levels are sustained or fall further. The cost of producing oil tends to rise and fall in tandem with the commodity itself, though it takes time for this to be reflected, given pre-existing contracts between oilfield services firms and producers.
And with the key theme that has dominated the sector over the past 10 years--access to resources--in no danger of disappearing, companies are unlikely to get much respite on the cost front.
With international oil firms no longer having easy, cheap access to the giant fields in Saudi Arabia and Russia, a greater share of their production now comes from unconventional sources, like Shell's giant Pearl plant in Qatar, which turns natural gas into more valuable oil-linked fuel products like diesel.
Although Pearl now contributes 260,000 barrels of oil equivalent a day to Shell's overall output, it came with a $20 billion price tag. It is a project that few firms other than the Anglo-Dutch giant, which spent eight years building the complex facility, could afford.
"The real challenge for large caps is on delivery [of profit growth]. Ten years ago, the issue was access to resources, which prompted the move into unconventional," said Santander's Mr. Kenney.
However, sometimes these moves to secure new patches can backfire, as the example of U.S. shale gas illustrates. Prices have tumbled as supply has expanded.
But despite the weaker profits, the fact that production volumes are cumulatively increasing year on year suggests that the long-term prognosis of fattening profits will materialize, But in the short term, companies will likely be caught in a double bind of relatively flat prices and high production costs.
For now, the sector will continue to deliver the steady, predictable returns that make companies like Shell and BP mainstays for many pension and similar long-term funds.
Meanwhile, however, investors looking for faster returns will likely be disappointed.
"You look at the large-cap oil sector for dividend yield, and the mid-cap, exploration-focused sector for growth," Mr. Kenney said.
Write to Alexis Flynn at
Credit: By Alexis Flynn
Subject: Profits; Petroleum industry; Oil sands; Costs; Energy economics; Natural gas; Energy industry
Location: Europe United States--US
People: Kenney, Jason
Company / organization: Name: Statoil; NAICS: 324110; Name: Eni SpA; NAICS: 211 111, 324110; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Total SA; NAICS: 211111, 324110, 447190; Name: BP PLC; NAICS: 324110, 447110, 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 5, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1031093162
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1031093162?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Sudan Oil Deal Hits Snag on Security
Author: Bariyo, Nicholas
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]06 Aug 2012: A.14.
ProQuest document link
Abstract:
Mutrif Siddiq, spokesman for the Sudanese negotiating team in Ethiopia, said that despite reaching the African Union-mediated deal on oil-transit fees, "no agreement will be signed" until a deal is agreed on the restoration of security in Sudan's three restive border states, where Sudanese forces are battling rebel groups, allegedly backed by the South.
Full text: KAMPALA, Uganda -- The recently agreed deal between oil-producing South Sudan and Sudan, which was expected to allow the resumption of vital oil shipments through Sudanese pipelines and ports, is under threat because of lingering tensions along the two nations' common border, officials said Sunday.
Mutrif Siddiq, spokesman for the Sudanese negotiating team in Ethiopia, said that despite reaching the African Union-mediated deal on oil-transit fees, "no agreement will be signed" until a deal is agreed on the restoration of security in Sudan's three restive border states, where Sudanese forces are battling rebel groups, allegedly backed by the South.
"Any agreement on oil shall be subject to the implementation of a full and final agreement on security matters," Mr. Siddiq said.
The Sudanese stance watered down South Sudan's prospects of resuming its 350,000 barrels-a-day oil output, halted in January when the transit-fees feud flared up, threatening the economies of two oil-producing nations.
"We are still talking but our desire is to resume oil output as soon as possible," said Barnaba Benjamin, South Sudan's information minister.
The two formerly united nations are yet to decide the precise position of their 1,120-mile oil-rich common border after a messy separation in July last year, which saw South Sudan break away with as much as 75% of Sudanese oil fields.
Talks over border security are continuing, but a final deal isn't envisaged until Ramadan concludes, at the end of August, Sudanese officials say. Prospects of a quick breakthrough remain murky after Sudan rejected an AU-proposed map last week to set up a demilitarized zone along the border to ease tensions between the two countries, which edged closer to an all-out war in April, after weeks of cross-border fights.
South Sudan has to urgently restart output in order to bolster its foreign-exchange reserves, which have nearly been depleted after months of the border feud. The United Nations Security Council had given the two states until Aug. 2 to resolve all outstanding disputes or face sanctions. The Security Council is now expected to meet Thursday to decide the way forward.
The oil deal, which came after months of back and forth negotiations, was reached at a time when U.S. Secretary of State Hillary Clinton became the most senior diplomat to visit South Sudan. Before her visit to Juba, Mrs. Clinton made a phone call to Sudan's foreign minister, where she urged a quick resolution of the oil spat.
"This [oil] agreement reflects leadership and a new spirit of compromise on both sides," Mrs. Clinton said Saturday.
Subscribe to WSJ:
Credit: By Nicholas Bariyo
Subject: National security; Oil sands; Territorial issues
Location: Sudan South Sudan
Classification: 9177: Africa; 8350: Transportation & travel industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.14
Publication year: 2012
Publication date: Aug 6, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1031147532
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1031147532?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Twitter Rumor Sparked Oil-Price Spike
Author: Friedman, Nicole
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 Aug 2012: n/a.
ProQuest document link
Abstract:
Traders and analysts said fears that Iran would disrupt oil supplies have kept prices for the benchmark U.S. crude above $80 a barrel recently despite a shaky outlook for global economic growth and oil demand.
Full text: Crude-oil futures bounced up over $1 at one point Monday after a false Twitter rumor exposed the oil market's knee-jerk fear of Mideast turmoil.
A Twitter account claiming to represent Vladimir Kolokoltsev, the Russian interior minister, tweeted at 9:59 a.m. New York time that Syrian President Bashar al-Assad had been killed or injured, followed by two tweets claiming to confirm the death.
Between 10:15 a.m. and 10:45 a.m., futures for light, sweet crude rose from $90.82 to $91.99 a barrel on the New York Mercantile Exchange.
In the age of rapid-fire tweets, "a well-placed story can move the market, and that looks like what happened," said Phil Flynn, an analyst at Price Futures Group.
The Russian Interior Ministry denied issuing the statement and told Reuters that it wasn't connected to the Twitter account.
The oil markets always have kept a close eye on developments in the crude-rich Middle East, but that scrutiny has ratcheted up by the current conflict between the West and Iran over Tehran's nuclear-weapons program. The West has imposed sanctions. Iranian officials have threatened to retaliate by closing down the Strait of Hormuz, through which a third of the world's seaborne crude passes.
Traders and analysts said fears that Iran would disrupt oil supplies have kept prices for the benchmark U.S. crude above $80 a barrel recently despite a shaky outlook for global economic growth and oil demand.
"The markets are paying a lot of attention to what's going on in the Middle East," said Peter Donovan of Vantage Trading.
Syria, the focus of the rumor, produces little oil. However, market participants said they are worried that Iran would react because it is a major supporter of the Assad regime.
The rumor was circulated by traders through email and instant messages. "I heard it not so much in the Twitterverse as in the big-mouth-verse," said Tom Kloza, publisher and chief oil analyst of the Oil Price Information Service.
The quick spread of rumors isn't a new phenomenon for the oil markets. Mr. Kloza said before both electronic trading and electronic communication, rumors would "sweep through the floor," passing from one trader to the next.
Monday's oil spike quickly reverted, but not entirely, as a weaker dollar supported prices for the rest of the session. Light, sweet crude for September delivery rose 80 cents, or 0.9%, to settle at $92.20 a barrel on the New York Mercantile Exchange, the highest settlement price since July 19. Trading volumes were at about 60% of the 12-month average Monday, making price moves more exaggerated in the thinly traded markets.
Though the report turned out to be false, Mideast unrest is "always a background" to the market, said Andy Lebow, a trader and broker for Jefferies.
Credit: By Nicole Friedman
Subject: Petroleum industry; Social networks; Futures; Gossip
Location: Iran Middle East New York
People: Assad, Bashar Al
Company / organization: Name: Twitter Inc; NAICS: 519130; Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 6, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1031213410
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1031213410?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Sudan Oil Deal Hits Snag on Security
Author: Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 Aug 2012: n/a. [Duplicate]
ProQuest document link
Abstract:
Mutrif Siddiq, spokesman for the Sudanese negotiating team in Ethiopia, said that despite reaching the African Union-mediated deal on oil-transit fees, "no agreement will be signed" until a deal is agreed on the restoration of security in Sudan's three restive border states, where Sudanese forces are battling multiple rebel groups, allegedly backed by the South.
Full text: KAMPALA, Uganda--The recently agreed deal between oil-producing South Sudan and Sudan, which was expected to allow the resumption of vital oil shipments through Sudanese pipelines and ports, is under threat because of lingering tensions along the two nations' common border, officials said Sunday.
Mutrif Siddiq, spokesman for the Sudanese negotiating team in Ethiopia, said that despite reaching the African Union-mediated deal on oil-transit fees, "no agreement will be signed" until a deal is agreed on the restoration of security in Sudan's three restive border states, where Sudanese forces are battling multiple rebel groups, allegedly backed by the South.
"Any agreement on oil shall be subject to the implementation of a full and final agreement on security matters," Mr. Siddiq said.
The Sudanese stance watered down South Sudan's prospects of resuming its 350,000 barrels-a-day oil output, halted in January when the transit-fees feud flared up, threatening the economies of two oil-producing nations.
"We are still talking but our desire is to resume oil output as soon as possible," said Barnaba Benjamin, South Sudan's information minister.
The two formerly united nations are yet to decide the precise position of their 1,120-mile oil-rich common border after a messy separation in July last year, which saw South Sudan break away with as much as 75% of Sudanese oil fields.
Talks over border security are continuing, but a final deal isn't envisaged until Ramadan concludes, at the end of August, Sudanese officials say. Prospects of a quick breakthrough remain murky after Sudan rejected an AU-proposed map last week to set up a demilitarized zone along the border to ease tensions between the two countries, which edged closer to an all-out war in April, after weeks of cross-border fights.
South Sudan has to urgently restart output in order to bolster its foreign-exchange reserves, which have nearly been depleted after months of the border feud. The United Nations Security Council had given the two states until Aug. 2 to resolve all outstanding disputes or face sanctions. The Security Council is now expected to meet Thursday to decide the way forward.
The oil deal, which came after months of back and forth negotiations, was reached at a time when U.S. Secretary of State Hillary Clinton became the most senior diplomat to visit South Sudan. Before her visit to Juba, Mrs. Clinton made a phone call to Sudan's foreign minister, where she urged a quick resolution of the oil spat.
"This (oil) agreement reflects leadership and a new spirit of compromise on both sides," Mrs. Clinton said Saturday.
Write to Nicholas Bariyo at
Credit: By Nicholas Bariyo
Subject: Petroleum industry; Oil sands; Agreements
Location: Uganda Sudan Ethiopia South Sudan
Company / organization: Name: United Nations Security Council; NAICS: 928120; Name: African Union; NAICS: 813940
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 6, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1033161840
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1033161840?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
EIA Increases Forecasts for 2012 Oil Prices
Author: Friedman, Nicole
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Aug 2012: n/a.
ProQuest document link
Abstract:
The price projections were part of the August edition of the Short-Term Energy Outlook, released monthly by the EIA, the independent statistical arm of the U.S. Department of Energy.
Full text: NEW YORK--The U.S. government raised its forecasts for the prices of oil and oil products Tuesday after crude-oil prices rose 4% in July.
The Energy Information Administration projected the price of West Texas Intermediate crude, the U.S. benchmark, will average $93.90 a barrel in 2012, up from $92.83 a barrel predicted in July. WTI for September delivery recently traded up $1.42, or 1.5%, at $93.62 a barrel on the New York Mercantile Exchange.
The price projections were part of the August edition of the Short-Term Energy Outlook, released monthly by the EIA, the independent statistical arm of the U.S. Department of Energy.
The EIA also revised its price estimate for Brent crude, the European benchmark, upward to $108.07 a barrel from $106. The report included price estimates for Brent for the first time last month. Brent futures recently traded up $2.32, or 2.1%, at $111.87 a barrel.
Retail gasoline prices were forecast to average $3.53 a gallon this year, up from a $3.49 a gallon in the July estimate. The EIA expects retail diesel prices to average $3.84 a gallon, up from last month's estimated $3.79 a gallon. Heating-oil prices were projected to average $3.68 a gallon, up from $3.64 a gallon estimated in July.
Credit: By Nicole Friedman
Subject: Petroleum industry; Prices; Oil sands
Location: United States--US
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210; Name: Department of Energy; NAICS: 926130
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 7, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1032543436
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1032543436?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iran Barters and Bargains to Help Oil Sales
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Aug 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: After being hit by European and U.S. sanctions, Iran's oil sales are stabilizing as the country entices buyers with attractive prices and a form of barter. But proposed new U.S. restrictions could further bite into its crude exports later this year.
South Korea, historically the fourth-largest buyer of Iranian crude at 239,000 barrels a day, represents the potential limits of Western pressure on Iranian exports.
The Asian nation stopped buying Iranian oil, which had accounted for about 10% of its needs, when a ban on insurance coverage from European companies left private refiners SK Energy and Hyundai Oilbank Co. unable to load Tehran's crude. The move was part of a pullout by Iranian oil buyers that halved the country's exports after the European Union imposed an oil embargo and the U.S. put pressure on Asian buyers to cut purchases in exchange for waiving sanctions against their own banks. Iranian crude production has fallen to below three million barrels a day, a level not seen since 1990, the aftermath of Iran's war with Iraq.
Yet, South Korea in recent days has signaled it was likely to resume crude purchases from Iran, possibly as early as September.
A form of barter set up by Iran provides an incentive to keep--or in the case of Seoul, to resume--its crude purchases. Faced with banking sanctions that impede its ability to receive crude proceeds and settle its bills for imported goods, the Islamic Republic increasingly gets paid into accounts based in the Asian countries where it sells the oil and in their local currency. Iranian traders then draw on the reserves to purchase goods exported to Iran.
South Korean products are ubiquitous in Tehran--from smartphones made by Samsung Electronics Co. Ltd. to LG Electronics Inc. televisions and even costume dramas on local televisions; Iranian imports from the country amounted to $6 billion last year. An unnamed official at Hyundai Oilbank said last week it was in the final stages of talks with Iran to resume crude oil imports from the Middle Eastern country beginning next month.
"South Korea is obviously interested in maintaining its non-oil business with Iran," says Michael Dei-Michei, an analyst at Vienna-based oil consultancy JBC Energy GmbH.
Bartering with India and China is already cushioning Iran exports against further decline. Flows of Indian rice, medicine and steel to Iran have surged in recent weeks after Tehran's private banks were able to use the rupees gained from oil sales and were even allowed to pay for the goods 100% upfront, one Iran trade professional said.
However, locking both sides in a captive trade relationship isn't the only reason why buyers are still interested in buying Iranian oil. South Korea is negotiating the use of Iranian tankers--insured by the Islamic Republic--and the loss of Tehran crude is economically costly.
Seoul's "refining sector would simply have a very hard time finding replacements for Iranian oil" at competitive prices in the long run, Mr. Dei-Michei says.
Global oil prices, including the Saudi crude that Korea is using as a substitute for Iranian oil, have rebounded in recent weeks amid positive news over the global economic recovery.
By contrast, Iran has is showing more flexibility when it comes to negotiating prices--a move China has taken advantage of. After a pricing dispute that ended with Beijing getting the upper hand, the country, long Tehran's largest oil buyer, has reversed a cut in Iranian imports, boosting them by 17% in June.
As a result, Iran's oil exports have stabilized in the past two months at about 1.1 million barrels a day and the rate of decline of its production has slowed, according to analysts.
To offset the decline in output, Iran is replacing Western technologies with domestic ones. According to a study published in Iran's oil ministry in-house magazine, Iran is now self-sufficient in technologies such as seismic-exploration software and most drilling cement and wellhead equipment.
Yet, Iran is unlikely to achieve better than stagnant production. It has tried to sell its oil to new customers such as Egypt, where millions of barrels of its oil are stored, and Russia, but has failed to reach a final agreement with buyers in either country, according to people familiar with the efforts. An Iranian oil marketing official declined to comment.
Attempts in Iran to boost refining to increase the exports of oil products are also facing challenges. One manager at one of Iran's largest refiners, Pars Oil Co., says the firm is struggling to import some chemical additives for its refineries because of the falling value of the Iranian currency, the rial.
An official at Pars Oil & Gas Co., a different company and which oversees the development of the country's largest natural-gas field, said the company won't rely on local manufacturers for the majority of its pipes because "they don't have enough experience...there is a problem with standards."
By the end of the year, new sanctions in the U.S. could dent both oil exports and production. Lawmakers approved penalties last week on firms insuring the National Iranian Oil Co. or the National Iranian Tanker Co. or provide tankers to Iran, though the measure has yet to be signed into law.
But when it does, Nigel Kushner, a sanctions expert on London law firm W Legal, says he expect this new legislation "will slice further Iran's crude oil exports" because of "the fear it brings" in dealing with Iran.
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 7, 2012
column: Market Focus
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1032545809
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1032545809?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
High Oil Prices Hit Cathay
Author: Chiu, Joanne
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 Aug 2012: n/a.
ProQuest document link
Abstract:
In the first half, the Hong Kong-based carrier and its China-focused unit, Hong Kong Dragon Airlines Ltd., carried 14.31 million passengers, 8.6% more from a year earlier, but cargo volume fell 9.8% to 753,901 metric tons during the same period because of a slowdown in international trade, Its passenger load factor--or the proportion of seats filled on flights--rose 0.8 percentage points to 80.1% in the first half, as capacity, measured by available seat kilometers, was up 6.9% from a year earlier at 65.35 billion ASKs.
Full text: HONG KONG--Cathay Pacific Airways Ltd. Wednesday posted its biggest interim net loss in nearly a decade, as it reeled under high fuel prices and a weak global economy that battered demand for passenger and freight services.
The blue-chip carrier, which last posted an interim loss in 2008, warned it continues to face rough weather ahead as fuel prices remain persistently high and demand shows little sign of picking up amid a fragile global economy.
This is the carrier's first net loss in four years since the outbreak of the financial crisis in 2008, when it posted an interim net loss of 760 million Hong Kong dollars ($97.4 million). This is also the airline's biggest loss following a HK$1.24 billion interim net loss in 2003, when the outbreak of severe acute respiratory syndrome took a toll on global air travel demand.
The airline said in a statement its net loss for the six months ended June 30 was HK$935 million ($120 million), compared with a first-half net profit of HK$2.81 billion a year earlier.
"The cost of fuel is the biggest challenge, although the recent reduction in the fuel price will, if sustained, provide welcome relief," Chairman Christopher Pratt said in a statement.
In the first half, Cathay Pacific's fuel costs, which accounted for 42% of its total operating costs, rose 6.5% to HK$20.80 billion from HK$19.53 billion. The airline said its realized profit from fuel hedging fell 59% from a year earlier to HK$391 million, as it found it difficult to hedge due to volatile fuel prices.
In contrast, Cathay Pacific's major rival Singapore Airlines Ltd. on July 25 said it swung to a quarterly net profit of S$78 million during April-June period, from a net loss of S$38 million in the January-to-March quarter, as fuel prices stabilized during the period. However, the carrier flagged a weak outlook for its cargo business due to sluggish international trade.
Cathay was also hit by lower contribution from its associates--including 19.53%-owned Air China Ltd. and their air cargo joint venture Air China Cargo Ltd. Cathay said the Chinese flag carrier's profit contribution in the first half was substantially lower at HK$244 million because of reduced demand, increased fuel costs and unfavorable exchange-rate movements. It didn't give the year-earlier figures for comparison.
It said the combined contributions from all associates amounted to a loss of HK$167 million, compared with a profit of HK$861 million a year earlier.
Cathay Pacific has said earlier it is considering accelerating the retirement of aging Boeing Co. 747-400 passenger aircraft over the next few years, trimming frequencies on some long-haul routes to North America and Europe in response to the high fuel prices and softening demand.
In the first half, the Hong Kong-based carrier and its China-focused unit, Hong Kong Dragon Airlines Ltd., carried 14.31 million passengers, 8.6% more from a year earlier, but cargo volume fell 9.8% to 753,901 metric tons during the same period because of a slowdown in international trade,
Its passenger load factor--or the proportion of seats filled on flights--rose 0.8 percentage points to 80.1% in the first half, as capacity, measured by available seat kilometers, was up 6.9% from a year earlier at 65.35 billion ASKs.
Revenue rose 4.4% to HK$48.86 billion from HK$46.79 billion. It didn't recommend a first-half dividend. It recommended a first-half dividend of 18 HK cents in the previous year.
Write to Joanne Chiu at
Credit: By Joanne Chiu
Subject: Airlines; Net losses; Costs; Prices; Profits
Company / organization: Name: Singapore Airlines Ltd; NAICS: 481111; Name: Cathay Pacific Airways Ltd; NAICS: 481111; Name: Boeing Co; NAICS: 336411, 336413, 336414
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 8, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1032602172
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1032602172?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Chesapeake Budget Plans Lift Stock --- Pledge to Pare Spending, Extend Focus on Oil Production Helps Shares Rise 9.4%
Author: Gilbert, Daniel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]08 Aug 2012: B.4.
ProQuest document link
Abstract:
Revenues at Chesapeake, the country's second-biggest gas natural-gas producer after Exxon Mobil Corp., have been battered by natural-gas prices that have sunk to their lowest level in a decade.
Full text: Chesapeake Energy Corp. shares jumped 9.4% Tuesday as executives detailed plans to cut spending and improve profits at the cash-strapped driller during a conference call to discuss its earnings.
Striking a more sober tone than in past earnings calls, executives of the Oklahoma City-based company renewed their pledge to trim spending next year, saying the company would reduce the number of drilling rigs it operates by 25%, to 100, but drill the same number of wells. Executives also said they would bring in $7 billion from asset sales by September.
"We anticipate much higher returns from our portfolio than you have seen in the past," said Aubrey McClendon, Chesapeake's co-founder and chief executive, who in May touted the company's rate of increasing oil production as "perhaps one of the best in the world." Oil production rose 88% in the second quarter from a year earlier, the company said in its earnings release Monday.
The promise of reduced spending, along with the increased production of oil by the natural-gas giant, pleased investors. Analysts were cautiously optimistic, with those at Sanford C. Bernstein & Co. saying in a note that "trimmed 2013 expenditures provide the promise of a better next year."
Chesapeake's shares ended the trading day at $19.37, up $1.67, in New York Stock Exchange composite trading, though they remain down about 29% from a year ago.
Revenues at Chesapeake, the country's second-biggest gas natural-gas producer after Exxon Mobil Corp., have been battered by natural-gas prices that have sunk to their lowest level in a decade. Mr. McClendon predicted that gas prices have bottomed -- they are currently around $3 per million British thermal units, after touching $1.90 in April -- and he expects them to recover in 2013.
The company has spent heavily -- more than six times the cash from its operations this year -- in a bid to produce more lucrative oil.
Chesapeake increased its planned spending on exploring and drilling for this year, but executives said Tuesday they would clamp down on costs and have reduced their drilling budget for 2013 by $750 million. Their focus will remain on increasing oil output.
The company's largest shareholders, Southeastern Asset Management Inc. and Carl Icahn, effectively took control of its board in June and have advocated for reduced capital spending. Chesapeake's earnings release said the board was reviewing operations for 2013 that could result in changes later this year. Company executives said Tuesday they don't expect dramatic changes to their plans.
But Tim Rezvan, a senior analyst at Sterne Agee, expects the board may further cut spending from levels currently forecast for 2013. "I think this [current spending-reduction plan] is a precursor for more changes to come," he said.
The company tried to placate investors concerned about its liquidity by raising the amount of cash it expects to collect from asset sales this year to at least $13 billion, up from $11.5 billion.
Chesapeake is counting on proceeds from the sales to help bring its $14.3 billion in long-term debt down to its goal of $9.5 billion by the end of the year.
The company is also taking longer to close some deals than it had forecast. Chesapeake has reached an agreement and is close to two others to sell its vast holdings in the oil-rich Permian Basin of West Texas, but executives said Tuesday it still had acreage left there and would pursue an additional deal. The company hasn't disclosed a price for the assets.
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Credit: By Daniel Gilbert
Subject: Capital expenditures; Cost reduction; Natural gas industry; Stock prices
Location: Oklahoma
People: McClendon, Aubrey
Company / organization: Name: Chesapeake Energy Corp; NAICS: 211111
Classification: 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.4
Publication year: 2012
Publication date: Aug 8, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1032629778
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1032629778?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Re produced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Rolls Engines on A380s Face New Scrutiny --- European Regulators Order Inspections of Oil System; Review Is Similar to Checks Following 2010 Qantas Incident
Author: Pasztor, Andy; Ostrower, Jon
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]09 Aug 2012: B.6.
ProQuest document link
Abstract:
Prompted by an in-flight engine fire and eight other dangerous oil-system incidents that affected engines made by Pratt & Whitney, the Federal Aviation Administration previously mandated enhanced inspections of oil tubes on more than 900 of the company's widely used PW 4000 engines.\n
Full text: European air-safety regulators ordered another round of high-priority inspections of Rolls-Royce PLC engines on dozens of Airbus A380 aircraft, similar to checks they mandated after an engine blowout caused nearly catastrophic damage to a Qantas superjumbo in 2010.
Tuesday's move by the European Aviation Safety Agency refocuses attention on the oil-distribution system inside Rolls-Royce's Trent 900 models, the same engine family that suffered an internal oil leak resulting in the high-profile accident two years ago. The engines are used only on the A380, which is made by Airbus, a unit of European Aeronautic Defence & Space Co.
The latest safety directive was prompted by a malfunction of a Rolls-Royce Trent 900 engine on a Singapore Airlines flight from Singapore to Hong Kong last month, said an industry official familiar with the details. Nobody was hurt, pilots shut down the engine and the plane returned safely to Singapore.
But investigators now believe some of the engine's turbines seized up due to inadequate lubrication because a part between an oil tube and a cover for some bearings was never installed, according to the European Aviation Safety Agency.
European regulators on Tuesday ordered some carriers to finish the safety checks and complete necessary repairs by the end of the month -- an unusually short deadline for most safety directives.
More than 200 Trent 900 engines are being checked for the missing part, with 30 engines identified as a priority, said the industry official. All of the priority engines currently flying on A380s have been checked, the official said.
Rolls-Royce said the lack of lubrication was traced to a part that was omitted during assembly. "As a precautionary measure, checks to ensure the correct fitting of the component are now well advanced," said company spokesman Bill O'Sullivan. "Measures have been taken to prevent a repeat occurrence," Mr. O'Sullivan added.
Singapore Airlines Ltd. served as launch customer for the A380 and the Trent 900 engine in 2007. It has been joined by Rolls-Royce engine customers Qantas Airways Ltd., Deutsche Lufthansa AG, China Southern Airlines Co. and, most recently,Malaysia Airlines System Bhd.
Emirates Airline, Air France-KLM and Korean Air Lines Co. operate the A380 with Engine Alliance GP7200 engines. Engine Alliance is a joint venture between General Electric Co. and Pratt & Whitney, a unit of United Technologies Corp.
The inspections will search for potential fractures of certain oil tubes, and consider whether nearby portions of bearing covers need to be replaced. Such fractures can reduce oil flow and may damage bearings. Reduced lubrication may result in engine disintegration or "uncontained engine failure," according to the directive from the European Aviation Safety Agency, which could cause fractured internal pieces to blast through engine coverings and damage other parts of the airplane.
The oil tubes pinpointed in the directive are different from those under previous scrutiny, but the inspections again draw attention to potential hazards stemming from oil leaks, pools of oil inside engine compartments and the fires they sometimes spark.
Earlier safety directives by European and U.S. regulators ordered inspections to identify and eliminate such dangers on other Airbus and Boeing Co. jetliners powered by engines supplied by various makers. Prompted by an in-flight engine fire and eight other dangerous oil-system incidents that affected engines made by Pratt & Whitney, the Federal Aviation Administration previously mandated enhanced inspections of oil tubes on more than 900 of the company's widely used PW 4000 engines.
In the 2010 Qantas accident, investigators determined that a manufacturing flaw affecting some oil tubes initiated a chain of events that caused an engine disc to fail on a heavily loaded A380 shortly after takeoff from Singapore. The engine spewed out flames and a trail of metal debris, which badly damaged portions of the wing and swaths of electrical wiring.
The Qantas pilots confronted a cascade of fuel leaks,system failures and flight-computer malfunctions after the engine explosion, including stall warnings and inoperative fuel pumps as they were on final approach to touching back down in Singapore. The crew struggled to shut down one of the jet's engines, compounding worries the overheated brakes and a small fire that had melted portions of the tarmac would pose a greater fire danger as fuel continued to leak from the stricken jet.
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Credit: By Andy Pasztor and Jon Ostrower
Subject: Airlines; Aviation; Aircraft industry; Inspections; Aircraft accidents & safety; Airplane engines
Location: Europe
Company / organization: Name: Rolls-Royce PLC; NAICS: 336412, 333611
Classification: 5320: Quality control; 8680: Transportation equipment industry; 9180: International
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.6
Publication year: 2012
Publication date: Aug 9, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1032728499
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1032728499?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Cnooc to Submit Oil Deal for Review
Author: Tracy, Tennille
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 Aug 2012: n/a.
ProQuest document link
Abstract:
Sen. James Inhofe (R., Okla.) said he has "serious national security concerns" with a state-controlled Chinese company having control over U.S. energy resources.
Full text: WASHINGTON--China's Cnooc Ltd. said it plans to defend its $15 billion proposed buyout of Canadian oil producer Nexen Inc. before U.S. regulators by describing itself as a publicly traded company that has a record of compliance with U.S. law.
State-controlled Cnooc confirmed Thursday it plans to request a national security review by the U.S., hoping to smooth a path for the deal's completion. While Nexen is based in Canada, it holds oil-drilling leases in the Gulf of Mexico, giving the Obama administration a say in the deal.
Cnooc will look to allay possible U.S. concerns by affirming its status as a publicly traded corporation governed by an independent board of directors, a spokesman said. The company also plans to highlight its compliance with U.S. laws and regulations via minority holdings in onshore natural-gas drilling projects and leases in the Gulf, he said.
The Cnooc spokesman declined to comment on the possible outcome of the review, conducted by the Committee of Foreign Investment in the U.S., or CFIUS, but he said, "We have emphasized that the deal poses no threat to U.S. national security."
Nexen holds about 2% of the acreage currently leased in the Gulf of Mexico and its oil output accounts for less than one-tenth of 1% of total U.S. oil production, according to Cnooc.
The proposed deal, announced last month, has drawn fire from U.S. lawmakers from both parties, including demands that it be submitted to stringent review under CFIUS, a federal committee that analyzes foreign acquisitions for potential risks.
Sen. James Inhofe (R., Okla.) said he has "serious national security concerns" with a state-controlled Chinese company having control over U.S. energy resources. Sen. Charles Schumer (D., N.Y.) said he wants the administration to use the deal as leverage to pressure China into opening up its own markets to U.S. companies.
Rep. Edward Markey (D., Mass.), meanwhile, has asked the administration to halt the deal until Cnooc agrees to pay royalties on a pair of Nexen leases currently exempt from payments to the U.S. government.
Dozens of CFIUS reviews are conducted each year, but few result in the U.S. government blocking a deal. As of the end of 2010, the Obama administration hadn't put the brakes on any foreign transactions, according to government reports.
Cnooc's acquisition of Nexen is likely to draw more scrutiny than most deals, however, given sensitivity about China owning U.S. energy resources in the Gulf of Mexico, analysts say.
Write to Tennille Tracy at
Credit: By Tennille Tracy
Subject: Petroleum industry; Acquisitions & mergers; National security; Petroleum production
Location: China United States--US Canada
People: Schumer, Charles E
Company / organization: Name: CNOOC Ltd; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 9, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1032812920
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1032812920?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Cnooc to Submit Oil Deal for Review
Author: Tracy, Tennille
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]10 Aug 2012: B.2.
ProQuest document link
Abstract:
Sen. James Inhofe (R., Okla.) said he has "serious national security concerns" with a state-controlled Chinese company having control over U.S. energy resources.
Full text: WASHINGTON -- China's Cnooc Ltd. said it plans to defend its $15 billion proposed buyout of Canadian oil producer Nexen Inc. before U.S. regulators by describing itself as a publicly traded company that has a record of compliance with U.S. law.
State-controlled Cnooc confirmed Thursday it plans to request a national security review by the U.S., hoping to smooth a path for the deal's completion. While Nexen is based in Canada, it holds oil-drilling leases in the Gulf of Mexico, giving the Obama administration a say in the deal.
Cnooc will look to allay possible U.S. concerns by affirming its status as a publicly traded corporation governed by an independent board of directors, a spokesman said. The company also plans to highlight its compliance with U.S. laws and regulations via minority holdings in onshore natural-gas drilling projects and leases in the Gulf, he said.
The Cnooc spokesman declined to comment on the possible outcome of the review, conducted by the Committee of Foreign Investment in the U.S., or CFIUS, but he said, "We have emphasized that the deal poses no threat to U.S. national security."
Nexen holds about 2% of the acreage currently leased in the Gulf of Mexico and its oil output accounts for less than one-tenth of 1% of total U.S. oil production, according to Cnooc.
The proposed deal has drawn fire from U.S. lawmakers, including demands that it be submitted to stringent review under CFIUS, a federal committee that analyzes foreign acquisitions.
Sen. James Inhofe (R., Okla.) said he has "serious national security concerns" with a state-controlled Chinese company having control over U.S. energy resources. Sen. Charles Schumer (D., N.Y.) said he wants the administration to use the dealto pressure China into opening up its markets to U.S. companies.
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Credit: By Tennille Tracy
Subject: Petroleum industry; National security; Petroleum production; Oil sands; Acquisitions & mergers
Location: China United States--US Canada
People: Schumer, Charles E
Company / organization: Name: CNOOC Ltd; NAICS: 211111; Name: Nexen Inc; NAICS: 211111
Classification: 9190: United States; 2330: Acquisitions & mergers; 8510: Petroleum industry; 4310: Regulation
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.2
Publication year: 2012
Publication date: Aug 10, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1032863484
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1032863484?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Indian Oil Slips on Policy Mess
Author: Joshi, Harsh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 Aug 2012: n/a.
ProQuest document link
Abstract:
[...]the politicians get real on India's power crisis, investors should brace themselves for further cuts in energy and the profitability of companies generating it.
Full text: When it comes to India's recent failings, hyperbole is easy to come by. But it's tough to top the worst ever set of quarterly earnings for an Indian public company.
Indian Oil Corp.'s disastrous performance amounts to a $4 billion loss in the June quarter. That result is painful for investors in the country's biggest oil refiner by sales. It also underscores how pervasive are India's problems.
New Delhi owns 78.9% of Indian oil and mandates that fuel is sold at below market rates at the pumps. That keeps voters happy, but also costs marketing companies, upstream refiners and the government billions of dollars in subsidies each year. Sales of below market price diesel, for instance, are responsible for 60% of revenue loss of refiners--analysts say the price needs to go up by 26% for sales to be profitable.
In the past, the government has compensated the oil companies. But with a record fiscal deficit of $95 billion in the last fiscal year, the government has nothing left in the tank. New Delhi did not give any compensation to the refiners in the last quarter. The result is rising losses across the sector. Indian Oil's rival Hindustan Petroleum Corp. also posted a $1.7 billion loss in the quarter.
The mess extends beyond oil companies. Electricity tariffs are subsidized as well and distribution companies, nearly all of which are completely owned by the government, are running huge losses. More broadly, the country's massive power outage last week that left hundreds of millions of people without electricity also offered a highly visible demonstration of the impact of a failed energy strategy.
To fix the issues, Indian oil companies don't need more compensation but a paradigm policy shift. Freeing fuel prices is essential to companies' profitability. That would give investors confidence and draw much-needed investment. The challenge for new finance minister, P. Chidambaram, is to act without incurring the wrath of populist opponents and losing his office. That will be no easy task. Until the politicians get real on India's power crisis, investors should brace themselves for further cuts in energy and the profitability of companies generating it.
Write to Harsh Joshi at
Credit: By Harsh Joshi
Subject: Blackouts; Petroleum industry
Location: India
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 10, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: Englis h
Document type: News
ProQuest document ID: 1032921063
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1032921063?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Demand Outlook Places Lid on Oil
Author: Friedman, Nicole
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 Aug 2012: n/a.
ProQuest document link
Abstract:
Fears about the demise of the euro zone were significantly calmed by European Central Bank President Mario Draghi's promise two weeks ago to do "whatever it takes" to save the single currency, market participants said.
Full text: Oil prices fell as a widely watched market forecaster lowered its estimate for the growth in crude demand next year. Friday's decline left prices up only 1.6% on the week despite surging to a three-month high Tuesday.
The International Energy Agency lowered--by 20%--its forecast for 2013 global demand growth. The energy watchdog cited worries about the world's economy in cutting its expectations to 0.8 million barrels a day from its earlier estimate of one million barrels a day.
"They gave a pretty downbeat outlook," John Kilduff, a founding partner of Again Capital, said of the report. "It was fairly negative."
The IEA echoed an Organization of Petroleum Exporting Countries report Thursday. The group warned that it could lower its own demand-growth forecast for 2013 by as much as 20%. OPEC blamed an economic slowdown in Asia, particularly in China, the world's No. 2 oil consumer.
Light, sweet crude for September delivery fell 49 cents, or 0.5%, to settle at $92.87 a barrel on the New York Mercantile Exchange on Friday. Brent crude lost 27 cents, or 0.2%, to settle at $112.95 a barrel on the IntercontinentalExchange.
Prices also were dented by signs that China's economic engine was losing steam. The nation's July trade surplus fell to $25.1 billion, well below the forecasted $35.2 billion.
In addition, China reported its lowest level of crude-oil imports in nine months.
Pessimistic Chinese data recently have supported oil prices, as traders hoped signs of a slowdown would prompt the Chinese government to implement new stimulus measures to boost economic growth.
However, "the steady stream of negative news out of not only China, but the U.S. and Europe as well, has become so great that it is finally trumping stimulus-led expectations for growth," brokerage Tradition Energy said in a note.
The sagging predictions of demand closed out a week where U.S. crude futures rose to a 12-week high of $93.67 a barrel Tuesday on several factors.
Fears about the demise of the euro zone were significantly calmed by European Central Bank President Mario Draghi's promise two weeks ago to do "whatever it takes" to save the single currency, market participants said.
At the same time, rising tensions in Syria put upward pressure on crude. Syria produces a minuscule amount of oil, but Iran is a major backer of Syrian President Bashar al-Assad. Traders and analysts fear that if things unravel in Syria, Iran may move to disrupt oil supplies from the region.
News out of Syria and Iran has been "helping to boost" prices, Mr. Kilduff said.
Hopes that the Federal Reserve would institute another round of monetary stimulus also helped buoy the market in recent weeks. Crude futures get a double benefit from such actions. First, any additional economic activity will likely spur demand for more oil. Also, stimulus normally weakens the dollar, raising the price of dollar-denominated crude futures.
But the slack demand outlook slammed the lid on the rising momentum in prices Friday, according to Tariq Zahir, a managing member of Tyche Capital Advisors.
"Prices are relatively capped to the upside," Mr. Zahir added.
Front-month September reformulated gasoline blendstock, or RBOB, rose 0.31 cent, or 0.1%, to settle at $3.0039 a gallon. September heating oil fell 2.45 cents, or 0.8%, to $3.0205 a gallon.
Write to Nicole Friedman at
Credit: By Nicole Friedman
Subject: Crude oil prices; Petroleum industry; Futures
Location: China Syria
People: Assad, Bashar Al
Company / organization: Name: IntercontinentalExchange Inc; NAICS: 523210; Name: International Energy Agency; NAICS: 928120; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: New York Mercantile Exchange; NAICS: 523210; Name: European Central Bank; NAICS: 521110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 10, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1032946616
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1032946616?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Demand Outlook Places Lid on Oil
Author: Friedman, Nicole
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]11 Aug 2012: B.4.
ProQuest document link
Abstract:
Fears about the demise of the euro zone were significantly calmed by European Central Bank President Mario Draghi's promise two weeks ago to do "whatever it takes" to save the single currency, market participants said.
Full text: Oil prices fell as a widely watched market forecaster lowered its estimate for the growth in crude demand next year. Friday's decline left prices up only 1.6% on the week despite surging to a three-month high Tuesday.
The International Energy Agency lowered -- by 20% -- its forecast for 2013 global demand growth. The energy watchdog cited worries about the world's economy in cutting its expectations to 0.8 million barrels a day from its earlier estimate of one million barrels a day.
"They gave a pretty downbeat outlook," John Kilduff, a founding partner of Again Capital, said of the report. "It was fairly negative."
The IEA echoed an Organization of Petroleum Exporting Countries report Thursday. The group warned that it could lower its own demand-growth forecast for 2013 by as much as 20%. OPEC blamed an economic slowdown in Asia, particularly in China, the world's No. 2 oil consumer.
Light, sweet crude for September delivery fell 49 cents, or 0.5%, to settle at $92.87 a barrel on the New York Mercantile Exchange on Friday. Brent crude lost 27 cents, or 0.2%, to settle at $112.95 a barrel on the IntercontinentalExchange.
Prices also were dented by signs that China's economic engine was losing steam. The nation's July trade surplus fell to $25.1 billion, well below the forecasted $35.2 billion.
In addition, China reported its lowest level of crude-oil imports in nine months.
Pessimistic Chinese data recently have supported oil prices, as traders hoped signs of a slowdown would prompt the Chinese government to implement new stimulus measures to boost economic growth.
However, "the steady stream of negative news out of not only China, but the U.S. and Europe as well, has become so great that it is finally trumping stimulus-led expectations for growth," brokerage Tradition Energy said in a note.
The sagging predictions of demand closed out a week where U.S. crude futures rose to a 12-week high of $93.67 a barrel Tuesday on several factors.
Fears about the demise of the euro zone were significantly calmed by European Central Bank President Mario Draghi's promise two weeks ago to do "whatever it takes" to save the single currency, market participants said.
At the same time, rising tensions in Syria put upward pressure on crude. Syria produces a minuscule amount of oil, but Iran is a major backer of Syrian President Bashar al-Assad. Traders and analysts fear that if things unravel in Syria, Iran may move to disrupt oil supplies from the region.
News out of Syria and Iran has been "helping to boost" prices, Mr. Kilduff said.
Hopes that the Federal Reserve would institute another round of monetary stimulus also helped buoy the market in recent weeks. Crude futures get a double benefit from such actions. First, any additional economic activity will likely spur demand for more oil. Also, stimulus normally weakens the dollar, raising the price of dollar-denominated crude futures.
But the slack demand outlook slammed the lid on the rising momentum in prices Friday, according to Tariq Zahir, a managing member of Tyche Capital Advisors.
"Prices are relatively capped to the upside," Mr. Zahir added.
Front-month September reformulated gasoline blendstock, or RBOB, rose 0.31 cent, or 0.1%, to settle at $3.0039 a gallon. September heating oil fell 2.45 cents, or 0.8%, to $3.0205 a gallon.
Subscribe to WSJ:
Credit: By Nicole Friedman
Subject: Commodity prices; Crude oil
Location: United States--US
Company / organization: Name: IntercontinentalExchange Inc; NAICS: 523210; Name: International Energy Agency; NAICS: 928120; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: New York Mercantile Exchange; NAICS: 523210; Name: European Central Bank; NAICS: 521110
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.4
Publication year: 2012
Publication date: Aug 11, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1033009080
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1033009080?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Syria's Russian Connection; Regime Attempts to Sidestep Sanctions by Using Foreign Banks in Oil Sales
Author: Coker, Margaret; Valentino-DeVries, Jennifer
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]14 Aug 2012: n/a.
ProQuest document link
Abstract:
Syria's plan to work around Western sanctions took shape this summer in a series of meetings between four officials--the central-bank governor, the ministers of oil and finance and the head of the state oil-marketing company in charge of selling Syrian oil, one government document shows.
Full text: Syria's embattled regime laid plans to use Russian banks as part of an emergency effort to sidestep American and European sanctions on oil and financial transactions, according to Syrian government documents and correspondence reviewed by The Wall Street Journal.
The documents offer an inside look at how a shrinking group of regime loyalists is working to prop up Bashar al-Assad's government. Over the past several weeks, senior Syrian officials have held a series of meetings to discuss how to conduct business after being cut off from most Western banking institutions and trade, the documents indicate.
The documents, which span a period from March until early July, also underscore the difficulties facing Western governments in sustaining comprehensive sanctions against Syria, as long as Damascus keeps its strong diplomatic alliance with Moscow. Earlier this month, Russia received a delegation of top Syrian economic officials, including its oil and finance ministers, to discuss the possibility of government loans and long-term oil deals, Syrian Deputy Prime Minister Qadri Jamil said in a news conference.
The sanctions, which began last year and were strengthened this spring, are aimed at Syria's oil and financial sectors. The unilateral actions are coordinated by Western and Middle Eastern countries allied against Syria, but aren't legally binding on Russian and other companies that don't have operations in the U.S. or Europe. Russia and China have used their veto power at the United Nations Security Council to block the possibility of international sanctions.
A cache of documents reviewed by the Journal includes what appears to be authentic correspondence between Syrian government officials and certain foreign companies. In interviews with the Journal, some people who were parties to correspondence confirmed details. None of the people reached by the Journal questioned the authenticity of documents referenced in this article, although some denied conducting any business with Syrian entities.
Syria isn't a globally significant oil producer. The 360,000 barrels of crude it pumps daily represent less than 1% of the world's daily oil production. But Syria's oil sales are one of the last sources of foreign currency for President Assad.
The roughly 150,000 barrels per day Syria has available for export, after its domestic needs are met, are worth approximately $380 million per month at current prices. That is a key reason why the U.S. and the European Union targeted Syria's state oil companies, its central bank and financial sector. The sanctions have cut Syria off from its traditional buyers in Europe, including in Italy, Germany and Spain.
Last summer, the Syrian government announced it had approximately $17 billion in foreign-currency reserves, a figure that some Western diplomats believe has fallen by between one-third and one-half.
The U.S. imposed sanctions on Syria's central bank and oil sector in August 2011. The EU placed limited sanctions on the Syrian oil sector last September, then strengthened them this March. Both the EU and U.K. imposed sanctions on the Syrian central bank in February.
The Russian government has long been opposed to international sanctions, both in general and in the case of Syria, saying they hinder political solutions. Diplomats at the United Nations say Moscow's strong views have kept other countries from initiating debate on sanctioning Syria's oil or banking sectors. Although Russian companies don't have any legal obligation to follow U.S. and EU sanctions against Syria, such commerce has the potential to complicate diplomacy on other issues.
Syria's plan to work around Western sanctions took shape this summer in a series of meetings between four officials--the central-bank governor, the ministers of oil and finance and the head of the state oil-marketing company in charge of selling Syrian oil, one government document shows.
After a July 1 meeting, the four officials drafted a letter to then-Prime Minister Riad Hijab saying that international sanctions had limited their ability to collect revenue by cutting off "conventional solutions [and] customary banking" practices, according to a copy of the letter reviewed by the Journal. A copy of the letter was included in correspondence between the Syrian central bank and Syria's oil-marketing company, known as Sytrol, whose head was one of the letter's four signatories. It isn't known if the prime minister received the letter. Mr. Hijab defected on Aug. 6.
So far this year, despite the sanctions, Sytrol has secured 11 contracts to sell oil, that letter said. In addition, the letter said, Sytrol had secured deals to import half the diesel fuel Syria is projected to need each year--fuel it doesn't produce at home but needs for military and industrial uses.
In that letter, the officials recommended a change in Syrian laws that would allow them to set up offshore companies and conduct business through them in order to minimize the impact of sanctions.
"Offshore companies are being formed in Russia and Malaysia and bank accounts are being activated in Russia in euro and Russian-ruble [denominated accounts] and could be ready Thursday July 5, 2012.... [T]hen we would be able to pay for the value of the imports and receive the money for crude exports easily, while all concerned parties will take all the necessary actions to ensure the confidentiality of the proceedings in order not to open the way to the European Union and the United States to track the work of these companies and include them on the list of sanctions," according to the letter.
It isn't clear from the documents reviewed by the Journal whether the steps outlined in that letter were completed. The letter addressed to the prime minister didn't include any names of offshore companies or Russian banks.
Separate documents reviewed by the Journal indicate that as recently as June Syrian government entities on the U.S. and EU sanctions lists were considering commercial transactions that would involve Russian banks.
Those documents suggest that Syria was looking to do business with Gazprombank, the lending affiliate of Russia's natural-gas monopoly.
A sample contract form sent by Sytrol in February to prospective oil buyers, after both the U.S. and EU had imposed some sanctions, listed Gazprombank as the financial institution through which payments for crude could be made, according to documents reviewed by the Journal, suggesting that Syria intended to clear foreign-currency payments for oil via that bank. It isn't known whether Gazprombank ever cleared any such payments, or what companies were involved in the 11 contracts that the Syrian government letter says have been signed this year.
In March, officials from Syria's central bank traveled to Moscow and met with executives from Gazprombank, in part to try to strengthen business relationships, including exchanging information to facilitate electronic money transfers, according to a separate document.
Gazprombank didn't respond to the Journal's question about the authenticity of the documents that mention the bank. It said it had a "correspondent banking relationship" with the Syrian central bank before the U.S. and EU sanctions were in place, but it "is no longer engaged in business (including international settlements) with the central bank of Syria and other Syrian financial institutions."
Correspondence in June between Sytrol and a small, Dubai-based oil trader identified Moscow-based Novikombank as Sytrol's "nominated bank" through which the trader would send money to the Syrian government. A June 21 letter from the trading firm, called Intertrade, to the head of Sytrol strikes an apologetic tone for the delays in closing an oil contract due to what the writer refers to as "your banking issues." It isn't clear from this letter whether any such contracts were closed.
In a telephone interview, the head of Intertrade, whose name appears on the letter, denied having any commercial relationship with Sytrol or Syria. After he was shown the correspondence reviewed by the Journal, he responded in writing that "we were just preparing the road for future commercial relations once it is legal and feasible to do so."
Novikombank, whose chairman is a former officer of the Soviet-era secret service and a colleague of President Vladimir Putin, said in a statement it doesn't do business with Syrian entities. A spokesman said that the bank doesn't comment on "rumors," and he declined to answer other questions about the bank's clients, citing Russian bank-secrecy laws.
Other Sytrol and Syrian government documents describe efforts to find buyers for the nation's surplus oil.
In pitches to several prospective customers, Sytrol officials agreed to discount Syrian crude, pricing it between $10 and $15 a barrel less than the Brent and the Dubai averages from which Middle Eastern oil is sometimes set.
One logistical problem posed by the sanctions was how to ship oil to buyers. Documents reviewed by the Journal show that Russian buyers of Syrian crude made plans to load Syrian oil onto leased tankers from Singapore and Russian-owned tankers based in the Black Sea. Correspondence between potential Russian buyers and Sytrol indicate that the buyers planned to use Russian insurance companies to cover the shipments.
Other documents showed that Syrian oil officials had found suppliers for diesel fuel. Sytrol agreed to buy 200,000 metric tons of diesel per month for 12 months from Angola's state oil company, Sonangol, at a price of $855 per ton, according to a contract reviewed by the Journal.
A South African firm, Avon Oil Trading Ltd., negotiated the deal on behalf of Sytrol after Syria's ambassador to South Africa approached the firm, according to Avon Chief Executive May Kiefer, who said she had tried unsuccessfully to do business with Syria previously.
"At the beginning of the year, they came back to us and said, 'Look, there's an opportunity if you guys are interested,' and of course we were interested," Ms. Kiefer said.
South African officials said their government has generally remained neutral on the issue of sanctions against Syria. In July, South Africa, which currently holds a rotating seat on the U.N. Security Council, joined Pakistan in abstaining from a vote that could have laid the groundwork for international military intervention. Russia and China vetoed the measure.
The Angolan state oil company, Sonangol, didn't respond to written requests for comment. Ms. Kiefer said that when she was negotiating the deal, Angolan executives said they were aware of Western sanctions against Syria but that they and their government felt no obligation to follow them.
Ms. Kiefer confirmed the contract terms laid out in the document reviewed by the Journal. The contract says her firm would be paid a commission of $1 million per month for the diesel deliveries from Sonangol.
James Marson in Moscow, Patrick McGroarty in Johannesburg, Summer Said in Dubai and Joe Lauria at the United Nations contributed to this article.
Write to Margaret Coker at and Jennifer Valentino-DeVries at
Credit: By Margaret Coker And Jennifer Valentino-DeVries
Subject: Sanctions; Petroleum industry; Meetings; Government documents; Prime ministers; Journals
Location: Syria Russia United States--US
People: Assad, Bashar Al
Company / organization: Name: Gazprombank; NAICS: 522110; Name: European Union; NAICS: 926110, 928120; Name: United Nations Security Council; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 14, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1033248746
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1033248746?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Syria's Russian Connection --- Regime Attempts to Sidestep Sanctions by Using Foreign Banks in Oil Sales
Author: Coker, Margaret; Valentino-DeVries, Jennifer
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]14 Aug 2012: A.1. [Duplicate]
ProQuest document link
Abstract:
Syria's plan to work around Western sanctions took shape this summer in a series of meetings between four officials -- the central-bank governor, the ministers of oil and finance and the head of the state oil-marketing company in charge of selling Syrian oil, one government document shows.
Full text: Syria's embattled regime laid plans to use Russian banks as part of an emergency effort to sidestep American and European sanctions on oil and financial transactions, according to Syrian government documents and correspondence reviewed by The Wall Street Journal.
The documents offer an inside look at how a shrinking group of regime loyalists is working to prop up Bashar al-Assad's government. Over the past several weeks, senior Syrian officials have held a series of meetings to discuss how to conduct business after being cut off from most Western banking institutions and trade, the documents indicate.
The documents, which span a period from March until early July, also underscore the difficulties facing Western governments in sustaining comprehensive sanctions against Syria, as long as Damascus keeps its strong diplomatic alliance with Moscow. Earlier this month, Russia received a delegation of top Syrian economic officials, including its oil and finance ministers, to discuss the possibility of government loans and long-term oil deals, Syrian Deputy Prime Minister Qadri Jamil said in a news conference.
The sanctions, which began last year and were strengthened this spring, are aimed at Syria's oil and financial sectors. The unilateral actions are coordinated by Western and Middle Eastern countries allied against Syria, but aren't legally binding on Russian and other companies that don't have operations in the U.S. or Europe. Russia and China have used their veto power at the United Nations Security Council to block the possibility of international sanctions.
A cache of documents reviewed by the Journal includes what appears to be authentic correspondence between Syrian government officials and certain foreign companies. In interviews with the Journal, some people who were parties to correspondence confirmed details. None of the people reached by the Journal questioned the authenticity of documents referenced in this article, although some denied conducting any business with Syrian entities.
Syria isn't a globally significant oil producer. The 360,000 barrels of crude it pumps daily represent less than 1% of the world's daily oil production. But Syria's oil sales are one of the last sources of foreign currency for President Assad.
The roughly 150,000 barrels per day Syria has available for export, after its domestic needs are met, are worth approximately $380 million per month at current prices. That is a key reason why the U.S. and the European Union targeted Syria's state oil companies, its central bank and financial sector. The sanctions have cut Syria off from its traditional buyers in Europe, including in Italy, Germany and Spain.
Last summer, the Syrian government announced it had approximately $17 billion in foreign-currency reserves, a figure that some Western diplomats believe has fallen by between one-third and one-half.
The U.S. imposed sanctions on Syria's central bank and oil sector in August 2011. The EU placed limited sanctions on the Syrian oil sector last September, then strengthened them this March. Both the EU and U.K. imposed sanctions on the Syrian central bank in February.
The Russian government has long been opposed to international sanctions, both in general and in the case of Syria, saying they hinder political solutions. Diplomats at the United Nations say Moscow's strong views have kept other countries from initiating debate on sanctioning Syria's oil or banking sectors. Although Russian companies don't have any legal obligation to follow U.S. and EU sanctions against Syria, such commerce has the potential to complicate diplomacy on other issues.
Syria's plan to work around Western sanctions took shape this summer in a series of meetings between four officials -- the central-bank governor, the ministers of oil and finance and the head of the state oil-marketing company in charge of selling Syrian oil, one government document shows.
After a July 1 meeting, the four officials drafted a letter to then-Prime Minister Riad Hijab saying that international sanctions had limited their ability to collect revenue by cutting off "conventional solutions [and] customary banking" practices, according to a copy of the letter reviewed by the Journal. A copy of the letter was included in correspondence between the Syrian central bank and Syria's oil-marketing company, known as Sytrol, whose head was one of the letter's four signatories. It isn't known if the prime minister received the letter. Mr. Hijab defected on Aug. 6.
So far this year, despite the sanctions, Sytrol has secured 11 contracts to sell oil, that letter said. In addition, the letter said, Sytrol had secured deals to import half the diesel fuel Syria is projected to need each year -- fuel it doesn't produce at home but needs for military and industrial uses.
In that letter, the officials recommended a change in Syrian laws that would allow them to set up offshore companies and conduct business through them in order to minimize the impact of sanctions.
"Offshore companies are being formed in Russia and Malaysia and bank accounts are being activated in Russia in euro and Russian-ruble [denominated accounts] and could be ready Thursday July 5, 2012. . . . [T]hen we would be able to pay for the value of the imports and receive the money for crude exports easily, while all concerned parties will take all the necessary actions to ensure the confidentiality of the proceedings in order not to open the way to the European Union and the United States to track the work of these companies and include them on the list of sanctions," according to the letter.
It isn't clear from the documents reviewed by the Journal whether the steps outlined in that letter were completed. The letter addressed to the prime minister didn't include any names of offshore companies or Russian banks.
Separate documents reviewed by the Journal indicate that as recently as June Syrian government entities on the U.S. and EU sanctions lists were considering commercial transactions that would involve Russian banks.
Those documents suggest that Syria was looking to do business with Gazprombank, the lending affiliate of Russia's natural-gas monopoly.
A sample contract form sent by Sytrol in February to prospective oil buyers, after both the U.S. and EU had imposed some sanctions, listed Gazprombank as the financial institution through which payments for crude could be made, according to documents reviewed by the Journal, suggesting that Syria intended to clear foreign-currency payments for oil via that bank. It isn't known whether Gazprombank ever cleared any such payments, or what companies were involved in the 11 contracts that the Syrian government letter says have been signed this year.
In March, officials from Syria's central bank traveled to Moscow and met with executives from Gazprombank, in part to try to strengthen business relationships, including exchanging information to facilitate electronic money transfers, according to a separate document.
Gazprombank didn't respond to the Journal's question about the authenticity of the documents that mention the bank. It said it had a "correspondent banking relationship" with the Syrian central bank before the U.S. and EU sanctions were in place, but it "is no longer engaged in business (including international settlements) with the central bank of Syria and other Syrian financial institutions."
Correspondence in June between Sytrol and a small, Dubai-based oil trader identified Moscow-based Novikombank as Sytrol's "nominated bank" through which the trader would send money to the Syrian government. A June 21 letter from the trading firm, called Intertrade, to the head of Sytrol strikes an apologetic tone for the delays in closing an oil contract due to what the writer refers to as "your banking issues." It isn't clear from this letter whether any such contracts were closed.
In a telephone interview, the head of Intertrade, whose name appears on the letter, denied having any commercial relationship with Sytrol or Syria. After he was shown the correspondence reviewed by the Journal, he responded in writing that "we were just preparing the road for future commercial relations once it is legal and feasible to do so."
Novikombank, whose chairman is a former officer of the Soviet-era secret service and a colleague of President Vladimir Putin, said in a statement it doesn't do business with Syrian entities. A spokesman said that the bank doesn't comment on "rumors," and he declined to answer other questions about the bank's clients, citing Russian bank-secrecy laws.
Other Sytrol and Syrian government documents describe efforts to find buyers for the nation's surplus oil.
In pitches to several prospective customers, Sytrol officials agreed to discount Syrian crude, pricing it between $10 and $15 a barrel less than the Brent and the Dubai averages from which Middle Eastern oil is sometimes set.
One logistical problem posed by the sanctions was how to ship oil to buyers. Documents reviewed by the Journal show that Russian buyers of Syrian crude made plans to load Syrian oil onto leased tankers from Singapore and Russian-owned tankers based in the Black Sea. Correspondence between potential Russian buyers and Sytrol indicate that the buyers planned to use Russian insurance companies to cover the shipments.
Other documents showed that Syrian oil officials had found suppliers for diesel fuel. Sytrol agreed to buy 200,000 metric tons of diesel per month for 12 months from Angola's state oil company, Sonangol, at a price of $855 per ton, according to a contract reviewed by the Journal.
A South African firm, Avon Oil Trading Ltd., negotiated the deal on behalf of Sytrol after Syria's ambassador to South Africa approached the firm, according to Avon Chief Executive May Kiefer, who said she had tried unsuccessfully to do business with Syria previously.
"At the beginning of the year, they came back to us and said, 'Look, there's an opportunity if you guys are interested,' and of course we were interested," Ms. Kiefer said.
South African officials said their government has generally remained neutral on the issue of sanctions against Syria. In July, South Africa, which currently holds a rotating seat on the U.N. Security Council, joined Pakistan in abstaining from a vote that could have laid the groundwork for international military intervention. Russia and China vetoed the measure.
The Angolan state oil company, Sonangol, didn't respond to written requests for comment. Ms. Kiefer said that when she was negotiating the deal, Angolan executives said they were aware of Western sanctions against Syria but that they and their government felt no obligation to follow them.
Ms. Kiefer confirmed the contract terms laid out in the document reviewed by the Journal. The contract says her firm would be paid a commission of $1 million per month for the diesel deliveries from Sonangol.
---
James Marson in Moscow, Patrick McGroarty in Johannesburg, Summer Said in Dubai and Joe Lauria at the United Nations contributed to this article.
Subscribe to WSJ:
Credit: By Margaret Coker and Jennifer Valentino-DeVries
Subject: Petroleum industry; International relations; Sanctions; Government documents
Location: Syria Russia
People: Assad, Bashar Al
Company / organization: Name: Gazprombank; NAICS: 522110; Name: European Union; NAICS: 926110, 928120
Classification: 9180: International; 1210: Politics & political behavior; 8510: Petroleum industry; 8110: Commercial banking services
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.1
Publication year: 2012
Publication date: Aug 14, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1033277771
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1033277771?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
China's Sinopec Pursues Big Energy Deal in Texas; Chinese Oil Firm, Banks in Talks to Invest Up to $1 Billion in Clean-Energy Plant
Author: Spegele, Brian; Smith, Rebecca
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]14 Aug 2012: n/a.
ProQuest document link
Abstract:
[...]Chinese oil-industry officials remain wary that Chinese energy investment in the U.S. will be criticized, especially following a deal by Sinopec rival Cnooc Ltd. for Canada's Nexen Inc. that includes some Gulf of Mexico properties.
Full text: A Chinese group that includes major oil company Sinopec is in advanced talks to put up to $1 billion in a Texas clean-energy project, in what would mark one of the biggest investments by Chinese companies in the U.S. power sector.
China Petrochemical Corp., known as Sinopec, together with Chinese banks are in talks to acquire an equity stake in and provide financing to the roughly $2.5 billion Texas Clean Energy Project, said people familiar with negotiations.
Such a move would be significant for Sinopec, which is looking to build favor in the U.S. as it aggressively acquires energy reserves and seeks U.S. production expertise, currently through minority stakes and partnerships with Western companies.
The company under Chairman Fu Chengyu has already invested billions in U.S. shale-gas fields, for example.
The project has already secured $450 million in grants from the U.S. Department of Energy, in addition to tax benefits. It also has the necessary permits and contracts, including a contract with San Antonio to buy its electricity for 25 years.
At the same time, Chinese oil-industry officials remain wary that Chinese energy investment in the U.S. will be criticized, especially following a deal by Sinopec rival Cnooc Ltd. for Canada's Nexen Inc. that includes some Gulf of Mexico properties.
Sinopec could burnish its image through an investment in clean technology.The joint U.S.-China investment comes as Beijing and Washington have urged collaboration on clean-energy research and deployment.
Those efforts have been stunted by mistrust and continuing clean-energy trade disputes, including a U.S. anti-dumping case against solar-panel makers.
Sinopec has worked to present itself as the most internationally savvy of China's major oil companies.
"They want to be seen as a good guy," said a person familiar with negotiations.
An agreement between Sinopec and Seattle-based Summit Power Group LLC, the project's developer, could be announced as early as September, people familiar with the negotiations said.
But they cautioned that many of the details, including specific financial terms and the size of the equity stake, have yet to be decided.
The project would include a coal-gasification plant, which backers say will use coal more cleanly, and that would capture carbon dioxide for use in oil recovery.
While the U.S. has plentiful coal supplies, coal is a major source of greenhouse-gases emissions. Coal gasification is viewed as important to keeping coal in the energy mix. Developers say the plant will capture 90% of carbon dioxide otherwise emitted into the atmosphere.
Two other big coal-gasification projects are in construction in the U.S.--Southern Co.'s Kemper project in Mississippi and Duke Energy Corp.'s Edwardsport plant in Indiana. Both have experienced rising costs that have made them controversial in their home states.
The Texas plant, located near Odessa, will convert coal into a combustible gas and use it to make electricity, much like a conventional gas-fired plant. In the process, it also will tease out chemicals for resale and carbon dioxide, which will be piped to the western Texas Permian Basin and used for enhanced oil recovery.
A person close to Sinopec said the company wants to learn from the project, and would use expertise gained in Texas to bolster enhanced oil-recovery efforts in China's large Shengli oil field in the eastern province of Shandong.
Chinese energy companies' ambitions in the U.S. have at times faced political resistance in Washington.
People involved in discussions said China's investment will be a "significant share" of the project's cost, consisting partly of debt and partly of equity.
Summit's ownership likely will decline from majority to minority, as other investors join in.
More investors are needed, and Summit is talking with potential participants in the U.S. and Europe, including some that might be eligible for export-bank financing from their own nations.
The plant will rely on equipment and technical expertise from companies in Germany and South Korea.
Siemens AG is furnishing gasification and power-production equipment, and Selas Fluid Processing Corp., a unit of Munich-based Linde AG, is providing gas separators and other pieces of equipment to glean carbon dioxide, urea and other chemicals from the waste stream.
People with knowledge of the discussions said Summit is expected to carve out a role for Chinese investors but not one that would upset existing engineering and construction agreements.
Eric Redman, president of Summit, said his company is "working hard to complete financing" but he said he couldn't give details because it is "all covered by confidentiality agreements."
He said his company is talking "with many people in many countries" and hopes to have all the pieces of a financing package in place soon.
Write to Brian Spegele at and Rebecca Smith at
Credit: Brian Spegele; Rebecca Smith
Subject: Equity stake; Clean technology; Energy policy; Petroleum industry; Oil sands
Location: China United States--US
People: Fu Chengyu
Company / organization: Name: Nexen Inc; NAICS: 211111; Name: China Petrochemical Corp; NAICS: 324110; Name: Department of Energy; NAICS: 926130
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 14, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1033497229
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1033497229?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
China's Sinopec Pursues Big Energy Deal in Texas --- Chinese Oil Firm, Banks in Talks to Invest Up to $1 Billion in Clean-Energy Plant
Author: Spegele, Brian; Smith, Rebecca
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]15 Aug 2012: B.1.
ProQuest document link
Abstract:
[...]Chinese oil-industry officials remain wary that Chinese energy investment in the U.S. will be criticized, especially following a deal by Sinopec rival Cnooc Ltd. for Canada's Nexen Inc. that includes some Gulf of Mexico properties.
Full text: A Chinese group that includes major oil company Sinopec is in advanced talks to put up to $1 billion in a Texas clean-energy project, in what would mark one of the biggest investments by Chinese companies in the U.S. power sector.
China Petrochemical Corp., known as Sinopec, together with Chinese banks are in talks to acquire an equity stake in and provide financing to the roughly $2.5 billion Texas Clean Energy Project, said people familiar with negotiations.
Such a move would be significant for Sinopec, which is looking to build favor in the U.S. as it aggressively acquires energy reserves and seeks U.S. production expertise, currently through minority stakes and partnerships with Western companies.
The company under Chairman Fu Chengyu has already invested billions in U.S. shale-gas fields, for example.
The project has already secured $450 million in grants from the U.S. Department of Energy, in addition to tax benefits. It also has the necessary permits and contracts, including a contract with San Antonio to buy its electricity for 25 years.
At the same time, Chinese oil-industry officials remain wary that Chinese energy investment in the U.S. will be criticized, especially following a deal by Sinopec rival Cnooc Ltd. for Canada's Nexen Inc. that includes some Gulf of Mexico properties.
The joint U.S.-China investment comes as Beijing and Washington have urged collaboration on clean-energy research and deployment.
Those efforts have been stunted by mistrust and continuing clean-energy trade disputes, including a U.S. anti-dumping case against solar-panel makers.
Sinopec has worked to present itself as the most internationally savvy of China's major oil companies.
An agreement between Sinopec and Seattle-based Summit Power Group LLC, the project's developer, could be announced as early as September, people familiar with the negotiations said.
But they cautioned that many of the details, including specific financial terms and the size of the equity stake, have yet to be decided.
The project would include a coal-gasification plant, which backers say will use coal more cleanly, and that would capture carbon dioxide for use in oil recovery.
While the U.S. has plentiful coal supplies, coal is a major source of greenhouse-gases emissions. Coal gasification is viewed as important to keeping coal in the energy mix. Developers say the plant will capture 90% of carbon dioxide otherwise emitted into the atmosphere.
Two other big coal-gasification projects are in construction in the U.S. -- Southern Co.'s Kemper project in Mississippi and Duke Energy Corp.'s Edwardsport plant in Indiana. Both have experienced rising costs that have made them controversial in their home states.
The Texas plant, located near Odessa, will convert coal into a combustible gas and use it to make electricity, much like a conventional gas-fired plant. In the process, it also will tease out chemicals for resale and carbon dioxide, which will be piped to the western Texas Permian Basin and used for enhanced oil recovery.
A person close to Sinopec said the company wants to learn from the project, and would use expertise gained in Texas to bolster enhanced oil-recovery efforts in China's large Shengli oil field in the eastern province of Shandong.
People involved in discussions said China's investment will be a "significant share" of the project's cost, consisting partly of debt and partly of equity.
Summit's ownership likely will decline from majority to minority, as other investors join in.
More investors are needed, and Summit is talking with potential participants in the U.S. and Europe, including some that might be eligible for export-bank financing from their own nations.
The plant will rely on equipment and technical expertise from companies in Germany and South Korea.
Siemens AG is furnishing gasification and power-production equipment, and Selas Fluid Processing Corp., a unit of Munich-based Linde AG, is providing gas separators and other pieces of equipment to glean carbon dioxide, urea and other chemicals from the waste stream.
People with knowledge of the discussions said Summit is expected to carve out a role for Chinese investors but not one that would upset existing engineering and construction agreements.
Eric Redman, president of Summit, said his company is "working hard to complete financing" but he said he couldn't give details because it is "all covered by confidentiality agreements."
He said his company is talking "with many people in many countries" and hopes to have all the pieces of a financing package in place soon.
Subscribe to WSJ:
Credit: Brian Spegele; Rebecca Smith
Subject: Negotiations; Clean technology
Location: China United States--US Texas
Company / organization: Name: Summit Power Group LLC; NAICS: 541611; Name: China Petrochemical Corp; NAICS: 324110
Classification: 9180: International; 8510: Petroleum industry; 1540: Pollution control
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.1
Publication year: 2012
Publication date: Aug 15, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1033461497
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1033461497?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iran's Asian Lifeline; Cut off from Western markets, the mullahs are sending their oil eastward.
Author: Berman, Ilan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 Aug 2012: n/a.
ProQuest document link
Abstract:
Confronted with Western sanctions over its nuclear ambitions, Iran is increasingly turning to Asia's vast markets and its sympathetic governments.
Full text: The West isn't the only part of the world going to Asia for commerce. Confronted with Western sanctions over its nuclear ambitions, Iran is increasingly turning to Asia's vast markets and its sympathetic governments.
Since the start of the year, as Western countries have weaned themselves off of Iranian oil, Asia has taken center stage in Iran's economic agenda. Today, four countries--China, India, South Korea and Japan--cumulatively buy more than half of Iran's total energy exports, up from just over a third a year ago.
Earlier this year, in response to new penalties on oil purchases from Iran levied by the United States and the European Union, these Asian nations slashed their imports significantly. But today there are signs that they are coming back to the Iranian marketplace.
Far and away the main culprit in this regard is China. After a temporary dip in oil imports earlier this year (as it turns out, largely due to a pricing dispute), Beijing has reportedly resumed being Tehran's largest customer. For July, its imports of Iranian oil were estimated at 587,000 barrels a day--representing 54% of Iran's total exports. China is now importing more than 100,000 barrels a day more from Iran than it did in 2011, according to statistics compiled by the Geneva-based consulting group Petrogistics.
China isn't the only one resuming business with Tehran. Both South Korea and Japan now show worrying signs of backsliding. South Korean refiners and Iran's National Iranian Tanker Company are said to be close to a deal that would allow Seoul to resume oil purchases from the Islamic Republic beginning in late September or early October.
And Japan, long a stalwart ally of Western sanctions, has provided its national refining companies with $7.6 billion in government shipping insurance to ensure the smooth delivery of Iranian crude. Tokyo this month doubled the quantity of oil it is importing from Iran.
Neither is technically circumventing sanctions, since both received waivers from Washington allowing them to continue importing Iranian crude. Still, the trend is not positive.
The bright spot, in comparison, is India. Imports of Iranian oil have dipped significantly, to 10% of total Indian imports today from 16% in 2008-09. More cuts are said to be on the way. Perhaps New Delhi is finally listening to the U.S., with whom it's hoping for a stronger partnership. Also, Delhi is paying Tehran for a large portion of its purchases of Iranian oil in rupees, which is more difficult for the Iranian regime to trade on the international market than dollars.
Cumulatively, these decisions give Iran's fiscal fortunes an unmistakable shot in the arm. In the process, they weaken the impact of Western economic pressure on the Islamic Republic.
Yet so far, U.S. policy has not responded to Iran's shift toward Asia. On the contrary, in many ways, it has encouraged it. The Obama administration's decision earlier this summer to exempt all 20 of Iran's major oil customers from biting new sanctions has sent the unmistakable message to Asian nations that--despite the official bluster emanating out of the White House--it is still possible to do business with both Washington and Tehran simultaneously.
True, the U.S. Congress just agreed to new sanctions that will take additional aim at Iran's energy industry. And once enacted, they will significantly expand penalties on individuals or companies who invest in Iran's oil and natural gas sectors, insure Iranian energy trade, or buy crude from the Islamic Republic.
But Iran's Asian consumers aren't likely to be significantly deterred by these new provisions. If history is any judge, the Obama administration, wary of upsetting economic ties with Beijing and other regional capitals, won't implement them with anything resembling the diligence needed to make a real dent in Iran's Asian market share.
That would be a grave error. To the extent they're implemented, sanctions are already having a pronounced effect on Iran's energy trade. Its oil exports are now estimated at one million barrels per day--the lowest figure in years, and just a fraction of the 2.5 million barrels the Islamic Republic was exporting daily just a few years ago.
But if Asia continues to throw the mullahs a lifeline, the regime won't learn. It follows, then, that for Western sanctions to truly stand a chance of altering Iran's behavior, Asia's economies must be forced to back away from their business with the Islamic Republic.
Mr. Berman is vice president of the American Foreign Policy Council in Washington, DC.
Credit: By Ilan Berman
Subject: Petroleum industry; Oil sands; Sanctions; Fines & penalties; Energy industry
Location: Iran India China Asia Japan United States--US South Korea
Company / organization: Name: European Union; NAICS: 926110, 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 16, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1033560534
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1033560534?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
White House Revives Talks Over Emergency Oil Release
Author: Tracy, Tennille
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 Aug 2012: n/a.
ProQuest document link
Abstract:
WASHINGTON--The White House is reviving talks over the possible release of U.S. emergency oil supplies as the price of crude oil topped $95 a barrel, an Obama administration official said.
Full text: WASHINGTON--The White House is reviving talks over the possible release of U.S. emergency oil supplies as the price of crude oil topped $95 a barrel, an Obama administration official said.
The talks are in early stages and a decision appears far from imminent, the official said. But the rising price of crude, along with increases in gasoline prices, is stoking fears that high fuel costs could damage an already sensitive economy.
The average price of gasoline has reached $3.70 a gallon, up from $3.40 a month ago, according to the AAA Fuel Gauge. The price of oil on the New York Mercantile Exchange, meanwhile, settled at $95.60 a barrel on Thursday, reaching a new three-month high.
If President Obama moved forward with a sale of emergency oil, Republicans are likely to criticize the move. Republicans in the past have said the Strategic Petroleum Reserve, the U.S.'s 700-million-barrel stockpile of oil, should be used only in times of severe supply disruptions.
Such a move by the administration is also likely to intensify the debate over the Keystone XL, a 1,700-mile oil pipeline from Canada that has been temporarily blocked by the Obama administration.
The Obama administration last released oil reserves in 2011 as part of a coordinated global effort to offset drops in oil production in war-torn Libya.
The administration is also reaching out to ally countries to discuss the possibility of a coordinated release of emergency oil supplies, the official said.
The White House last considered a release of strategic reserves last spring, when oil prices were trading near $110 a barrel. The idea was shelved when oil prices fell.
Write to Tennille Tracy at tennille.tracy@dowjones.com
Credit: By Tennille Tracy
Subject: Petroleum industry; Gasoline prices
Location: United States--US
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 16, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1033589063
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1033589063?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The Dodd-Frank Threat to U.S. Energy; Intrusive new disclosure rules by the SEC would give state-owned oil firms a big advantage in world markets.
Author: Gerard, Jack
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 Aug 2012: n/a.
ProQuest document link
Abstract:
Forcing publicly traded companies to release proprietary information about their foreign operations would put them at a serious competitive disadvantage because state-owned firms could plunder that information and determine their rivals' strategy and resource levels.
Full text: In a fragile recovery with 8.3% unemployment, you'd think Congress and government regulators would be concerned about rules that put American firms at a disadvantage. Well, think again.
On Aug. 22, the Securities and Exchange Commission (SEC) will vote on regulations to implement Section 1504 of the 2010 Dodd-Frank financial-reform law. Section 1504 seeks to increase transparency in dealings between private energy companies and foreign governments to protect investors. That's a worthy goal.
The SEC has broad discretion in determining what the disclosure requirement under 1504 will be. Yet indications from meetings with SEC officials are that it may favor a draconian approach that would irreparably harm U.S. oil and natural-gas companies.
The danger arises if publicly traded energy firms are required to release--for public consumption--commercially sensitive, detailed payment information about every foreign project. This means they would have to reveal extensive data, including the names and locations of their most important personnel and capital assets, in addition to how much they pay for licenses, taxes, royalties and other fees.
But the rule would only cover companies listed by the SEC. State-owned multinationals--which constitute the vast majority of energy assets world-wide and own 78% of all oil and natural-gas reserves--will not have to comply. The 16 biggest oil companies in the world do not fall under SEC jurisdiction.
Forcing publicly traded companies to release proprietary information about their foreign operations would put them at a serious competitive disadvantage because state-owned firms could plunder that information and determine their rivals' strategy and resource levels. Information worth billions of dollars would be just a few mouse clicks away.
Next Wednesday's SEC vote on this matter will have a profound impact on the ability of American oil and natural-gas firms to compete on the international stage. Thousands of jobs, millions in revenues, and billions of investment dollars hang in the balance.
Yet a structure already exists to provide transparency, one that's endorsed both by the Obama administration and the World Bank. It is called the Extractive Industries Transparency Initiative (EITI), and it was launched in September 2002 by then-British Prime Minister Tony Blair. This initiative creates a workable framework for payment disclosures, and the SEC should incorporate its disclosure standards into its rule-making.
Under EITI, energy companies provide information about government payments related to foreign projects. That data is then aggregated and listed on a countrywide basis. Operational details for specific companies aren't publicized, and propriety information is protected. The initiative is already being implemented in the U.S. through the Interior Department. It makes participating governments publicly accountable for how they spend tax dollars. Regulators and average citizens alike are given access to information that can tell them where their money went, how much was spent, and toward what purpose. This information is available on the U.S. Department of the Interior website.
The robust structure of EITI will expose corruption and mismanagement, and also bring more transparency and accountability to these business practices. But it is not so intrusive that it threatens the global competitiveness of U.S. energy companies.
If the SEC moves forward with an intrusive interpretation of Section 1504, companies such as the China National Petroleum Company and Russia's Gazprom wouldn't be forced to disclose important data on foreign payments, but their American competitors would. This competitive disadvantage could likely lead to lost contracts for U.S. energy companies while doing nothing to promote transparency.
It does not have to be this way. The SEC could take an approach that promotes economic growth, requiring companies to disclose only information directly relevant to protecting investors and--before publicizing it--scrubbing away any details that might hurt firms' competitiveness if revealed.
By using EITI as a basis for its Dodd-Frank rule, the SEC can improve transparency in foreign energy payments without putting American oil and gas companies at undue risk. Our economy is still on the mend. Hamstringing the energy sector with costly and intrusive new disclosure rules will reduce jobs and investment.
Mr. Gerard is the president and CEO of the American Petroleum Institute.
Credit: By Jack Gerard
Subject: Petroleum industry; Competition; Capital assets; Natural gas utilities; Energy industry
Location: United States--US
People: Blair, Tony
Company / organization: Name: Congress; NAICS: 921120; Name: International Bank for Reconstruction & Development--World Bank; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 16, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1033590938
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1033590938?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
White House Revives Talks Over Emergency Oil Release
Author: Tracy, Tennille
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 Aug 2012: n/a. [Duplicate]
ProQuest document link
Abstract:
WASHINGTON--The White House is reviving talks over the possible release of U.S. emergency oil supplies as the price of crude oil topped $95 a barrel, an Obama administration official said.
Full text: WASHINGTON--The White House is reviving talks over the possible release of U.S. emergency oil supplies as the price of crude oil topped $95 a barrel, an Obama administration official said.
The talks are in early stages and a decision appears far from imminent, the official said. But the rising price of crude, along with increases in gasoline prices, is stoking fears that high fuel costs could damage an already sensitive economy.
The average price of gasoline has reached $3.70 a gallon, up from $3.40 a month ago, according to the AAA Fuel Gauge. The price of oil on the New York Mercantile Exchange, meanwhile, settled at $95.60 a barrel on Thursday, reaching a new three-month high.
If President Obama moved forward with a sale of emergency oil, Republicans are likely to criticize the move. Republicans in the past have said the Strategic Petroleum Reserve, the U.S.'s 700-million-barrel stockpile of oil, should be used only in times of severe supply disruptions.
Such a move by the administration is also likely to intensify the debate over the Keystone XL, a 1,700-mile oil pipeline from Canada that has been temporarily blocked by the Obama administration.
The Obama administration last released oil reserves in 2011 as part of a coordinated global effort to offset drops in oil production in war-torn Libya.
The administration is also reaching out to ally countries to discuss the possibility of a coordinated release of emergency oil supplies, the official said.
The White House last considered a release of strategic reserves last spring, when oil prices were trading near $110 a barrel. The idea was shelved when oil prices fell.
Write to Tennille Tracy at tennille.tracy@dowjones.com
Credit: By Tennille Tracy
Subject: Petroleum industry; Gasoline prices
Location: United States--US
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 16, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1033750713
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1033750713?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Hits Fresh 3-Month High, Topping $95
Author: Bird, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 Aug 2012: n/a.
ProQuest document link
Abstract:
Spillover from lofty gains in North Sea Brent crude-oil prices, where field maintenance is trimming near-term supplies, and heightened tensions in the Middle East also underpinned prices.
Full text: NEW YORK--Crude-oil futures prices settled at a fresh three-month high above $95 a barrel Thursday afternoon, extending to a third day a rally spurred by concerns over tightening supplies.
September-delivery crude oil rose $1.27, or 1.4%, to settle at $95.60 a barrel on the New York Mercantile Exchange, the highest price since May 11. In recent days, the price has been hitting three-month highs.
Traders said Thursday's intraday move above the $95 level for the first since mid-May, after a sluggish start to trading, was fueled by position adjustments ahead of the expiration of September crude-oil options at the end of Nymex trading.
Crude-oil and products prices have rallied in recent days on signs of tightening supplies, caused in part by operating snags at several refineries.
Spillover from lofty gains in North Sea Brent crude-oil prices, where field maintenance is trimming near-term supplies, and heightened tensions in the Middle East also underpinned prices.
"To me, it's a supply-driven rally," rather than a sign of stronger demand, said Andy Lebow, senior vice president of energy futures at Jefferies Bache in New York. "People are buying, but they don't think the economy is improving, they're speculating on the geopolitics and looking at the numbers," including U.S. oil inventory data, which showed larger-than-expected declines in U.S. crude-oil and gasoline stocks, he said.
The Energy Information Administration, while reporting a bigger-than-expected drop in weekly crude-oil and gasoline stocks Wednesday, also said there was a sharp jump in implied U.S. oil demand in the week, which also added to the rally.
"It's probably just a one-week aberration, but if you're a bull, that's a bit of fresh air," said Kyle Cooper, managing partner at IAF Advisors in Houston.
Tensions caused by the conflict in Syria have spilled into Lebanon, causing Saudi Arabia and other Gulf states to order their citizens to leave that nation, while market nerves remain on edge as to how the continuing issue of tighter international sanctions on Iran will play out. Iran, the second-biggest oil exporter in the Organization of Petroleum Exporting Countries, has seen a sharp drop in its output due to embargoed oil sales, while others in OPEC have raised output to cover any shortfall.
Despite the surprise decline of 3.7 million barrels in crude-oil stocks reported last week by the EIA, inventories remain above five-year average levels relative to refiner demand for crude, analysts noted.
Gasoline and distillate supplies are tight in the Northeast U.S., but analysts said there is potential for fuel to be diverted to the region, rather than exported, to cover any supply shortfalls, and more imports also are expected.
September RBOB gasoline futures settled 0.08 cent lower, at $3.0832 a gallon, after settling Wednesday at the highest level since May 1 and rising 3.1% over the previous two days.
September heating oil futures shed early declines to settle 1.2%, or 3.77 cents, higher, at $3.1229 a gallon, the highest level since May 2. The contract rose 3.5% or 10.46 cents over the last three trading days.
Write to David Bird at david.bird@dowjones.com.
Credit: By David Bird
Subject: Petroleum industry; Crude oil; Supplies
Location: United States--US
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 16, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1034243927
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1034243927?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Burrata with Roasted Nectarines and Pistachio-Herb Oil; Satisfying and seasonal food in about 30 minutes
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Aug 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: PEACHES AND CREAM is a classic pairing that doesn't beg for a tune-up. But this savory take on the duo, consisting of burrata, roasted nectarines and pistachio-herb dressing, is a last-meal-on-earth-worthy upgrade. Even better, it takes only 15 minutes to pull together.
The second of four Slow Food Fast contributions from Portland, Ore., chef Jenn Louis, this late-summer starter (which can double as a light main course) is a spoil of creamy, sweet, tangy and herbal riches. Tucking into it involves cutting into a warm nectarine and slathering it with oozy burrata. The dish is drizzled with a dressing that sends up hits of grassy olive oil, chopped pistachios and herbs.
Burrata, a cream-filled ball of mozzarella, can be found at cheese shops and fine grocery stores. It's decadent enough to be served plain, with a drizzle of olive oil and sea salt. The cheese is a staple ingredient at Lincoln, where Ms. Louis pairs it with seasonal ingredients during the warmer months. In the spring, it comes with mint-and-chili-braised asparagus. It's currently being served with a roasted fig and plum mixture, topped with aged balsamic vinegar. This recipe, created especially for The Wall Street Journal, calls for nectarines, which are at their peak in late summer. The fruit, though dripping with sweet juices, has enough acidity to cut through the cheese's richness.
Roast the nectarines at high heat until the flesh swells and the cut sides caramelize in spots. The meat will practically melt when bitten into. Roasting fruit reduces water content and concentrates flavor.
While the nectarines roast, make the pistachio-herb sauce. "I think of it sort of like a salsa verde," Ms. Louis said, referring to the Italian version of the sauce, with herbs, capers and anchovies. The pistachios distinguish this dressing by providing it with extra texture and a sweet note. Recently, Ms. Louis spooned it over halibut and salmon.
To make the sauce, hand-chop pistachios along with basil, mint, fennel fronds, scallions, lemon zest and garlic until fine. Once it's ready, put the mixture in a bowl and pour some good olive oil over top. A final squeeze of lemon juice balances out the earthiness.
"I wanted to give readers something they can do at home that isn't just plopping burrata on a plate," Ms. Louis said. She recommends enjoying this dish outside with company and chilled rosé.
Kitty Greenwald
Burrata With Roasted Nectarines and Pistachio-Herb Oil
Total Time: 15 minutes
Serves: 4
4 nectarines, halved and pitted
¾ cup plus 3 tablespoons olive oil
Maldon salt
½ cup raw shelled pistachios
2 tablespoons finely chopped fennel frond
½ garlic clove, finely chopped
8 large mint leaves, finely chopped
4-6 large basil leaves, finely chopped
2 lemons, zested; juice of 1 lemon
½ cup scallions, white and green parts, sliced into thin rings and lightly packed
2 balls burrata (about 1 pound total), halved
Toasted baguette slices, for serving
What To Do
1. Preheat oven to 400 degrees. Lightly brush cut sides of nectarines with 1 tablespoon oil and season with salt, to taste. Place nectarines, cut sides down, in a baking dish just large enough to hold them snugly. Roast until they soften and caramelize in spots, about 15 minutes. Cut into smaller segments or leave whole.
2. Meanwhile, roughly chop pistachios. Add fennel frond, garlic, mint, basil, lemon zest and scallions and chop together to mix. Place chopped ingredients in a small bowl and add ¾ cup plus 2 tablespoons oil. Add salt and lemon juice, to taste.
3. On each of four plates, place a burrata half and 3-4 nectarine segments (or 2 nectarine halves) on a plate. Spoon 1-2 tablespoons pistachio-herb oil over cheese and fruit. Season with salt, to taste. Serve with baguette slices.
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 17, 2012
Section: Life and Style
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1033782392
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1033782392?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
: Revving Up the Oil Paints for a Car Show
Author: Yost, Mark
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Aug 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Thousands of people will flock to the Pebble Beach Concours d'Elegance Sunday to see rare, historic cars on the 18th fairway of the famed golf course by the sea. But many visitors may not know that another car-culture celebration will be sharing the lush grass: the annual show of the Automotive Fine Arts Society.
Created in 1983, this small group of automotive artists works in oil, watercolors, acrylics, wood, gouache, pen and ink, clay and metal. In addition to California's Pebble Beach Golf Links, their artwork often turns up at the Amelia Island Concours d'Elegance in Florida and the Salon Privé Concours d'Elegance and the Goodwood Revival, both in the U.K. Two major sports-art museums in the U.S. show such art, the American Sports Art Museum in Daphne, Ala., and the National Art Museum of Sport in Indianapolis.
Like some sectors of the art market, sports art and its automotive-art niche have struggled in the wake of the recession. "Prices basically held up until 2010 and then the floor dropped out," said AFAS President Ken Eberts, who estimates that automotive art in general saw about a 50% fall in prices in 2010. "We got back about 25% of that drop over the past two years," he said. "And prices are still creeping up."
LeRoy Neiman, who died in June at age 91, is still the Ferrari in the sports-art market. But when it comes to price, he's been way behind Warhol. One of the most expensive Neimans, "Le Mans," a colorful portrait of the famed car race, sold for $107,550 at a December 2003 auction at Christie's in New York.
Neiman made his money from serigraphs--prints made by a special process--of his originals. They originally sold for $3,000 to $6,000 each, and he sold an estimated $10 million worth of serigraphs every year for more than 20 years. Today, the serigraphs can range anywhere from $7,000 to $15,000, said Mike Morehead, who owns the Prairebrooke Gallery in Overland Park, Kan.
One problem for sports artists is that "the broader arts community tends to look down on them," Mr. Morehead said. Because it's such a niche market, many sports artists look for benefactors. Mina Papatheodorou-Valyraki is a Greek artist who uses bottle caps to spread the paint thickly on the canvas. She has produced commissioned works for Formula One, Ferrari and Lamborghini. F-1 driver Jean Todt, now president of the Federation Internationale de l'Automobile, has a number of her paintings at his museum in Paris. But the recession has even impacted her. "Today the crisis is deep in the field of arts," she said.
One of the iconic automotive artists displaying his work at Pebble Beach this year will be Art Fitzpatrick. At 93, he finds it hard to make the trek from his studio in Carlsbad, Calif., and says this will be his final Pebble Beach showing. Over his 70-year career as an artist and car designer, Mr. Fitzpatrick says he built custom cars for Clark Gable, Errol Flynn and Al Jolson.
One of Mr. Fitzpatrick's featured pieces will be his original gouache-and-acrylic painting of a 1953 Studebaker Starliner, which was used in a U.S. Postal Service stamp series called "American Sporty Cars."
Mr. Eberts himself will show "The Mercer and the Bridge," which features a 1915 Mercer Raceabout in the shadow of the Brooklyn Bridge. Both the car and the bridge were designed by the Roebling family.
Credit: By Mark Yost
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 17, 2012
Section: Life and Style
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1033786349
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1033786349?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
ATP Oil & Gas Files for Chapter 11 Bankruptcy
Author: Beaudette, Marie; Gleason, Stephanie
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Aug 2012: n/a.
ProQuest document link
Abstract:
"While the moratorium adversely affected all companies involved in deepwater drilling in the Gulf of Mexico, the impact was especially profound on ATP, which is a smaller company than its principal competitors with a heavier concentration in the deepwater Gulf of Mexico," ATP said in court papers.
Full text: ATP Oil & Gas Corp. filed for Chapter 11 bankruptcy protection Friday, hit by the rising costs associated with its deep-water drilling projects in the Gulf of Mexico.
The company listed assets of $3.64 billion and liabilities of $3.49 billion in papers filed with the U.S. Bankruptcy Court in Houston.
ATP, which has 75.9 million barrels of crude oil in reserve, plans to tap a $700 million bankruptcy loan to fund the restructuring, according to court papers. The company aims to borrow $80 million on the loan from lenders led by Credit Suisse AG on an interim basis. ATP already owes Credit Suisse $366 million.
ATP blamed its financial woes in part on the drilling ban put in place in the Gulf of Mexico, where 90% of its wells are located, after the disastrous 2010 Deepwater Horizon oil spill. It resumed drilling in the Gulf last spring.
"While the moratorium adversely affected all companies involved in deepwater drilling in the Gulf of Mexico, the impact was especially profound on ATP, which is a smaller company than its principal competitors with a heavier concentration in the deepwater Gulf of Mexico," ATP said in court papers.
The Houston-based company was founded in 1991 by T. Paul Bulmahn, its former chief executive and current chairman. It drills for oil and gas in the Gulf of Mexico, Mediterranean Sea and North Sea. Its deep-water drilling operations are costly.
Earlier this year, the company faced operational problems at its platform in the Gulf of Mexico and a deep-water well in the Mediterranean. In early June, its newly hired CEO, Matt McCarroll, left after just a week and rescinded his purchase of 1 million of ATP's shares.
Mike Spector and Ryan Dezember contributed to this article.
Write to Marie Beaudette at and Stephanie Gleason at and Stephanie Gleason at
Credit: By Marie Beaudette And Stephanie Gleason
Subject: Bankruptcy reorganization; Bankruptcy; Petroleum industry; Litigation
Company / organization: Name: ATP Oil & Gas Corp; NAICS: 211111, 211112; Name: Credit Suisse Group; NAICS: 522110; Name: Bankruptcy Court-US; NAICS: 922110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 17, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1033786350
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1033786350?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Qatar Petroleum-Exxon Venture Requests Permit to Export U.S. Natural Gas
Author: González, Ángel; Lefebvre, Ben
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Aug 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: HOUSTON--Golden Pass Products LLC, a joint venture between Exxon Mobil Corp. and Qatar Petroleum, is asking federal authorities for permission to export large quantities of liquefied natural gas made in the U.S. from an existing terminal near the Texas-Louisiana border, an executive said Friday.
If permission is granted, Exxon, the biggest natural-gas producer in the country, and its partner would spend $10 billion converting a recently finished terminal built near Port Arthur, Texas, to import natural gas into a facility capable of exporting 15.6 million tons of LNG per year, or approximately two billion cubic feet per day. The U.S. produces about 72 billion cubic feet of natural gas a day.
If permission is granted, Exxon, the biggest natural-gas producer in the country, and its partner would spend $10 billion converting a recently finished terminal built to import natural gas into a facility capable of exporting 15.6 million tons of LNG per year, or approximately two billion cubic feet per day. The U.S. produces about 72 billion cubic feet of natural gas a day.
The move acknowledges the dramatic shift in energy markets produced by the development of techniques to produce natural gas from shale formations across the U.S. After years of fretting about natural gas scarcity and spending billions constructing import terminals to bring the fuel from places as far as Qatar and West Africa, energy companies now seek to turn the U.S. into a major energy exporter.
"The market changed from what we originally envisioned," said Bill Davis, Project Executive for Golden Pass Products. "Something changed along the way--it was the discovery of vastly significant gas resources."
The joint venture's application is for export to countries with which the U.S. has a free-trade treaty; it says it will submit an additional application for countries that haven't signed free-trade agreements with the U.S. soon. Mr. Davis said it could take several years to get regulatory approval and up to five years to build the liquefaction facilities at the terminal.
A rival company, Cheniere Energy Inc., already has authorization to ship LNG world-wide from a terminal near Exxon's Golden Pass Facility. But Exxon's application puts its heft behind the controversial drive to export U.S. natural gas. Proponents say that exports will boost the U.S. economy and create jobs, while critics charge that exporting will raise prices for domestic consumers and lead to greater use of the drilling method known as hydraulic fracturing, which some environmentalists fear could cause pollution.
U.S. natural gas producers, straining under a collapse in domestic prices, have hoped for the chance to sell natural gas to overseas markets where prices can be much higher. As new drilling technology helped unlock increasing amounts of natural gas, prices plummeted to $1.90 per million British thermal units in April from nearly $14 per million British thermal units in July 2008.
Natural gas futures for September delivery closed Friday at $2.719 per million British thermal units, down 0.5 cent, or 0.2%, as traders worried that excess supply would continue despite a drop in the number of rigs drilling for natural gas. The U.S. produces about 72 billion cubic feet a day of natural gas.
Customers from the U.K., Korea, India and Spain have already contracted supply from Cheniere. The company, which recently gave the order to start building the facility, expects to start deliveries in 2015.
In addition to Qatar Petroleum and Exxon, the Golden Pass LNG Terminal and a pipeline connecting it to the natural gas transmission network are also owned in part by ConocoPhillips.
Write to Ángel González at and Ben Lefebvre at
Corrections & Amplifications Golden Pass Products is asking federal authorities for permission to export liquefied natural gas from a terminal near Port Arthur, Texas. An earlier version of this article incorrectly said the terminal was in Louisiana.
Credit: By Ángel González And Ben Lefebvre
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 17, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1033786416
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1033786416?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Exxon Seeks to Export Gas
Author: Gonzalez, Angel; Lefebvre, Ben
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]18 Aug 2012: B.3.
ProQuest document link
Abstract:
Corrections & Amplifications A joint venture between Exxon Mobil Corp. and Qatar Petroleum called Golden Pass Products is asking federal authorities for permission to export liquefied natural gas from a terminal near Port Arthur, Texas.
Full text: Corrections & Amplifications
A joint venture between Exxon Mobil Corp. and Qatar Petroleum called Golden Pass Products is asking federal authorities for permission to export liquefied natural gas from a terminal near Port Arthur, Texas. A Corporate News article about the venture in some editions Saturday incorrectly said the terminal is in Louisiana.
(WSJ Aug. 23, 2012)
Subscribe to WSJ:
HOUSTON -- A joint venture between Exxon Mobil Corp. and Qatar Petroleum is asking federal authorities for permission to export large quantities of liquefied natural gas made in the U.S. from an existing terminal in Louisiana, an executive said Friday.
If permission is granted, Exxon, the biggest natural-gas producer in the country, and its partner would spend $10 billion converting a recently finished terminal built to import natural gas into a facility capable of exporting 15.6 million tons of LNG per year, or approximately two billion cubic feet per day. The U.S. produces about 72 billion cubic feet of natural gas a day.
The move acknowledges the dramatic shift in energy markets produced by the development of techniques to produce natural gas from shale formations across the U.S.
After years of fretting about natural gas scarcity and spending billions constructing import terminals to bring the fuel from places as far as Qatar and West Africa, energy companies now seek to turn the U.S. into a major energy exporter.
"The market changed from what we originally envisioned," said Bill Davis, project executive for the joint venture, Golden Pass Products LLC. "Something changed along the way -- it was the discovery of vastly significant gas resources."
The joint venture's application is for export to countries with which the U.S. has a free-trade treaty; it says it will submit an additional application for countries that haven't signed free-trade agreements with the U.S. soon.
Mr. Davis said it could take several years to get regulatory approval and up to five years to build the liquefaction facilities at the terminal.
A rival company, Cheniere Energy Inc., already has authorization to ship LNG world-wide from a terminal near Exxon's Golden Pass Facility. But Exxon's application puts its heft behind the controversial drive to export U.S. natural gas.
Proponents say that exports will boost the U.S. economy and create jobs, while critics charge that exporting will raise prices for domestic consumers and lead to greater use of the drilling method known as hydraulic fracturing, which some environmentalists fear could cause pollution.
U.S. natural gas producers, straining under a collapse in domestic prices, have hoped for the chance to sell natural gas to overseas markets where prices can be much higher. As new drilling technology helped unlock increasing amounts of natural gas, prices plummeted to $1.90 per million British thermal units in April from nearly $14 per million British thermal units in July 2008.
Natural gas futures for September delivery closed Friday at $2.719 per million British thermal units, down 0.5 cent, or 0.2%, as traders worried that excess supply would continue despite a drop in the number of rigs drilling for natural gas. The U.S. produces about 72 billion cubic feet a day of natural gas.
Customers from the U.K., Korea, India and Spain have already contracted supply from Cheniere. The company, which recently gave the order to start building the facility, expects to start deliveries in 2015.
Credit: By Angel Gonzalez and Ben Lefebvre
Subject: Natural gas; Petroleum industry; Energy policy; International trade; Regulatory approval
Location: Texas United States--US Louisiana
Company / organization: Name: Cheniere Energy Inc; NAICS: 211111; Name: Qatar Petroleum; NAICS: 211111; Name: Exxon Mobil Corp; NAICS: 447110, 211111
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.3
Publication year: 2012
Publication date: Aug 18, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1033807367
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1033807367?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
REVIEW --- Icons: Revving Up the Oil Paints for a Car Show
Author: Yost, Mark
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]18 Aug 2012: C.14.
ProQuest document link
Abstract:
Because it's such a niche market, many sports artists look for benefactors.
Full text: Corrections & Amplifications
Jean Todt, president of the Federation Internationale de l'Automobile, is a former rally co-driver. An Icons article in Saturday's Review section about the annual show of the Automotive Fine Arts Society incorrectly said he was a Formula One driver.
(WSJ Aug. 22, 2012)
Subscribe to WSJ:
Thousands of people will flock to the Pebble Beach Concours d'Elegance Sunday to see rare, historic cars on the 18th fairway of the famed golf course by the sea. But many visitors may not know that another car-culture celebration will be sharing the lush grass: the annual show of the Automotive Fine Arts Society.
Created in 1983, this small group of automotive artists works in oil, watercolors, acrylics, wood, gouache, pen and ink, clay and metal. In addition to California's Pebble Beach Golf Links, their artwork often turns up at the Amelia Island Concours d'Elegance in Florida and the Salon Prive Concours d'Elegance and the Goodwood Revival, both in the U.K. Two major sports-art museums in the U.S. show such art, the American Sports Art Museum in Daphne, Ala., and the National Art Museum of Sport in Indianapolis.
Like some sectors of the art market, sports art and its automotive-art niche have struggled in the wake of the recession. "Prices basically held up until 2010 and then the floor dropped out," said AFAS President Ken Eberts, who estimates that automotive art in general saw about a 50% fall in prices in 2010. "We got back about 25% of that drop over the past two years," he said. "And prices are still creeping up."
LeRoy Neiman, who died in June at age 91, is still the Ferrari in the sports-art market. But when it comes to price, he's been way behind Warhol. One of the most expensive Neimans, "Le Mans," a colorful portrait of the famed car race, sold for $107,550 at a December 2003 auction at Christie's in New York.
Neiman made his money from serigraphs -- prints made by a special process -- of his originals. They originally sold for $3,000 to $6,000 each, and he sold an estimated $10 million worth of serigraphs every year for more than 20 years. Today, the serigraphs can range anywhere from $7,000 to $15,000, said Mike Morehead, who owns the Prairebrooke Gallery in Overland Park, Kan.
One problem for sports artists is that "the broader arts community tends to look down on them," Mr. Morehead said. Because it's such a niche market, many sports artists look for benefactors. Mina Papatheodorou-Valyraki is a Greek artist who uses bottle caps to spread the paint thickly on the canvas. She has produced commissioned works for Formula One, Ferrari and Lamborghini. F-1 driver Jean Todt, now president of the Federation Internationale de l'Automobile, has a number of her paintings at his museum in Paris. But the recession has even impacted her. "Today the crisis is deep in the field of arts," she said.
One of the iconic automotive artists displaying his work at Pebble Beach this year will be Art Fitzpatrick. At 93, he finds it hard to make the trek from his studio in Carlsbad, Calif., and says this will be his final Pebble Beach showing. Over his 70-year career as an artist and car designer, Mr. Fitzpatrick says he built custom cars for Clark Gable, Errol Flynn and Al Jolson.
One of Mr. Fitzpatrick's featured pieces will be his original gouache-and-acrylic painting of a 1953 Studebaker Starliner, which was used in a U.S. Postal Service stamp series called "American Sporty Cars."
Mr. Eberts himself will show "The Mercer and the Bridge," which features a 1915 Mercer Raceabout in the shadow of the Brooklyn Bridge. Both the car and the bridge were designed by the Roebling family.
Credit: By Mark Yost
Subject: Art galleries & museums; Artists; Prices; Automobile shows; Art exhibits
Location: California
Company / organization: Name: Pebble Beach Golf Links; NAICS: 713910
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.14
Publication year: 2012
Publication date: Aug 18, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: Feature
ProQuest document ID: 1033807630
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1033807630?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Pump Action Spurs Iraqi Oil Production
Author: Hassan Hafidh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 Aug 2012: n/a.
ProQuest document link
Abstract:
Oil-field workers have been relatively safe, but a string of bomb attacks on oil pipelines, including two last month, temporarily halted crude-oil exports from northern Iraq to the Turkish Mediterranean port of Ceyhan for few days after each attack.\n
Full text: Iraq has reclaimed its place as the second-largest oil producer in the Organization of Petroleum Exporting Countries, overtaking Iran for the first time in 24 years and shifting the balance of power in the group.
After years of conflict and poor security, Iraq has finally begun to rebuild its shattered oil industry. In July, it pumped just over three million barrels a day, an impressive 400,000 barrel-a-day increase since the end of 2011, according to OPEC data.
But the shift in rankings also is because Iran's output has declined. Western sanctions, aimed at pressuring Tehran over its nuclear program, have cut 700,000 barrels a day from the country's production since 2011, according to OPEC data.
Before the first of the sanctions were imposed in January, Iran was producing 3.5 million barrels a day of oil, a level Iraq doesn't expect to reach until next year.
The gap between the two countries is likely to widen further in the coming months as Iraq sees more rewards from contracts signed in 2009 and 2010 with large Western, Russian and Chinese oil companies to develop a dozen neglected oil fields in southern Iraq. These include some of the world's largest, like Rumaila and West Qurna.
The recovery in Iraq's oil output because of these deals was gradual at first, averaging 4.2% annual growth between 2006 and 2010. It kicked into high gear last year, as oil production expanded 12.5%.
This is good news for oil consumers. Extra supplies from Iraq helped global markets cope with the loss of Libyan exports during last year's civil war. It also helps offset the loss of Iranian exports this year.
But so far, Iraq has just been making up for many years of oil-industry neglect. It still has plenty of growth potential.
"Iraq sits on very bountiful oil reserves [estimated at 143 billion barrels], and for decades there was too little investment to develop these," said Samuel Ciszuk, an analyst at the U.K.-based consultancy KBC Energy Economics. "So the capacity to lift production even significantly above today's levels is there."
Oil Minister Abdul Kareem Luaiby said recently that Baghdad is aiming for output of 3.4 million barrels a day by the end of this year. It has loftier plans to produce 12 million barrels a day by 2017. However, despite the recent progress, most observers believe that only a fraction of that five-year target can be achieved.
"As a back-of-the-envelope estimation, one could assume that by 2017 the total could be about 4.5 million barrels a day," said Manouchehr Takin, an oil analyst at the London-based Center for Global Energy Studies. "If we are optimistic, it could be five million barrels a day."
Infrastructure bottlenecks, such as lack of pipeline networks and export terminals, have slowed oil production for years. This problem has eased with the opening at the beginning of the year of two new seaborne oil terminals. But other infrastructure challenges remain.
Boosting oil production further will require injecting a lot of water into fields to restore pressure. Iraqi oil ministry senior officials has been wrangling for years over setting up a new system, which would require huge new investments.
Security is also a problem. Oil-field workers have been relatively safe, but a string of bomb attacks on oil pipelines, including two last month, temporarily halted crude-oil exports from northern Iraq to the Turkish Mediterranean port of Ceyhan for few days after each attack. The bombings were blamed on the outlawed Kurdistan Workers' Party, which is waging a campaign against the Turkish state in a fight for more autonomy for Turkey's estimated 14 million ethnic Kurds.
Iraq's own disputes with its semiautonomous Kurdish region also have held back production. In April, Kurdistan halted 100,000 barrels a day of oil production, claiming Baghdad owed the Kurds $1.5 billion collected from previous oil exports. It resumed exports this month in a goodwill gesture to Baghdad, but may stop them again on Aug. 31 if the payment dispute isn't resolved.
Iraq has much to gain if it can resolve these disputes. "Should [Kurdistan]-Baghdad oil relations mend, Iraqi exports would indeed grow by about 175,000 to 200,000 barrels a day more" during the third and fourth quarters of this year, KBC Energy's Mr. Ciszuk said. Any exports from Kurdistan would be on top of the current output of more than three million barrels a day.
Credit: By Hassan Hafidh
Subject: Petroleum production; Petroleum industry; Pipelines; Exports; Iraq War-2003; Energy economics
Location: Iran Iraq
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 19, 2012
column: Market Focus
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1034117719
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1034117719?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
: Revving Up the Oil Paints for a Car Show
Author: Yost, Mark
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Aug 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Thousands of people will flock to the Pebble Beach Concours d'Elegance Sunday to see rare, historic cars on the 18th fairway of the famed golf course by the sea. But many visitors may not know that another car-culture celebration will be sharing the lush grass: the annual show of the Automotive Fine Arts Society.
Created in 1983, this small group of automotive artists works in oil, watercolors, acrylics, wood, gouache, pen and ink, clay and metal. In addition to California's Pebble Beach Golf Links, their artwork often turns up at the Amelia Island Concours d'Elegance in Florida and the Salon Privé Concours d'Elegance and the Goodwood Revival, both in the U.K. Two major sports-art museums in the U.S. show such art, the American Sports Art Museum in Daphne, Ala., and the National Art Museum of Sport in Indianapolis.
Like some sectors of the art market, sports art and its automotive-art niche have struggled in the wake of the recession. "Prices basically held up until 2010 and then the floor dropped out," said AFAS President Ken Eberts, who estimates that automotive art in general saw about a 50% fall in prices in 2010. "We got back about 25% of that drop over the past two years," he said. "And prices are still creeping up."
LeRoy Neiman, who died in June at age 91, is still the Ferrari in the sports-art market. But when it comes to price, he's been way behind Warhol. One of the most expensive Neimans, "Le Mans," a colorful portrait of the famed car race, sold for $107,550 at a December 2003 auction at Christie's in New York.
Neiman made his money from serigraphs--prints made by a special process--of his originals. They originally sold for $3,000 to $6,000 each, and he sold an estimated $10 million worth of serigraphs every year for more than 20 years. Today, the serigraphs can range anywhere from $7,000 to $15,000, said Mike Morehead, who owns the Prairebrooke Gallery in Overland Park, Kan.
One problem for sports artists is that "the broader arts community tends to look down on them," Mr. Morehead said. Because it's such a niche market, many sports artists look for benefactors. Mina Papatheodorou-Valyraki is a Greek artist who uses bottle caps to spread the paint thickly on the canvas. She has produced commissioned works for Formula One, Ferrari and Lamborghini. Former rally co-driver Jean Todt, now president of the Fédération Internationale de l'Automobile, has a number of her paintings at his museum in Paris. But the recession has even impacted her. "Today the crisis is deep in the field of arts," she said.
One of the iconic automotive artists displaying his work at Pebble Beach this year will be Art Fitzpatrick. At 93, he finds it hard to make the trek from his studio in Carlsbad, Calif., and says this will be his final Pebble Beach showing. Over his 70-year career as an artist and car designer, Mr. Fitzpatrick says he built custom cars for Clark Gable, Errol Flynn and Al Jolson.
One of Mr. Fitzpatrick's featured pieces will be his original gouache-and-acrylic painting of a 1953 Studebaker Starliner, which was used in a U.S. Postal Service stamp series called "American Sporty Cars."
Mr. Eberts himself will show "The Mercer and the Bridge," which features a 1915 Mercer Raceabout in the shadow of the Brooklyn Bridge. Both the car and the bridge were designed by the Roebling family.
Corrections & Amplifications Jean Todt is a former rally co-driver. An earlier version of this article incorrectly said he was a Formula One driver.
Credit: By Mark Yost
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 20, 2012
Section: Life and Style
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1034444179
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1034444179?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Think Gas Prices Are Bad Now? --- Surge in Futures and Cost of Oil Hasn't Fully Shown Up at the Pump; U.S. Average Is $3.72 a Gallon
Author: Biers, John M; Strumpf, Dan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]21 Aug 2012: C.4.
ProQuest document link
Abstract:
Aside from higher oil prices, disruptions to U.S. output and an uptick in demand both at home and overseas mean gasoline prices could continue climbing, at least over the short term, analysts, traders and investors say.
Full text: Rising gasoline futures are paving the way for more pain at the pump.
Gasoline futures have soared 19% over the past two months, setting in motion an increase in retail prices, which are up 7.2% over the same period, according to AAA Fuel Gauge Report. Pump prices tend to lag behind moves in the futures market by several weeks, meaning drivers have yet to feel the full extent of the recent rally.
And there is another reason for consumers to fear even higher gasoline prices: The motor fuel is still playing catch-up with its biggest input cost. Crude-oil futures are up 27% since late June as Western sanctions against producer Iran eroded global supplies.
Aside from higher oil prices, disruptions to U.S. output and an uptick in demand both at home and overseas mean gasoline prices could continue climbing, at least over the short term, analysts, traders and investors say.
Lower gasoline prices earlier this year helped boost consumer spending and bolstered the economy. Now, higher prices threaten to become a drag on spending heading into the second half of the year, said James Hamilton, a professor at the University of California San Diego.
"It's taking money away from what [consumers] would have spent on something else," Mr. Hamilton says.
On Monday, gasoline futures hovered near three-month highs, finishing up 0.1% at $3.03 a gallon. At the pump, U.S. drivers paid an average of $3.72 for a gallon of regular gasoline, according to AAA. The Brent crude contract, which traders say has a bigger influence on gasoline prices than U.S. crude futures on the New York Mercantile Exchange, inched lower to $113.70 a barrel.
Zachariah Yurch, head of trading at commodity fund Gamma-Q LLC in Columbus, Ohio, which manages $52 million in assets, is betting that prices of gasoline and diesel will continue to rise as supplies fall due to several recent refinery accidents and the closing of refineries in the Northeast. The U.S. fuel market "already is tight, and it'll continue to remain tight" in coming months, Mr. Yurch says.
Inventories of gasoline and diesel that refiners and others have on hand in the U.S. are at their lowest levels for this time of year since 2008. Gasoline stockpiles are down 3% from a year ago and totaled 203.7 million barrels, while stockpiles of distillates, a category that encompasses diesel, have declined 19% to 124.2 million barrels, according to the latest data from the Energy Information Administration. These declines have come as U.S. refiners have ramped up fuel exports. Distillate exports are 49.3% above last year's level, according to EIA data.
Meanwhile, the outlook for domestic demand is brightening. AAA forecasts a 3.1% rise in automobile travel during the coming Labor Day holiday weekend in the U.S, with 28.2 million people on the roads.
Mr. Yurch says he is keeping a close eye on the East Coast, where several refineries were shut because they were losing money. And plants staying open are scaling back from traditional fuels. Delta Air Lines Inc. has said it plans to reduce output of gasoline and other refined products in favor of more jet fuel at a Pennsylvania refinery it purchased in June.
To be sure, some analysts say a pullback in oil prices or a sharp slowdown in growth could scuttle the rally in gasoline.
Scott Givre, a partner at the energy trading firm Gotham Capital, placed a bullish bet on gasoline when prices were about $2.50 a gallon in June and cashed out when prices rose past $3 earlier this month. But now Mr. Givre says he is unsure whether prices can rise much further, given that the U.S. is nearing the end of the summer driving season, when consumption usually peaks for the year.
Another bet on higher prices "just doesn't look that great anymore," he adds.
Gasoline prices have gotten an unexpected boost from several refinery accidents that have sharply curtailed fuel supplies. Chevron Corp.'s refinery in Richmond, Calif., has been running at 50%-60% capacity since an Aug. 6 fire. The partial shutdown sent wholesale prices in California up 30 cents a gallon in a single day.
Four days before that fire, a blaze at HollyFrontier Corp.'s Tulsa, Okla., refinery shut down a key diesel unit. That is expected to cut the facilities' 125,000-barrel-a-day output by between 30,000 and 40,000 barrels a day through October.
"Anybody who needs to purchase gasoline over the next six months, they're locking in prices right now," said Jason Williams, an energy broker at Coquest, a brokerage firm in Dallas. "They are worried that the supply shortages might last for the next three months."
---
Ken Clark contributed to this article.
Subscribe to WSJ:
Credit: By John M. Biers and Dan Strumpf
Subject: Gasoline prices; Petroleum refineries; Petroleum industry; Futures; Crude oil; Commodity prices; Gasoline
Location: United States--US Iran
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Classification: 3400: Investment analysis & personal finance; 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Aug 21, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1034339522
Document URL: https://login.ez proxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1034339522?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Cnooc Net Drops on China Oil Spill
Author: Lee, Yvonne
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Aug 2012: n/a.
ProQuest document link
Abstract:
Cnooc, China's largest listed offshore oil and natural-gas producer, also recommended a 40% cut in its dividend, chiefly due to the cost of its proposed US$15.1 billion acquisition of Canadian energy company Nexen Inc. Despite the decline in output, Cnooc said it expects to meet its 2012 production target amid an aggressive strategy of acquiring overseas shale-gas and oil assets.
Full text: HONG KONG--Cnooc Ltd. posted a 19% decline in its first-half net profit on Tuesday, as a production halt at the site of a massive oil spill in China last year lowered the energy company's output.
Cnooc, China's largest listed offshore oil and natural-gas producer, also recommended a 40% cut in its dividend, chiefly due to the cost of its proposed US$15.1 billion acquisition of Canadian energy company Nexen Inc.
Despite the decline in output, Cnooc said it expects to meet its 2012 production target amid an aggressive strategy of acquiring overseas shale-gas and oil assets. Its confidence in meeting the output target is underpinned by 10 new oil- and gas-exploration discoveries in offshore China so far this year as well as the planned acquisition of Nexen, announced last month.
Cnooc's first-half net profit fell to 31.87 billion yuan ($5.01 billion) from 39.34 billion yuan a year earlier, as higher corporate taxes also took a toll. The latest result came in below the average 35.92-billion-yuan forecast of six analysts polled by Dow Jones Newswires.
Revenue fell 5% to 118.27 billion yuan, as Cnooc's net crude-oil and gas output sank 4.6% to 160.9 million barrels of oil equivalent.
The reduced production stemmed largely from the shutdown of the Penglai 19-3 oil field after an oil spill last year. China's State Oceanic Administration ordered a halt to production at the field last September, citing unsatisfactory progress in cleaning up the June 2011 spill. The field in Bohai Bay, on China's eastern coast, is 51%-owned by Cnooc. It is operated by ConocoPhillips China.
Cnooc's average selling price of its crude oil rose 8.1% to $116.91 a barrel, while the company's corporate taxes increased 48% to 13.34 yuan billion.
Chairman Wang Yilin said Cnooc has proposed a first-half dividend of 15 Hong Kong cents (two U.S. cents), down from 25 Hong Kong cents in the previous year, because of the capital requirements of the Nexen deal.
"Upon the closing of the transaction, the company will become a truly global oil and gas exploration and production company with a balanced resources portfolio and important presences in the world's major oil and gas production areas," Mr. Wang said in a written statement.
A Nexen acquisition is expected to raise Cnooc's proved reserves by about 30% and its net output by about 20%. Nexen's assets include oil and gas projects in offshore Nigeria, the Gulf of Mexico, Colombia, Yemen and Poland, as well as a project to tap gas trapped in tight shale rock in British Columbia.
China's big three energy producers--Cnooc, China National Petroleum Corp. and China Petroleum Corp.--have secured multibillion-dollar deals in recent years to buy into shale-gas and oil assets in North America, giving their energy-thirsty nation a foothold in a region known for innovative new drilling techniques. However, a slide in North American gas prices has resulted in write-downs by some major competitors in the sector.
The shale-gas industry is still in its infancy in China, but the Chinese government has made shale gas a cornerstone of its five-year energy plan, aiming to boost production from no commercial output today to 60 billion cubic meters a year by 2020.
In 2010, Cnooc agreed to pay Chesapeake Energy Corp. $1.08 billion for a one-third stake in 600,000 acres in the oil-rich Eagle Ford Shale formation in south Texas, and to spend an additional $1.08 billion on drilling there.
Write to Yvonne Lee at
Credit: By Yvonne Lee
Subject: Acquisitions & mergers; Petroleum industry; Corporate profits; Corporate taxes; Natural gas
Location: United States--US China
Company / organization: Name: CNOOC Ltd; NAICS: 211111; Name: Dow Jones Newswires; NAICS: 519110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 21, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1034340682
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1034340682?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Think Gas Prices Are Bad Now? Surge in Futures and Cost of Oil Hasn't Fully Shown Up at the Pump; U.S. Average Is $3.72 a Gallon
Author: Biers, John M; Strumpf, Dan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Aug 2012: n/a. [Duplicate]
ProQuest document link
Abstract:
Aside from higher oil prices, disruptions to U.S. output and an uptick in demand both at home and overseas mean gasoline prices could continue climbing, at least over the short term, analysts, traders and investors say.
Full text: Rising gasoline futures are paving the way for more pain at the pump.
Gasoline futures have soared 19% over the past two months, setting in motion an increase in retail prices, which are up 7.2% over the same period, according to AAA Fuel Gauge Report. Pump prices tend to lag behind moves in the futures market by several weeks, meaning drivers have yet to feel the full extent of the recent rally.
And there is another reason for consumers to fear even higher gasoline prices: The motor fuel is still playing catch-up with its biggest input cost. Crude-oil futures are up 27% since late June as Western sanctions against producer Iran eroded global supplies.
Aside from higher oil prices, disruptions to U.S. output and an uptick in demand both at home and overseas mean gasoline prices could continue climbing, at least over the short term, analysts, traders and investors say.
Lower gasoline prices earlier this year helped boost consumer spending and bolstered the economy. Now, higher prices threaten to become a drag on spending heading into the second half of the year, said James Hamilton, a professor at the University of California San Diego.
"It's taking money away from what [consumers] would have spent on something else," Mr. Hamilton says.
On Monday, gasoline futures hovered near three-month highs, finishing up 0.1% at $3.03 a gallon. At the pump, U.S. drivers paid an average of $3.72 for a gallon of regular gasoline, according to AAA. The Brent crude contract, which traders say has a bigger influence on gasoline prices than U.S. crude futures on the New York Mercantile Exchange, inched lower to $113.70 a barrel.
Zachariah Yurch, head of trading at commodity fund Gamma-Q LLC in Columbus, Ohio, which manages $52 million in assets, is betting that prices of gasoline and diesel will continue to rise as supplies fall due to several recent refinery accidents and the closing of refineries in the Northeast. The U.S. fuel market "already is tight, and it'll continue to remain tight" in coming months, Mr. Yurch says.
Inventories of gasoline and diesel that refiners and others have on hand in the U.S. are at their lowest levels for this time of year since 2008. Gasoline stockpiles are down 3% from a year ago and totaled 203.7 million barrels, while stockpiles of distillates, a category that encompasses diesel, have declined 19% to 124.2 million barrels, according to the latest data from the Energy Information Administration. These declines have come as U.S. refiners have ramped up fuel exports. Distillate exports are 49.3% above last year's level, according to EIA data.
Meanwhile, the outlook for domestic demand is brightening. AAA forecasts a 3.1% rise in automobile travel during the coming Labor Day holiday weekend in the U.S, with 28.2 million people on the roads.
Mr. Yurch says he is keeping a close eye on the East Coast, where several refineries were shut because they were losing money. And plants staying open are scaling back from traditional fuels. Delta Air Lines Inc. has said it plans to reduce output of gasoline and other refined products in favor of more jet fuel at a Pennsylvania refinery it purchased in June.
To be sure, some analysts say a pullback in oil prices or a sharp slowdown in growth could scuttle the rally in gasoline.
Scott Givre, a partner at the energy trading firm Gotham Capital, placed a bullish bet on gasoline when prices were about $2.50 a gallon in June and cashed out when prices rose past $3 earlier this month. But now Mr. Givre says he is unsure whether prices can rise much further, given that the U.S. is nearing the end of the summer driving season, when consumption usually peaks for the year.
Another bet on higher prices "just doesn't look that great anymore," he adds.
Gasoline prices have gotten an unexpected boost from several refinery accidents that have sharply curtailed fuel supplies. Chevron Corp.'s refinery in Richmond, Calif., has been running at 50%-60% capacity since an Aug. 6 fire. The partial shutdown sent wholesale prices in California up 30 cents a gallon in a single day.
Four days before that fire, a blaze at HollyFrontier Corp.'s Tulsa, Okla., refinery shut down a key diesel unit. That is expected to cut the facilities' 125,000-barrel-a-day output by between 30,000 and 40,000 barrels a day through October.
"Anybody who needs to purchase gasoline over the next six months, they're locking in prices right now," said Jason Williams, an energy broker at Coquest, a brokerage firm in Dallas. "They are worried that the supply shortages might last for the next three months."
Ken Clark contributed to this article.
Write to John M. Biers at and Dan Strumpf at
Credit: By John M. Biers And Dan Strumpf
Subject: Gasoline prices; Petroleum refineries; Petroleum industry
Location: United States--US
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 21, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1034353785
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1034353785?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Nigeria's Former Oil Bandits Now Collect Government Cash
Author: Hinshaw, Drew
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 Aug 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: ABUJA, Nigeria--Alhaji Dokubo-Asari once stalked the mangrove-choked creeks of the Niger Delta, a leaf stuck to his forehead for good luck, as a crew that he ran bled oil from pipelines and sold it to smugglers. "Asari fuel," they called it.
Last year, Nigeria's state oil company began paying him $9 million a year, by Mr. Dokubo-Asari's account, to pay his 4,000 former foot soldiers to protect the pipelines they once attacked.
He shrugs off the unusual turn of events. "I don't see anything wrong with it," said the thickly built former gunman, lounging in a house gown at his home here in Nigeria's capital.
Nigeria is shelling out hundreds of millions of dollars a year to maintain an uneasy calm in the oil-rich delta, where attacks ranging from theft to bombings to kidnappings pummeled oil production three years ago, to as low as 500,000 barrels on some days. Now production is back up to 2.6 million barrels daily of low-sulfur crude of the sort favored by U.S. refineries, which get nearly 9% of their supply here.
The gilded pacification campaign is offered up by the government as a success story. But others say the program, including a 2009 amnesty, has sent young men in Nigeria's turbulent delta a different message: that militancy promises more rewards than risks.
While richly remunerated former kingpins profess to have left the oil-theft business, many former militant foot soldiers who are paid less or not at all by the amnesty, and have few job prospects, continue to pursue prosperity by tapping pipelines.
Now, oil theft appears to be on the rise again. Royal Dutch Shell PLC's Nigerian unit estimates that more than 150,000 barrels of oil are stolen from Nigerian pipelines daily. That is one of the lower estimates. In May, theft from one pipeline got so bad that Shell simply shut it down.
"Everybody seems to believe...that the Niger Delta problem is over," said a former government mediator, Dimieari Von Kemedi. "It's just on pause. The challenge is to move from pause to stop."
Meanwhile, Nigeria is facing a separate militancy, in the form of the radical Islamic group Boko Haram, whose guerrilla attacks on churches and police stations in a different part of the country have left hundreds dead. Some legislators have proposed extending amnesty to Boko Haram, as well.
It is an expensive proposition. This year alone, Nigeria will spend about $450 million on its amnesty program, according to the government's 2012 budget, more than what it spends to deliver basic education to children.
Under the arrangement, the government grants living allowances to tens of thousands of former members of the bandit crews and sends them to vocational classes, in sites ranging from Houston to London to Seoul. These costs are on top of millions of dollars paid at the outset to the crews' leaders for handing in their weapons.
For a few, the program has meant spectacular rewards. To improve ties with former delta warlords, the government invited the top "generals," as they call themselves, for extended stays on the uppermost, executive floors of Abuja's Hilton hotel.
The Nigerian state oil company, according to one of its senior officials, is giving $3.8 million a year apiece to two former rebel leaders, Gen. Ebikabowei "Boyloaf" Victor Ben and Gen. Ateke Tom, to have their men guard delta pipelines they used to attack. Another general, Government "Tompolo" Ekpumopolo, maintains a $22.9 million-a-year contract to do the same, the official said.
A liaison to Mr. Tom declined to comment on the contracts. Mr. Ekpumopolo didn't return phone calls and messages. Mr. Ben, when reached for comment, asked, "How much money is involved in this interview?" and then hung up.
Later, he sent an enigmatic text: "Very wel dn im nt dispose bt cnsider 100%al u wnt ,we need investors in niger delta absolute peace is guarante."
For President Goodluck Jonathan, a Niger Delta native, such lavish expenditures have become a political liability. Despite a growing economy, his country of 167 million struggles to finance even the basics, starting with power plants, roads and sewers. A blossoming middle class in Nigeria's cities has put further strain on public infrastructure.
Yet because four-fifths of government revenue flows from the oil fields, aides to the president defend the high cost of peace by saying the treasury would face an even worse drain if a full-blown militancy in the delta flared up again. "If it's too huge, what are the alternatives?" said Oronto Douglas, a senior adviser to Mr. Jonathan.
"For you to address the whole issue of poverty and development, you need some kind of peace," added Mutiu Sunmonu, managing director for Shell's Nigerian unit. "That is what I think the amnesty program has offered."
Enticed by the program, the militants emerged a couple of years ago from the oil-soaked swamps of the delta. Some of the leaders took up residence in the executive floors of Abuja's Hilton and through much of 2010 and early 2011 spent weeks or months enjoying the Executive Lounge's complimentary supply of Hennessey V.S.O.P. cognac, priced at $51 a shot on the room-service menu. Over a buffet of fiery Nigerian dishes--gumbos, Jollof rice pilafs, goat stews--they rubbed shoulders with the country's leading politicians and influence peddlers, who often live in the floor's $700-a-night art-deco rooms.
"These are young men who came out of the creeks and were given the opportunity to hang out with the crème de la crème, wearing gold watches and drinking from gold-rimmed teacups," said Tony Uranta, a member of the government's Niger Delta Technical Committee advisory group and a frequent Hilton executive-floor guest. "It's a natural thing."
Most have since moved out of the hotel. "It's too high-profile," said an aide to one ex-warlord, Mr. Tom.
Meanwhile, thousands of former militant foot soldiers have been given job training, a feature of the program that officials call its most indisputable success. The question is how many will be able to make use of this training. In Nigeria, the government estimates, there are 67 million other people waiting to be employed.
Kempare Ebipade says he spent six years guarding creekside armories as an oil militant, in the course of which he took two bullets to the thigh. In 2009 he accepted amnesty and was sent to the U.S. for two weeks at the Martin Luther King Jr. Center for Nonviolent Social Change in Atlanta. He displayed a booklet of Dr. King's speeches from which he said he sometimes reads to villagers.
Mr. Ebipade is a skilled welder now, trained in the craft by the amnesty program. But the father of four struggles to imagine how he will find clients for a welding workshop he has set up, or how he will continue to afford his apartment's rent of $1,100 a year.
The government has vigorously pushed oil companies to hire locals. Mr. Ebipade says that out of the former militant army of 10,000 he belonged to, he has heard of only five that landed jobs with oil companies.
Shell's Mr. Sunmonu warned against the idea "that every trained ex-militant is going to get a paid employment, because if you just look at the number, it's probably huge. So we therefore must broaden our solutions to focus more on self-employment: small enterprises, medium enterprises."
The Niger Delta has seen promising economic progress. Construction on a regional highway is under way.
Nigeria's overall economy is projected to grow at a brisk 7.1% this year. But much of the growth is in cities far from the delta, and a population boom reduces the degree to which the growth helps with the unemployment problem.
In the delta, years-old electric towers punctuate village skylines, but many don't carry electricity, having never been connected to the overtaxed power grid. Children travel to scattered schools aboard canoes, navigating creeks coated by the rainbow stains of oil slicks. A United Nations office has estimated it would take 30 years to clean the waters, which once sustained fisheries.
Amid this landscape, oil-related crime lures locals like Atu Thompson, father of 18 and self-described oil thief, who says he and others see few other ways to provide. "You can take me to amnesty, give me a good contract--but others are still there," Mr. Thompson says.
Mr. Dokubo-Asari, 48 years old, used to be prominent among them. While not all of his account of life in the mangrove swamps could be verified, he long was one of Nigeria's best-known oil marauders.
About 25 years ago, Mr. Dokubo-Asari left overcrowded university classrooms, he says, to study guerrilla warfare in the Libya led by Col. Moammar Gadhafi. He says he was given $100,000 to stir up trouble back in Nigeria, an oil competitor to Libya.
Fomenting conflict proved easy in the restive Niger Delta he returned to in the early 1990s. From a local governor, Mr. Dokubo-Asari says, he procured weapons and money to build a militia that ultimately was several thousand strong. For years, as he tells it, they broke open pipelines, filling canisters with crude oil and refining some of it through timeworn techniques used by locals to boil palm-tree sap into wine.
The government struggled to lure him out of the mangroves. Mr. Dokubo-Asari responded to one amnesty offer that he considered meager by announcing a death threat against petroleum workers. Shell evacuated hundreds of expatriates and oil derricks briefly slowed to a stop. The next day, oil prices hit $50 a barrel for the first time.
Nigeria's government offered Mr. Dokubo-Asari a truce and $1,000 apiece, he says, for his AK-47 rifles, numbering 3,182. He says he took the deal and used the profits to purchase more weapons and return to the swamp.
There, he recounts he was finally arrested and coerced into another round of negotiations. Fearing assassination, he fled to Cotonou, Benin, where he says he founded a school for Niger Delta children. He showed a video of him teaching kids kung fu at the school.
New warlords quickly took Mr. Dokubo-Asari's place. Marauding under noms de guerre like Gen. Shoot-at-Sight, Gen. Africa and Gen. Young Shall Grow, they formed a loose confederation of gunmen calling itself the Movement for the Emancipation of the Niger Delta, or MEND, and crippled enough oil infrastructure to bring Nigeria's production on some days to a near-halt.
That was when Nigeria announced the 2009 amnesty. In televised ceremonies, guerrillas dropped off rifles, machine guns, tear-gas canisters, dynamite bundles, rocket launchers, antiaircraft guns, gunboats and grenades to be sold to the government, which also offered the nonviolence training courses and nine-month vocational classes.
Theft fell sharply. Yet now, just as Nigeria's state oil company has begun institutionalizing pipeline-watch jobs for some ex-militants, theft has blossomed again. "It's quite an escalation. If nothing is done, it will continue to increase because more and more people will just come to feel that this is a gold field," said Shell's Mr. Sunmonu. "We're not going to give up on this and run away from it. We believe it can be stopped."
Maclean Imomotimi left an overpacked university four years ago, the muscular 30-year-old says, to rob barges in the Niger Delta swamps. Now, befitting his new career, he is known as Gen. Imomotimi.
He says he accepted the government's amnesty offer in 2011 on the expectation he would be feted, his hotel bills and bar tabs paid; instead, he was disappointed to receive a living allowance of just 65,000 naira ($413) a month.
So Gen. Imomotimi has returned to the waterways, this time, he says, not to rob barges but to steal oil.
"I take amnesty's money--what [little] they give me--I take it and I buy other guns," he says. "There's much, much more money in the creeks."
Write to Drew Hinshaw at
Credit: By Drew Hinshaw
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 22, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1034480354
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1034480354?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Earnings: Cnooc Net Drops On China Oil Spill
Author: Lee, Yvonne
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]22 Aug 2012: B.7.
ProQuest document link
Abstract:
Cnooc, China's largest listed offshore oil and natural-gas producer, also recommended a 40% cut in its dividend, chiefly due to the cost of its proposed US$15.1 billion acquisition of Canadian energy company Nexen Inc. Despite the decline in output, Cnooc said it expects to meet its 2012 production target amid an aggressive strategy of acquiring overseas gas and oil assets.
Full text: HONG KONG -- Cnooc Ltd. posted a 19% decline in its first-half net profit on Tuesday, as a production halt at the site of a massive oil spill in China last year lowered the energy company's output.
Cnooc, China's largest listed offshore oil and natural-gas producer, also recommended a 40% cut in its dividend, chiefly due to the cost of its proposed US$15.1 billion acquisition of Canadian energy company Nexen Inc.
Despite the decline in output, Cnooc said it expects to meet its 2012 production target amid an aggressive strategy of acquiring overseas gas and oil assets. Its confidence in meeting the target is underpinned by 10 oil- and gas-exploration discoveries in offshore China so far this year as well as the planned acquisition of Nexen, announced last month.
Cnooc's first-half net profit fell to 31.87 billion yuan ($5.01 billion) from 39.34 billion yuan a year earlier, as higher corporate taxes also took a toll.
Revenue fell 5% to 118.27 billion yuan, as net crude-oil and gas output sank 4.6% to 160.9 million barrels of oil equivalent.
The reduced production stemmed largely from the shutdown of the Penglai 19-3 oil field after an oil spill last year. China's State Oceanic Administration ordered a halt to production at the field last September, citing unsatisfactory progress in cleaning up the June 2011 spill. The field in Bohai Bay, on China's eastern coast, is 51%-owned by Cnooc. It is operated by ConocoPhillips China.
Cnooc's average selling price of its crude oil rose 8.1% to $116.91 a barrel, while the company's corporate taxes increased 48% to 13.34 yuan billion.
Chairman Wang Yilin said Cnooc has proposed a first-half dividend of 15 Hong Kong cents (two U.S. cents), down from 25 Hong Kong cents in the previous year, because of the capital requirements of the Nexen deal.
"Upon the closing of the transaction, the company will become a truly global oil and gas exploration and production company," Mr. Wang said in a written statement.
A Nexen acquisition is expected to raise Cnooc's proved reserves by about 30% and its net output by about 20%. Nexen's assets include oil and gas projects in offshore Nigeria, the Gulf of Mexico, Colombia, Yemen and Poland, as well as a project to tap gas trapped in shale rock in British Columbia.
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Credit: By Yvonne Lee
Subject: Financial performance; Oil spills
Location: China
Company / organization: Name: CNOOC Ltd; NAICS: 211111
Classification: 8510: Petroleum industry; 9179: Asia & the Pacific
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.7
Publication year: 2012
Publicationdate: Aug 22, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1034502878
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Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Nigeria's Former Oil Bandits Now Collect Government Cash
Author: Hinshaw, Drew
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]22 Aug 2012: A.1. [Duplicate]
ProQuest document link
Abstract:
Royal Dutch Shell PLC's Nigerian unit estimates that more than 150,000 barrels of oil are stolen from Nigerian pipelines daily. The Nigerian state oil company, according to one of its senior officials, is giving $3.8 million a year apiece to two former rebel leaders, Gen. Ebikabowei "Boyloaf" Victor Ben and Gen. Ateke Tom, to have their men guard delta pipelines they used to attack.
Full text: ABUJA, Nigeria -- Alhaji Dokubo-Asari once stalked the mangrove-choked creeks of the Niger Delta, a leaf stuck to his forehead for good luck, as a crew that he ran bled oil from pipelines and sold it to smugglers. "Asari fuel," they called it.
Last year, Nigeria's state oil company began paying him $9 million a year, by Mr. Dokubo-Asari's account, to pay his 4,000 former foot soldiers to protect the pipelines they once attacked.
He shrugs off the unusual turn of events. "I don't see anything wrong with it," said the thickly built former gunman, lounging in a house gown at his home here in Nigeria's capital.
Nigeria is shelling out hundreds of millions of dollars a year to maintain an uneasy calm in the oil-rich delta, where attacks ranging from theft to bombings to kidnappings pummeled oil production three years ago, to as low as 500,000 barrels on some days. Now production is back up to 2.6 million barrels daily of low-sulfur crude of the sort favored by U.S. refineries, which get nearly 9% of their supply here.
The gilded pacification campaign is offered up by the government as a success story. But others say the program, including a 2009 amnesty, has sent young men in Nigeria's turbulent delta a different message: that militancy promises more rewards than risks.
While richly remunerated former kingpins profess to have left the oil-theft business, many former militant foot soldiers who are paid less or not at all by the amnesty, and have few job prospects, continue to pursue prosperity by tapping pipelines.
Now, oil theft appears to be on the rise again. Royal Dutch Shell PLC's Nigerian unit estimates that more than 150,000 barrels of oil are stolen from Nigerian pipelines daily. That is one of the lower estimates. In May, theft from one pipeline got so bad that Shell simply shut it down.
"Everybody seems to believe. . .that the Niger Delta problem is over," said a former government mediator, Dimieari Von Kemedi. "It's just on pause. The challenge is to move from pause to stop."
Meanwhile, Nigeria is facing a separate militancy, in the form of the radical Islamic group Boko Haram, whose guerrilla attacks on churches and police stations in a different part of the country have left hundreds dead. Some legislators have proposed extending amnesty to Boko Haram, as well.
It is an expensive proposition. This year alone, Nigeria will spend about $450 million on its amnesty program, according to the government's 2012 budget, more than what it spends to deliver basic education to children.
Under the arrangement, the government grants living allowances to tens of thousands of former members of the bandit crews and sends them to vocational classes, in sites ranging from Houston to London to Seoul. These costs are on top of millions of dollars paid at the outset to the crews' leaders for handing in their weapons.
For a few, the program has meant spectacular rewards. To improve ties with former delta warlords, the government invited the top "generals," as they call themselves, for extended stays on the uppermost, executive floors of Abuja's Hilton hotel.
The Nigerian state oil company, according to one of its senior officials, is giving $3.8 million a year apiece to two former rebel leaders, Gen. Ebikabowei "Boyloaf" Victor Ben and Gen. Ateke Tom, to have their men guard delta pipelines they used to attack. Another general, Government "Tompolo" Ekpumopolo, maintains a $22.9 million-a-year contract to do the same, the official said.
A liaison to Mr. Tom declined to comment on the contracts. Mr. Ekpumopolo didn't return phone calls and messages. Mr. Ben, when reached for comment, asked, "How much money is involved in this interview?" and then hung up.
Later, he sent an enigmatic text: "Very wel dn im nt dispose bt cnsider 100%al u wnt ,we need investors in niger delta absolute peace is guarante."
For President Goodluck Jonathan, a Niger Delta native, such lavish expenditures have become a political liability. Despite a growing economy, his country of 167 million struggles to finance even the basics, starting with power plants, roads and sewers. A blossoming middle class in Nigeria's cities has put further strain on public infrastructure.
Yet because four-fifths of government revenue flows from the oil fields, aides to the president defend the high cost of peace by saying the treasury would face an even worse drain if a full-blown militancy in the delta flared up again. "If it's too huge, what are the alternatives?" said Oronto Douglas, a senior adviser to Mr. Jonathan.
"For you to address the whole issue of poverty and development, you need some kind of peace," added Mutiu Sunmonu, managing director for Shell's Nigerian unit. "That is what I think the amnesty program has offered."
Enticed by the program, the militants emerged a couple of years ago from the oil-soaked swamps of the delta. Some of the leaders took up residence in the executive floors of Abuja's Hilton and through much of 2010 and early 2011 spent weeks or months enjoying the Executive Lounge's complimentary supply of Hennessey V.S.O.P. cognac, priced at $51 a shot on the room-service menu. Over a buffet of fiery Nigerian dishes -- gumbos, Jollof rice pilafs, goat stews -- they rubbed shoulders with the country's leading politicians and influence peddlers, who often live in the floor's $700-a-night art-deco rooms.
"These are young men who came out of the creeks and were given the opportunity to hang out with the creme de la creme, wearing gold watches and drinking from gold-rimmed teacups," said Tony Uranta, a member of the government's Niger Delta Technical Committee advisory group and a frequent Hilton executive-floor guest. "It's a natural thing."
Most have since moved out of the hotel. "It's too high-profile," said an aide to one ex-warlord, Mr. Tom.
Meanwhile, thousands of former militant foot soldiers have been given job training, a feature of the program that officials call its most indisputable success. The question is how many will be able to make use of this training. In Nigeria, the government estimates, there are 67 million other people waiting to be employed.
Kempare Ebipade says he spent six years guarding creekside armories as an oil militant, in the course of which he took two bullets to the thigh. In 2009 he accepted amnesty and was sent to the U.S. for two weeks at the Martin Luther King Jr. Center for Nonviolent Social Change in Atlanta. He displayed a booklet of Dr. King's speeches from which he said he sometimes reads to villagers.
Mr. Ebipade is a skilled welder now, trained in the craft by the amnesty program. But the father of four struggles to imagine how he will find clients for a welding workshop he has set up, or how he will continue to afford his apartment's rent of $1,100 a year.
The government has vigorously pushed oil companies to hire locals. Mr. Ebipade says that out of the former militant army of 10,000 he belonged to, he has heard of only five that landed jobs with oil companies.
Shell's Mr. Sunmonu warned against the idea "that every trained ex-militant is going to get a paid employment, because if you just look at the number, it's probably huge. So we therefore must broaden our solutions to focus more on self-employment: small enterprises, medium enterprises."
The Niger Delta has seen promising economic progress. Construction on a regional highway is under way.
Nigeria's overall economy is projected to grow at a brisk 7.1% this year. But much of the growth is in cities far from the delta, and a population boom reduces the degree to which the growth helps with the unemployment problem.
In the delta, years-old electric towers punctuate village skylines, but many don't carry electricity, having never been connected to the overtaxed power grid. Children travel to scattered schools aboard canoes, navigating creeks coated by the rainbow stains of oil slicks. A United Nations office has estimated it would take 30 years to clean the waters, which once sustained fisheries.
Amid this landscape, oil-related crime lures locals like Atu Thompson, father of 18 and self-described oil thief, who says he and others see few other ways to provide. "You can take me to amnesty, give me a good contract -- but others are still there," Mr. Thompson says.
Mr. Dokubo-Asari, 48 years old, used to be prominent among them. While not all of his account of life in the mangrove swamps could be verified, he long was one of Nigeria's best-known oil marauders.
About 25 years ago, Mr. Dokubo-Asari left overcrowded university classrooms, he says, to study guerrilla warfare in the Libya led by Col. Moammar Gadhafi. He says he was given $100,000 to stir up trouble back in Nigeria, an oil competitor to Libya.
Fomenting conflict proved easy in the restive Niger Delta he returned to in the early 1990s. From a local governor, Mr. Dokubo-Asari says, he procured weapons and money to build a militia that ultimately was several thousand strong. For years, as he tells it, they broke open pipelines, filling canisters with crude oil and refining some of it through timeworn techniques used by locals to boil palm-tree sap into wine.
The government struggled to lure him out of the mangroves. Mr. Dokubo-Asari responded to one amnesty offer that he considered meager by announcing a death threat against petroleum workers. Shell evacuated hundreds of expatriates and oil derricks briefly slowed to a stop. The next day, oil prices hit $50 a barrel for the first time.
Nigeria's government offered Mr. Dokubo-Asari a truce and $1,000 apiece, he says, for his AK-47 rifles, numbering 3,182. He says he took the deal and used the profits to purchase more weapons and return to the swamp.
There, he recounts he was finally arrested and coerced into another round of negotiations. Fearing assassination, he fled to Cotonou, Benin, where he says he founded a school for Niger Delta children. He showed a video of him teaching kids kung fu at the school.
New warlords quickly took Mr. Dokubo-Asari's place. Marauding under noms de guerre like Gen. Shoot-at-Sight, Gen. Africa and Gen. Young Shall Grow, they formed a loose confederation of gunmen calling itself the Movement for the Emancipation of the Niger Delta, or MEND, and crippled enough oil infrastructure to bring Nigeria's production on some days to a near-halt.
That was when Nigeria announced the 2009 amnesty. In televised ceremonies, guerrillas dropped off rifles, machine guns, tear-gas canisters, dynamite bundles, rocket launchers, antiaircraft guns, gunboats and grenades to be sold to the government, which also offered the nonviolence training courses and nine-month vocational classes.
Theft fell sharply. Yet now, just as Nigeria's state oil company has begun institutionalizing pipeline-watch jobs for some ex-militants, theft has blossomed again. "It's quite an escalation. If nothing is done, it will continue to increase because more and more people will just come to feel that this is a gold field," said Shell's Mr. Sunmonu. "We're not going to give up on this and run away from it. We believe it can be stopped."
Maclean Imomotimi left an overpacked university four years ago, the muscular 30-year-old says, to rob barges in the Niger Delta swamps. Now, befitting his new career, he is known as Gen. Imomotimi.
He says he accepted the government's amnesty offer in 2011 on the expectation he would be feted, his hotel bills and bar tabs paid; instead, he was disappointed to receive a living allowance of just 65,000 naira ($413) a month.
So Gen. Imomotimi has returned to the waterways, this time, he says, not to rob barges but to steal oil.
"I take amnesty's money -- what [little] they give me -- I take it and I buy other guns," he says. "There's much, much more money in the creeks."
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Credit: By Drew Hinshaw
Subject: Pipelines; Theft; Petroleum production
Location: Niger Delta Nigeria
Company / organization: Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210
Classification: 8510: Petroleum industry; 9177: Africa
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.1
Publication year: 2012
Publication date: Aug 22, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1034503102
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1034503102?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Fu rther reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
India Holds Back Clearances for Oil, Gas Blocks
Author: Sharma, Rakesh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Aug 2012: n/a.
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India, which saw its crude-oil import bill jump 48% on year to 6.72 trillion rupees ($121.76 billion) in the fiscal year ended March 31, is seeking to trim it by ramping up local output with the help of global oil and gas exploration companies and by acquiring assets overseas.
Full text: NEW DELHI--India is holding back clearances for more than a fifth of the exploratory blocks it has auctioned in various rounds since 1999 to domestic and overseas energy explorers due to defence, environmental and maritime boundary issues.
The delay is hurting the nation's plans to expedite exploration of its oil and gas assets and ramp up local output to cut its import bill and may threaten investments by overseas explorers in the country's energy sector.
"Presently, 52 blocks awarded under various rounds of New Exploration Licensing Policy bidding are pending clearance by different organizations such as the Ministry of Defence, Ministry of Environment and Forests, Ministry of External Affairs and state governments," Oil Minister Jaipal Reddy told lawmakers in a written reply in the lower house of Parliament.
Of the 52 blocks awaiting clearances, 22 are operated by Oil & Natural Gas Corp., 15 by Reliance Industries Ltd., five by BHP Billiton Ltd., three by Cairn Energy PLC, two by Santos Ltd. and one each by BG Group PLC, BP PLC and ENI S.p.A.
Under nine auction rounds, India has awarded 249 blocks. But so far, discoveries have been made in only 36 blocks.
Mr. Reddy said clearances for larger areas from which these blocks are carved out are always obtained from other ministries before offering them for bidding. But for the 52 blocks, the companies will have to seek additional approvals from the related ministries of defence, environment and foreign affairs to start or resume exploratory work.
The Indian and foreign companies have already invested $12.4 billion for exploration and development activities in these blocks, he said.
India, which saw its crude-oil import bill jump 48% on year to 6.72 trillion rupees ($121.76 billion) in the fiscal year ended March 31, is seeking to trim it by ramping up local output with the help of global oil and gas exploration companies and by acquiring assets overseas.
However, the government's control over pricing and marketing of its natural resources and lengthy approval processes for exploration blocks have made overseas investors jittery and lose interest in the country's energy sector.
India's Mint newspaper last month reported that the oil ministry had warned the prime minister's office that non-clearance of blocks could lead to an exodus of foreign companies that were brought in with assurances of a conducive investment environment as well as litigation and claims of damages.
Write to Rakesh Sharma at
Credit: By Rakesh Sharma
Subject: Petroleum industry; Foreign investment; Natural gas
Location: India
Company / organization: Name: BHP Billiton; NAICS: 211111, 212231, 212234; Name: Reliance Industries Ltd; NAICS: 324110; Name: BP PLC; NAICS: 447110, 324110, 211111; Name: Cairn Energy PLC; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 23, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1034685295
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1034685295?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Sudan, South Spar Over Oil-Rich Region
Author: Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Aug 2012: n/a.
ProQuest document link
Abstract:
Sudan and South Sudan--which split up a year ago following a two-decade-long civil war--are supposed to nominate a total of at least seven members for the temporary administration of Abyei, pending a referendum that will let residents determine which country they will be a part of.
Full text: KAMPALA--Sudan and South Sudan traded new allegations Thursday over a disputed oil-rich region straddling the two countries, heightening the risk of renewed standoff just days before the sides are set to resume border talks.
Sudan accused South Sudan on Thursday of unilaterally appointing a new administration for Abyei, an area seized in May 2011 by Sudanese forces and claimed by both countries. South Sudan rejected the accusation.
Sudan and South Sudan--which split up a year ago following a two-decade-long civil war--are supposed to nominate a total of at least seven members for the temporary administration of Abyei, pending a referendum that will let residents determine which country they will be a part of. Both sides had agreed to a temporary deal on who would run and provide security for the region, but each side has rejected the other's nominations several times.
"The establishment of the Abyei administration must be agreed by both countries, which South Sudan is ignoring," said Sudan government spokesman Rabie Abdelaty.
A South Sudanese spokesman countered Thursday that Sudan had accepted its nominations, prompting it to appoint the chief administrator for Abyei. Sudan is supposed to nominate officials for the positions of deputy chief administrator and speaker, the spokesman said.
The dispute comes as the countries prepare to conclude negotiations on a deal that would allow South Sudan to resume vital oil exports via its northern neighbor. Following its secession in July 2011, South Sudan retained 75% of the oil fields of the former Sudan. But it relies on its northern neighbor's pipelines and ports to get its oil to world markets.
Earlier this month, the two countries made a tentative deal on how much South Sudan should pay to ship its oil through Sudanese ports and pipelines. But Sudan insists that no transit oil will be allowed through its territories until an agreement on border security is reached. Sudanese forces are battling multiple armed groups in three restive border states, which Sudan alleges are backed by South Sudan. South Sudan denies those accusations.
Mr. Abdelaty said talks to resolve the border security are expected to resume next week in Ethiopia. The two sides are also expected to agree on the demarcation of their poorly marked 1,120-mile common border.
South Sudan has in the past accused Sudan of attempting to annex its oil-rich border regions. Sudan withdrew its forces from Abyei in early May 2012, bowing to international pressure amid simmering tensions with its southern neighbor.
Write to Nicholas Bariyo at
Credit: By Nicholas Bariyo
Subject: Nominations; Pipelines
Location: Sudan South Sudan
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 23, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1034714795
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1034714795?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Romney Pushes Bigger Role for States in Oil Drilling
Author: Murray, Sara
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Aug 2012: n/a.
ProQuest document link
Abstract:
The presumptive Republican presidential nominee's appearance in New Mexico Thursday came a day after his campaign unveiled a plan to give states broad authority to approve energy exploration on federal lands within their borders.
Full text: HOBBS, N.M.--Mitt Romney hammered home the benefits of broader state control of oil exploration, debuting his fleshed-out energy plan while on the stump Thursday.
The presumptive Republican presidential nominee's appearance in New Mexico Thursday came a day after his campaign unveiled a plan to give states broad authority to approve energy exploration on federal lands within their borders. The campaign said the plan could lead North America to energy independence by 2020.
"This is not some pie-in-the-sky kind of thing," Mr. Romney said. "This is a real, achievable objective."
He used a bar chart to show the various oil sources that could help boost production across the U.S., Mexico and Canada. Among the major contributors: offshore drilling, natural gas and biofuels.
"The net of all this, as you can see, is by 2020 we're able to produce somewhere between 23 to 28 million barrels per day of oil, and we won't need to buy any oil from the Middle East or Venezuela or anywhere else where we don't want to," said Mr. Romney, pointing to his chart.
Key to Mr. Romney's energy agenda is a plan to allow states to write regulations and safety procedures for exploration on federal land within their borders--a move designed to speed up oil and gas drilling.
"On federal lands, the permitting process to actually drill and get oil or gas is extraordinarily slow," Mr. Romney said. "Now, interestingly, on state lands and private lands, state regulators have streamlined their permitting process."
He took a dig at the Obama administration, accusing it of using burdensome regulations to discourage oil and gas production, which he said forces Americans to use renewable energy instead.
"Look, I like wind and solar like the next person," Mr Romney said, "but I don't want the law to be used to stop the production of oil and gas and coal."
The Obama campaign said the Romney plan was tilted in favor of big oil companies, some of whose executives have been large donors to the Romney campaign.
"He wants to keep giving billions of dollars in tax subsidies to the big oil and gas companies and recklessly open new areas for drilling, but turn our back on increasing energy efficiency and developing our clean, homegrown energy sources," said Lis Smith, a spokeswoman for the Obama campaign. "That's not a recipe for energy independence."
She said Mr. Romney's plan would only ensure that big oil's profits continue to increase, while the jobs created by the clean-energy sector in states like Michigan, Ohio and Iowa would go to China.
Mr. Romney said his plan would bring more jobs with good wages and improve the nation's security. The plan will "assure that we have all of the energy we need to keep America powered and to make sure that our military never has to borrow from someone across the ocean that might not be our best friend," he said.
Ryan Tracy contributed to this article.
Write to Sara Murray at
Credit: By Sara Murray
Subject: Petroleum industry; Energy policy; Political campaigns; Natural gas utilities
Location: United States--US Canada North America New Mexico
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 23, 2012
Section: US
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1034731476
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1034731476?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
In Oil Market, Stimulus Skepticism Reigns
Author: Friedman, Nicole
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Aug 2012: n/a.
ProQuest document link
Abstract:
NEW YORK--Crude-oil futures eased 1% Thursday as the market soured on the likelihood of Federal Reserve stimulus actions--in contrast to the view taken in the gold market--analysts and traders said.
Full text: NEW YORK--Crude-oil futures eased 1% Thursday as the market soured on the likelihood of Federal Reserve stimulus actions--in contrast to the view taken in the gold market--analysts and traders said.
Two high-profile voices threw cold water on the idea of additional monetary stimulus from the Fed. The president of the St. Louis Federal Reserve Bank, James Bullard, said in an interview Thursday with CNBC that the probability of further stimulus from the Fed is "not as high" as the market expects.
Later in the day, Mitt Romney, the presumptive Republican presidential nominee, told the Fox Business Network that he didn't support the Fed's last round of bond-buying and thinks another would be "the wrong way to go."
The renewed doubt in the market that stimulus could be implemented "seemed to precipitate a pretty aggressive little fall" in oil futures, said Peter Donovan, vice president of Vantage Trading and a Nymex floor broker.
Crude opened the session above Wednesday's three-month settlement high on hopes of Fed stimulus. Stimulus measures benefit oil and oil-based products in two ways. Any increase in economic activity would spur demand for oil in the U.S., the world's largest oil consumer. Also, such measures, which are tantamount to printing money, would lower the value of the dollar and dollar-denominated crude oil. That would make crude cheaper for buyers of other currencies.
However, futures fell into the red midday and continued to slide. Prices declined $1.61 between 12:30 p.m. and 1:30 p.m. New York time. Light, sweet crude for October delivery fell 99 cents on the day to settle at $96.27 a barrel on the New York Mercantile Exchange.
Though Mr. Romney doesn't currently hold a government position, his comments still had "psychological" influence in the market, Mr. Donovan said. "Any opposition to stimulus certainly would have a little bit of a negative effect on the price of oil," he said.
The stimulus skepticism in the oil market didn't play out the same way in gold trading. While gold's run-up paused after Mr. Bullard's comments on the likelihood of stimulus, the yellow metal held its gains. Gold futures rose $32.30, or 2%, to settle at $1,672.80 a troy ounce on Nymex's Comex division Thursday.
Still, investors in both markets are likely to proceed with caution in the coming weeks as other growth scenarios shake out.
Investors are cautiously eyeing Europe, where Greece is in meetings with euro-zone leaders about the terms of the country's bailout. German Finance Minister Wolfgang Schaeuble said on German radio Thursday that additional time to meet bailout requirements, as Greece is requesting, won't help the country solve its problems. Mr. Schaeuble's comments "tempered" market hopes for successful bailout negotiations, said John Kilduff, a founding partner of Again Capital.
Traders are also likely to look for clues from Fed Chairman Ben Bernanke, who is due to deliver a speech at the Jackson Hole, Wyo., monetary-policy symposium next week, said Howard Wen, a commodities research associate at HSBC.
But oil prices, which have increased 9.4% since Aug. 1, could still have room to rally, said Ray Carbone, president of Paramount Options, a brokerage company. "Given the trajectory that crude has been on, it's just a little bit of a setback," he said.
Tatyana Shumsky contributed to this article.
Credit: By Nicole Friedman
Subject: Commodity prices; Gold markets; Bailouts; Central banks; Gold; Futures
People: Bullard, James Romney, W Mitt
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210; Name: Fox Business Network; NAICS: 515210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 23, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1034741579
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1034741579?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Rises as Output Is Curbed
Author: Biers, John M
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 Aug 2012: n/a.
ProQuest document link
Abstract:
"The focus is shifting away from [Hurricane] Isaac and toward fundamentals," he said. Besides Isaac, market participants are awaiting the release of U.S. crude inventories on Wednesday by the Department of Energy.
Full text: Oil futures rose as Hurricane Isaac forced the suspension of almost all crude output in the Gulf of Mexico.
Traders said they felt confident bidding up prices after the International Energy Agency, a watchdog energy group for the world's industrialized nations, signaled that it wasn't leaning toward releasing oil from strategic reserves in response to the production disruptions.
Gasoline prices gave back some of the gains made Monday amid relief that the storm hasn't strengthened enough to cause widespread damage to the nation's main refining hub on the Gulf Coast.
Oil futures climbed 86 cents, or 0.9%, to $96.33 a barrel on the New York Mercantile Exchange after a report dismissed the chance of an emergency oil-stockpile release. Gasoline futures, which jumped 2.5% Monday, closed at $3.1261 a gallon, down 2.87 cents, or 0.9%. Brent crude futures settled at $112.58, up 32 cents, or 0.3%.
Maria Van der Hoeven, executive director of the International Energy Agency, was quoted by news outlets as saying there was no need for a strategic stock release because the oil market is "sufficiently well supplied."
But later Tuesday, the Group of Seven leading industrialized economies called for oil-producing nations to boost crude production, "mindful of the substantial risks posed" to the global economy by high oil prices. The G-7 also said it stands "ready to call upon the International Energy Agency to take appropriate action to ensure that the market is fully and timely supplied."
The National Hurricane Center upgraded Isaac to hurricane status. The storm has a "dangerous" storm surge and threatens to result in heavy rainfall, the NHC said.
The U.S. Bureau of Safety and Environmental Enforcement, which oversees offshore oil-and-gas operations, said as of 12:30 p.m. EDT Tuesday, 1.29 million barrels a day of crude, or 93% of the oil production in the Gulf's federal waters, were offline.
On Monday, Gulf Coast refiners shut about 1.3 million barrels of fuel-production capacity, equal to about 8% of total U.S. output, according to the Department of Energy. Those shutdowns come amid a tight U.S. gasoline market, especially on the East Coast.
While Isaac isn't expected to pose a major threat to oil and gas production, there is still a chance the storm could result in significant refinery upheaval if there is flooding or the loss of power. Andy Lebow, senior vice president of energy futures at Jefferies Bache, described the outlook for refining as a "wait and see" situation.
But Hamza Khan, an analyst with Schork Group, a commodity analysis and energy market research firm, said the market already was looking past Isaac. While last week's forecasts gave the storm a 30% chance of strengthening into a Category 3 storm, those odds now stand at 5%, he said. "The focus is shifting away from [Hurricane] Isaac and toward fundamentals," he said.
Besides Isaac, market participants are awaiting the release of U.S. crude inventories on Wednesday by the Department of Energy. Some analysts think a major decline in oil inventories could spur higher prices.
Ian Talley contributed to this article.
Write to John M. Biers at
Credit: By John M. Biers
Subject: Petroleum production; Petroleum industry; Rain; Production capacity; Energy industry
Location: United States--US
Company / organization: Name: International Energy Agency; NAICS: 928120; Name: New York Mercantile Exchange; NAICS: 523210; Name: Group of Seven; NAICS: 926110; Name: Department of Energy; NAICS: 926130
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 28, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1035239205
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1035239205?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permissio n.
Last updated: 2017-11-19
Database: The Wall Street Journal
G-7 Calls for Lift In Oil Production
Author: Reddy, Sudeep
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 Aug 2012: n/a.
ProQuest document link
Abstract:
After Hurricane Isaac shut nearly all of the Gulf of Mexico?s oil production, traders speculated that the U.S. could tap its Strategic Petroleum Reserve, the 696 million barrel emergency oil stockpile created to protect against supply disruptions after the 1973-74 OPEC oil embargo.
Full text: WASHINGTON?The Group of Seven leading industrialized economies appealed to the world?s major oil producers to boost output as fears about Hurricane Isaac and tensions with Iran pushed up oil prices.
The G-7 nations?the U.S., Canada, Japan, U.K., Germany, France and Italy?stopped short of coordinating a release of emergency oil stockpiles despite mounting worries about the damage from rising fuel costs on already weak economies.
?We encourage oil-producing countries to increase their output to meet demand, while drawing prudently on excess capacity,? finance ministers from the G-7 nations said in a statement on Tuesday. Major oil exporter Saudi Arabia pledged this year to come to the aid of oil-consuming economies if needed, but most other members of the Organization of the Petroleum Exporting Countries have resisted boosting output in recent months.
The ministers blamed the jump in oil prices on ?geopolitical concerns and certain supply disruptions? and said they were ?mindful of the substantial risks posed by elevated oil prices.?
The concerns come as gasoline prices sit at their highest level for this time of year?when demand usually starts to ease as summer ends?amid worries about weather-related disruptions and supply cuts from Iran, which is facing international sanctions.
Crude oil futures prices rose Tuesday by 86 cents to $96.33 a barrel on the New York Mercantile Exchange. While that is below the $100-plus levels of the spring, it is up $18.64, or 24%, over the past two months. Gasoline prices nationwide averaged about $3.76 a gallon on Tuesday, up 27 cents from a month ago, according to AAA.
The latest jumps are stoking debate on the campaign trail about U.S. energy policy, with Republicans criticizing the Obama administration.
After Hurricane Isaac shut nearly all of the Gulf of Mexico?s oil production, traders speculated that the U.S. could tap its Strategic Petroleum Reserve, the 696 million barrel emergency oil stockpile created to protect against supply disruptions after the 1973-74 OPEC oil embargo.
White House spokesman Jay Carney said Tuesday that ?all options remain on the table,? but said there was ?nothing to announce today.?
Tapping the U.S. reserves during the election season would likely generate attacks from Republicans. The Clinton administration drew criticism for opening the SPR in October 2000 as heating-oil prices rose.
But Hurricane Isaac could give the Obama administration some political cover. The Bush administration tapped the SPR in 2005 after Hurricane Katrina knocked off oil production and sent prices higher.
Just the expectation of a release of emergency stockpiles can limit upward moves in oil prices if speculators fear being on the wrong side of a bet.
G-7 discussions about oil prices sometimes signal action from the International Energy Agency, which coordinates emergency stockpiles for major energy consumers. But the latest G-7 statement echoed earlier language that the nations stand ready to call on the IEA to take action ?to ensure that the market is fully and timely supplied.?
The IEA on Tuesday described the oil market as adequately supplied and said the loss of Iranian production had been long anticipated by markets.
?The Iranian sanctions didn?t come out of the blue,? IEA Executive Director Maria van der Hoeven told Reuters on Tuesday. ?The market has been adjusting relatively smoothly to lower Iranian supplies of the last nine months. ?
?On the supply side,? she said, ?there is a steep increase in production from other OPEC sources like Saudi Arabia, and we also see a steep ramp-up in the United States and the Canada oil sands.?
The U.S. Energy Information Administration estimates there is roughly 2.4 million barrels a day in spare production capacity, almost all of it in OPEC-member economies, with Saudi Arabia accounting for most of that. The EIA said that is ?relatively tight? compared with total production of nearly 89 million barrels a day.
Ian Talley and Keith Johnson contributed to this article.
Write to Sudeep Reddy at
Credit: By Sudeep Reddy
Subject: Petroleum industry; Energy policy; Petroleum production
Location: Iran France Germany United Kingdom--UK Japan Italy Canada Saudi Arabia United States--US
People: Carney, Jay
Company / organization: Name: International Energy Agency; NAICS: 928120; Name: New York Mercantile Exchange; NAICS: 523210; Name: Group of Seven; NAICS: 926110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 28, 2012
Section: News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1035370725
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1035370725?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
G-7 Calls for Lift In Oil Production
Author: Reddy, Sudeep
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Aug 2012: n/a.
ProQuest document link
Abstract:
After Hurricane Isaac shut nearly all of the Gulf of Mexico's oil production, traders speculated that the U.S. could tap its Strategic Petroleum Reserve, the 696 million barrel emergency oil stockpile created to protect against supply disruptions after the 1973-74 OPEC oil embargo.
Full text: WASHINGTON--The Group of Seven leading industrialized economies appealed to the world's major oil producers to boost output as fears about Hurricane Isaac and tensions with Iran pushed up oil prices.
The G-7 nations--the U.S., Canada, Japan, U.K., Germany, France and Italy--stopped short of coordinating a release of emergency oil stockpiles despite mounting worries about the damage from rising fuel costs on already weak economies.
"We encourage oil-producing countries to increase their output to meet demand, while drawing prudently on excess capacity," finance ministers from the G-7 nations said in a statement on Tuesday. Major oil exporter Saudi Arabia pledged this year to come to the aid of oil-consuming economies if needed, but most other members of the Organization of the Petroleum Exporting Countries have resisted boosting output in recent months.
The ministers blamed the jump in oil prices on "geopolitical concerns and certain supply disruptions" and said they were "mindful of the substantial risks posed by elevated oil prices."
The concerns come as gasoline prices sit at their highest level for this time of year--when demand usually starts to ease as summer ends--amid worries about weather-related disruptions and supply cuts from Iran, which is facing international sanctions.
Crude oil futures prices rose Tuesday by 86 cents to $96.33 a barrel on the New York Mercantile Exchange. While that is below the $100-plus levels of the spring, it is up $18.64, or 24%, over the past two months. Gasoline prices nationwide averaged about $3.76 a gallon on Tuesday, up 27 cents from a month ago, according to AAA.
The latest jumps are stoking debate on the campaign trail about U.S. energy policy, with Republicans criticizing the Obama administration.
After Hurricane Isaac shut nearly all of the Gulf of Mexico's oil production, traders speculated that the U.S. could tap its Strategic Petroleum Reserve, the 696 million barrel emergency oil stockpile created to protect against supply disruptions after the 1973-74 OPEC oil embargo.
White House spokesman Jay Carney said Tuesday that "all options remain on the table," but said there was "nothing to announce today."
Tapping the U.S. reserves during the election season would likely generate attacks from Republicans. The Clinton administration drew criticism for opening the SPR in October 2000 as heating-oil prices rose.
But Hurricane Isaac could give the Obama administration some political cover. The Bush administration tapped the SPR in 2005 after Hurricane Katrina knocked off oil production and sent prices higher.
Just the expectation of a release of emergency stockpiles can limit upward moves in oil prices if speculators fear being on the wrong side of a bet.
G-7 discussions about oil prices sometimes signal action from the International Energy Agency, which coordinates emergency stockpiles for major energy consumers. But the latest G-7 statement echoed earlier language that the nations stand ready to call on the IEA to take action "to ensure that the market is fully and timely supplied."
The IEA on Tuesday described the oil market as adequately supplied and said the loss of Iranian production had been long anticipated by markets.
"The Iranian sanctions didn't come out of the blue," IEA Executive Director Maria van der Hoeven told Reuters on Tuesday. "The market has been adjusting relatively smoothly to lower Iranian supplies of the last nine months. "
"On the supply side," she said, "there is a steep increase in production from other OPEC sources like Saudi Arabia, and we also see a steep ramp-up in the United States and the Canada oil sands."
The U.S. Energy Information Administration estimates there is roughly 2.4 million barrels a day in spare production capacity, almost all of it in OPEC-member economies, with Saudi Arabia accounting for most of that. The EIA said that is "relatively tight" compared with total production of nearly 89 million barrels a day.
Ian Talley and Keith Johnson contributed to this article.
Write to Sudeep Reddy at
Credit: By Sudeep Reddy
Subject: Petroleum industry; Energy policy; Petroleum production
Location: Iran France Germany United Kingdom--UK Japan Canada Italy Saudi Arabia United States--US
People: Carney, Jay
Company / organization: Name: International Energy Agency; NAICS: 928120; Name: New York Mercantile Exchange; NAICS: 523210; Name: Group of Seven; NAICS: 926110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 29, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1035428366
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1035428366?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Rises as Output Curbed
Author: Biers, John M
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]29 Aug 2012: C.4.
ProQuest document link
Abstract:
Traders said they felt confident bidding up prices after the International Energy Agency, a watchdog energy group for the world's industrialized nations, signaled that it wasn't leaning toward releasing oil from strategic reserves in response to the production disruptions.
Full text: Oil futures rose as Hurricane Isaac forced the suspension of almost all crude output in the Gulf of Mexico.
Traders said they felt confident bidding up prices after the International Energy Agency, a watchdog energy group for the world's industrialized nations, signaled that it wasn't leaning toward releasing oil from strategic reserves in response to the production disruptions.
Gasoline prices gave back some of the gains made Monday amid relief that the storm hasn't strengthened enough to cause widespread damage to the nation's main refining hub on the Gulf Coast.
Oil futures climbed 86 cents, or 0.9%, to $96.33 a barrel on the New York Mercantile Exchange after a report dismissed the chance of an emergency oil-stockpile release. Gasoline futures, which jumped 2.5% Monday, closed at $3.1261 a gallon, down 2.87 cents, or 0.9%. Brent crude futures settled at $112.58, up 32 cents, or 0.3%.
Maria Van der Hoeven, executive director of the International Energy Agency, was quoted by news outlets as saying there was no need for a strategic stock release because the oil market is "sufficiently well supplied."
But later Tuesday, the Group of Seven largest industrialized economies called for oil-producing nations to boost crude production, "mindful of the substantial risks posed" to the global economy by high oil prices. The G-7 also said it stands "ready to call upon the International Energy Agency to take appropriate action to ensure that the market is fully and timely supplied."
The National Hurricane Center upgraded Isaac to hurricane status. The storm has a "dangerous" storm surge and threatens to result in heavy rainfall, the NHC said.
The U.S. Bureau of Safety and Environmental Enforcement, which oversees offshore oil-and-gas operations, said as of 12:30 p.m. EDT Tuesday, 1.29 million barrels a day of crude, or 93% of the oil production in the Gulf's federal waters, were offline.
On Monday, Gulf Coast refiners shut about 1.3 million barrels of fuel-production capacity, equal to about 8% of total U.S. output, according to the Department of Energy. Those shutdowns come amid a tight U.S. gasoline market, especially on the East Coast.
While Isaac isn't expected to pose a major threat to oil and gas production, there is still a chance the storm could result in significant refinery upheaval if there is flooding or the loss of power. Andy Lebow, senior vice president of energy futures at Jefferies Bache, described the outlook for refining as a "wait and see" situation.
But Hamza Khan, an analyst with Schork Group, said the market already was looking past Isaac. "The focus is shifting away from [Hurricane] Isaac and toward fundamentals," he said.
---
Ian Talley contributed to this article.
Subscribe to WSJ:
Credit: By John M. Biers
Subject: Petroleum production; Petroleum industry; Production capacity; Futures trading; Crude oil; Commodity prices
Location: United States--US
Company / organization: Name: International Energy Agency; NAICS: 928120; Name: New York Mercantile Exchange; NAICS: 523210; Name: Group of Seven; NAICS: 926110; Name: Department of Energy; NAICS: 926130
Classification: 3400: Investment analysis & personal finance; 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Aug 29, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1035504379
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1035504379?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: G-7 Calls for Lift In Oil Production
Author: Reddy, Sudeep
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]29 Aug 2012: A.9.
ProQuest document link
Abstract:
After Hurricane Isaac shut nearly all of the Gulf of Mexico's oil production, traders speculated that the U.S. could tap its Strategic Petroleum Reserve, the 696 million barrel emergency oil stockpile created to protect against supply disruptions after the 1973-74 OPEC oil embargo.
Full text: WASHINGTON -- The Group of Seven leading industrialized economies appealed to the world's major oil producers to boost output as fears about Hurricane Isaac and tensions with Iran pushed up oil prices.
The G-7 nations -- the U.S., Canada, Japan, U.K., Germany, France and Italy -- stopped short of coordinating a release of emergency oil stockpiles despite mounting worries about the damage from rising fuel costs on already weak economies.
"We encourage oil-producing countries to increase their output to meet demand, while drawing prudently on excess capacity," finance ministers from the G-7 nations said in a statement on Tuesday. Major oil exporter Saudi Arabia pledged this year to come to the aid of oil-consuming economies if needed, but most other members of the Organization of the Petroleum Exporting Countries have resisted boosting output in recent months.
The ministers blamed the jump in oil prices on "geopolitical concerns and certain supply disruptions" and said they were "mindful of the substantial risks posed by elevated oil prices."
The concerns come as gasoline prices sit at their highest level for this time of year -- when demand usually starts to ease as summer ends -- amid worries about weather-related disruptions and supply cuts from Iran, which is facing sanctions.
Crude oil futures prices rose Tuesday by 86 cents to $96.33 a barrel on the New York Mercantile Exchange. While that is below the $100-plus levels of the spring, it is up $18.64, or 24%, over the past two months. Gasoline prices nationwide averaged about $3.76 a gallon on Tuesday, up 27 cents from a month ago, according to AAA.
The latest jumps are stoking debate on the campaign trail about U.S. energy policy, with Republicans criticizing the Obama administration.
After Hurricane Isaac shut nearly all of the Gulf of Mexico's oil production, traders speculated that the U.S. could tap its Strategic Petroleum Reserve, the 696 million barrel emergency oil stockpile created to protect against supply disruptions after the 1973-74 OPEC oil embargo.
White House spokesman Jay Carney said Tuesday that "all options remain on the table," but said there was "nothing to announce today."
Tapping the U.S. reserves during the election season would likely generate attacks from Republicans. The Clinton administration drew criticism for opening the SPR in October 2000 as heating-oil prices rose.
But Hurricane Isaac could give the Obama administration some political cover. The Bush administration tapped the SPR in 2005 after Hurricane Katrina knocked off oil production and sent prices higher.
Just the expectation of a release of emergency stockpiles can limit upward moves in oil prices if speculators fear being on the wrong side of a bet.
G-7 discussions about oil prices sometimes signal action from the International Energy Agency, which coordinates emergency stockpiles for major energy consumers. But the latest G-7 statement echoed earlier language that the nations stand ready to call on the IEA to take action "to ensure that the market is fully and timely supplied."
The IEA on Tuesday described the oil market as adequately supplied.
---
Ian Talley and Keith Johnson contributed to this article.
Subscribe to WSJ:
Credit: By Sudeep Reddy
Subject: Energy policy; Strategic petroleum reserve; Crude oil prices; Hurricanes; International relations; Petroleum production
Location: Iran United States--US France Germany United Kingdom--UK Japan Canada Italy
People: Carney, Jay
Company / organization: Name: International Energy Agency; NAICS: 928120; Name: New York Mercantile Exchange; NAICS: 523210; Name: Group of Seven; NAICS: 926110
Classification: 1300: International trade & foreign investment; 5310: Production planning & control; 8510: Petroleum industry; 9180: International
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.9
Publication year: 2012
Publication date: Aug 29, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1035512411
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1035512411?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Prices Lower After Supply Data
Author: Bird, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Aug 2012: n/a.
ProQuest document link
Abstract:
Part of the increase came in a jump of nearly 950,000 barrels a day of crude oil imports into the Gulf region, which analysts said may reflect some effort by refiners to bulk up imports as initial shutdowns of facilities began late last week.
Full text: NEW YORK--Crude-oil futures settled lower Wednesday after U.S. government data showed oil inventories rose unexpectedly last week.
Widespread expectations that oil pipelines, drilling platforms and refineries in the key Gulf Coast region will restart quickly after precautionary shutdowns ahead of Hurricane Isaac also spurred selling, traders said. But several companies said conditions didn't yet allow for inspections as parts of the key Gulf refining region were hit by loss of electrical power and flooding, amid continuing heavy rains.
Nearly 95% of oil output from the U.S. Gulf was shut, government data released Wednesday show.
But the market was more focused on news that crude stocks posted an unexpected rise of 3.778 million barrels last week. The data from the Energy Information Administration ran counter to expectations from analysts surveyed by Dow Jones Newswires, who anticipated a decline of 1.5 million barrels in crude-oil stocks in the week.
Part of the increase came in a jump of nearly 950,000 barrels a day of crude oil imports into the Gulf region, which analysts said may reflect some effort by refiners to bulk up imports as initial shutdowns of facilities began late last week.
October-delivery crude-oil futures on the New York Mercantile Exchange settled 84 cents lower, down 0.9%, at $95.49 a barrel.
"Initial reports suggest there was little, if any, damage to offshore oil and gas platforms from Hurricane Isaac," said Tim Evans, analyst at Citi Futures Perspective. "Operations should begin returning to normal over the next few days."
Mr. Evans said he "sees potential for a secondary bullish market reaction if next week's inventory data shows a larger than expected impact on inventories from the storm, but any fear or surprise element associated with the storm seems to have been lost."
By the Department of Energy's count, some 936,500 barrels a day of crude-oil refining capacity on the Gulf Coast was shut in ahead of the storm as of Wednesday morning.
Gene McGillian, analyst at Tradition Energy, noted crude prices have been stuck in a $94 to $98 range over the past two weeks, but after three-month highs at the top of the range, "the rally is stalling." Prices could break higher, if clear signs of a new economic stimulus move emerge from Federal Reserve Board Chairman Ben Bernanke's speech Friday to the Fed's annual economic symposium at Jackson Hole, Wyo.
The EIA data also showed gasoline stocks fell 1.5 million barrels, slightly more than the expected 1.2-million-barrel drop. Distillate stocks--diesel fuel and heating oil--rose 873,000 barrels, against expectations of a drop of 100,000 barrels.
While demand for gasoline was little changed in the week, at just above nine million barrels a day, it was 1.8% below that of a year earlier.
Late in the summer season, gasoline stocks dropped 0.7% in the week to the lowest level since May 25, the start of summer Memorial Day holiday time. Inventories are 3.6% below a year earlier.
Reformulated gasoline blendstock futures for September settled 2.58 cents lower, at $3.1003 a gallon.
Heating-oil futures settled down 0.46 cent, at $3.1157 a gallon. EIA reported demand for distillate fuel in the week was 12.8% below a year earlier, at 3.563 million barrels a day, a three-year low for the week.
Credit: By David Bird
Subject: Petroleum industry; Supply & demand
Location: United States--US Gulf of Mexico New York
People: Bernanke, Ben
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210; Name: Federal Reserve Board; NAICS: 921130; Name: Dow Jones Newswires; NAICS: 519110; Name: Department of Energy; NAICS: 926130
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 29, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1035576754
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1035576754?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil-Market Moves Cast Doubt on a Goldman Call
Author: Gross, Jenny
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Aug 2012: n/a.
ProQuest document link
Abstract:
Goldman Sachs Group Inc. is standing by its forecast that the gap between U.S. and European crude-oil prices will narrow, but some investors say lower output from the North Sea and Iran could lead the Wall Street bank to miss its mark.
Full text: Goldman Sachs Group Inc. is standing by its forecast that the gap between U.S. and European crude-oil prices will narrow, but some investors say lower output from the North Sea and Iran could lead the Wall Street bank to miss its mark.
Goldman is one of Wall Street's largest commodity dealers and its forecasts carry weight in the market. In April, it predicted that the difference in price between Brent crude, relative to which a majority of the world's oil is priced, and West Texas Intermediate, the U.S. benchmark, would shrink by more than half to $5 a barrel by the end of the year.
In the months since, the opposite happened. The spread nearly doubled, topping $20 a barrel earlier this month. Wednesday, the front-month Brent contract closed at $112.54, $17.05 higher than the front-month WTI. Analysts from banks like Morgan Stanley and BNP Paribas say the world's two most-traded benchmarks could continue to diverge until the year's end.
A Goldman spokeswoman said the bank still expects the spread to narrow.
"What can ruin a contraction are ongoing worries about supplies and geopolitics," said Ole Hansen, head of commodity trading at Denmark-based Saxo Bank. "We need to see a stable world on the oil front. If we have that, the fundamentals will slowly move that spread lower--but it will be a bumpy road."
Unlike WTI, Brent is internationally traded, making it more apt to be affected by supply disruptions in the global market. Escalating fears of a conflict between Iran and Israel over Iran's nuclear program have led to a higher price for Brent in recent months as investors worry that a military conflict would disrupt supplies.
Goldman, and many others in the market, expected the May reversal of the Seaway pipeline to relieve a glut of crude oil at the key storage hub of Cushing, Okla., that has kept U.S. oil prices depressed relative to Brent since the beginning of 2011. The pipeline used to flow from the U.S. Gulf coast to Cushing; it now flows in the other direction.
However, as output increases in Canada and in the Bakken shale formation in North Dakota, oil is flowing into the Midwest market, including Cushing, faster than it can be bought to the Gulf Coast for export. Cushing is the delivery point for WTI futures, so the level of supplies there has a disproportionate effect on WTI prices.
"Yes there's a reversal of the pipeline, but on the other hand, you have more oil coming in than you can take out," said Harry Tchilinguirian, the London-based head of commodity strategy at BNP Paribas. He said the spread could broaden to $20 a barrel again in the coming months.
Another factor that could cause the two contracts to diverge is that U.S. refineries, such as BP PLC's Whiting plant, in Indiana, are converting so that they can process heavier, cheaper Canadian oil. This will reduce total demand this year for light oil, like WTI, potentially weighing on prices, he said.
In contrast, relatively strong European prices for products such as gasoline and diesel could lead refiners to demand lighter grades of crude like Brent, which is already supported because of maintenance at oil infrastructure in the North Sea, Mr. Tchilinguirian said. Refiners can more easily process lighter grades of crude into gasoline and diesel than heavier grades.
Morgan Stanley last week widened its estimate for the spread's 2012 average to $16.50 from $15, explaining that any increase in tension with Iran and Syria could cause Brent to rise relative to WTI. Also, an oversupply of light, sweet crude in the U.S. Gulf could lead to greater flows of oil into Cushing, the bank said in a note.
Goldman isn't alone in forecasting the spread will narrow. Other players in the market, such as Bank of AmericaMerrill Lynch, also don't see the current spread as sustainable.
Goldman said falling crude inventories at Cushing will boost U.S. prices, thereby narrowing the discount to Brent. As the Seaway pipeline approaches full capacity, this will further alleviate the glut of oil at Cushing and allow WTI crude to reconnect with Brent.
"Goldman's explanation is totally logical: Lots of factors tend to indicate the glut in Cushing may be coming to an end and that the spread is poised to narrow," said Louis-Cyprien Doucet, an independent trader based in Paris. "Inventories have been steadily declining in the last few weeks and WTI is priced at or under Canadian crude, which should (once again in a logical world) decrease the rate at which Canadian oil flows into the States."
Mr. Doucet is betting that the spread will narrow, but he said it is unrealistic to think it could come to $5 a barrel in just a few months.
"Many have had their fingers burnt on that spread," said Mr. Hansen. "It isn't an easy one to trade."
Write to Jenny Gross at
Credit: By Jenny Gross
Subject: Pipelines; Petroleum industry; Crude oil prices; Supplies
Location: Iran North Sea
Company / organization: Name: Morgan Stanley; NAICS: 523110, 523120, 523920; Name: BNP Paribas; NAICS: 522110; Name: Goldman Sachs Group Inc; NAICS: 523110, 523120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 29, 2012
column: Market Focus
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1036605906
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1036605906?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Pemex Makes Its First Big Oil Find in Deep Gulf
Author: Iliff, Laurence
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Aug 2012: n/a.
ProQuest document link
Abstract:
MEXICO CITY--Mexican state-owned oil firm Petroleos Mexicanos, or Pemex, has made its first big crude-oil discovery in the deep waters of the Gulf of Mexico, near the Mexico-U.S. maritime boundary, President Felipe Calderon said Wednesday.
Full text: MEXICO CITY--Mexican state-owned oil firm Petroleos Mexicanos, or Pemex, has made its first big crude-oil discovery in the deep waters of the Gulf of Mexico, near the Mexico-U.S. maritime boundary, President Felipe Calderon said Wednesday.
Mr. Calderon said the initial estimate of a deposit in the Perdido area on Mexico's side of the Gulf was between 250 million and 400 million barrels of light crude, using the industry's broadest measurement of "proven, probable and possible," or 3P, reserves. The exploratory well was drilled in 2,500 meters (8,250 feet) of water.
"We estimate that this deposit could belong to one of the most important regions of the deep-water Gulf," he said. The larger "petroleum system" of additional fields, Mr. Calderon added, "could have from four billion to 10 billion barrels of crude, which bolsters our reserves and will allow Mexico to maintain and increase petroleum production in the medium- and long-term."
The new well, dubbed "Trion I," was drilled 39 kilometers (24 miles) south of the U.S.-Mexico maritime border, and 180 kilometers east of Gulf state of Tamaulipas, which also borders the U.S.
On the U.S. side of the Gulf, Royal Dutch Shell PLC operates its Perdido oil-and-gas platform in the region. The platform has a peak production capacity of 100,000 barrels per day, according to Shell's website.
Prior to Pemex's discovery of crude oil at Trion, the oil monopoly had found only natural gas during the recent increase of its deep-water exploratory efforts.
Carlos Morales, head of Pemex's exploration-and-production division, said in a radio interview that Trion I could be among the top 10 crude-oil discoveries on either side of the Gulf. He said typically a deposit of its type would take seven years to get to the production phase, but that Pemex is going to try to do that in five years.
Mr. Morales said Pemex began committing more resources to Gulf oil exploration in 2007 with the construction of special drilling platforms and said he foresees a Tamaulipas oil port to service Pemex's future operations in the Gulf. Mr. Morales said pushing aggressively into deep waters could raise Pemex's crude-oil production to four million barrels a day from the current 2.55 million barrels a day.
The deep waters of the Gulf are seen by analysts as one of Pemex's best bets to have another surge of oil production after eight years of steady declines.
Pemex has traditionally drilled in the shallow waters of the southern Gulf, where the discovery of the supergiant Cantarell complex in the late 1970s launched Mexico as an oil power. Cantarell's output peaked at more than two million barrels of oil per day in 2004 and is now around 400,000 barrels a day.
Mr. Calderon, who held up a sample of crude oil taken from the well, said half of Pemex's petroleum reserves could be in the deep waters of the Gulf.
Pemex reported proven hydrocarbon reserves of 13.8 billion barrels of oil equivalent as of Jan. 1. Its 3P reserves were 43.8 billion barrels of oil equivalent.
Under current law, Mexico doesn't allow foreign companies to drill in its territory except under contract to Pemex, with strict rules that ban the sharing of risk or of oil. Oil majors have expressed interest in drilling with Pemex on the Mexican side of the Gulf, but only under shared-risk contracts.
Credit: By Laurence Iliff
Subject: Oil reserves; Petroleum industry; Petroleum production; Production capacity
Location: United States--US
Company / organization: Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Petroleos Mexicanos; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 29, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1036605911
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1036605911?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The Administration Is No Friend of U.S. Oil Refineries
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Aug 2012: n/a.
ProQuest document link
Abstract:
Studies indicate these new regulations could lead to a six- to 25-cent-per-gallon increase in consumer fuel costs and up to seven refinery closures, depending on how stringent the Environmental Protection Agency decides to make the standards.
Full text: Your article (Election 2012, Aug. 22) highlights President Obama's last-minute attempts to prevent a Philadelphia refinery from closing, but I would like to add the real factors that created the refinery's woes.
I applaud the agreement to keep the Philadelphia refinery open and thousands of workers employed, as well as any role the president or any other individual or entity played in such a pact. However, as someone with decades of experience in the refining and manufacturing sectors and one who tracks the industry on a daily basis, I can unequivocally say that the current administration is not working to keep refineries open. To the contrary, the untold irony of the Journal story is that President Obama's policies, coupled with a relentless campaign against fossil fuels, greatly contributed to Northeast refineries becoming threatened in the first place.
If President Obama is truly interested in saving refinery jobs over the long term, he will reverse his current policies that are inundating domestic refiners with costly and often conflicting regulations that threaten their competitiveness, while offering little or no environmental benefits.
The president's automobile mandate, disingenuously proposed under the guise of "Cafe standards," and the federal biofuels mandate will together lead to the unnatural destruction of demand for gasoline equivalent to 18 refinery closures.
If producing such fuels and vehicles were cost-effective and driven by consumer choices in the free market, so be it. However, these policies will only serve to artificially drive up consumer fuel costs and make buying a car a luxury. In relation to biofuels, such realities are why several states have joined a large coalition of auto, engine, food manufacturing, environmental and consumer groups in calling for major reforms to our nation's ethanol mandate.
The administration is also advancing new gasoline regulations that will raise consumer costs and could threaten additional refinery closures. Studies indicate these new regulations could lead to a six- to 25-cent-per-gallon increase in consumer fuel costs and up to seven refinery closures, depending on how stringent the Environmental Protection Agency decides to make the standards. Furthermore, with voters rejecting the energy rationing greenhouse gas (GHG) cap-and-trade scheme, the EPA is now moving forward with regulating GHGs under the Clean Air Act, despite the fact that EPA Administrator Lisa Jackson herself indicated such rules will do nothing to reduce global GHG emissions. These requirements conflict with many other existing regulations, which would force refiners to increase GHG emissions and threaten to send more refining jobs overseas.
Market factors certainly played a large part in threatening Northeast refinery operations; the facilities were facing high crude costs, the struggling economy and foreign competition. However, the Obama administration's policies and an uncertain regulatory future made the problems worse, not better. The fact, as you note, that the administration agreed to "loosen certain environmental restrictions" to help keep the refinery open is an admission of the adverse impacts the current regulatory environment is having on the domestic refining industry.
Furthermore, this administration has repeatedly discouraged energy exploration and energy production, contributing to higher refinery crude-oil costs. The most glaring example of such a policy is the president's decision to disapprove the Keystone XL pipeline, a project that would have created tens of thousands of jobs and provided our nation with a more secure oil source, greatly benefiting American refineries and consumers.
We hope the president's newfound willingness to recognize the benefits of one Northeast refinery and the jobs it provides translates into a reversal of current policies to ensure the viability of our entire domestic refining industry. Otherwise, more refining jobs are sure to be sent overseas.
Charles T. Drevna
President
American Fuel & Petrochemical Manufacturers
Washington
Subject: Petroleum refineries; Petroleum industry; Costs; Biodiesel fuels
Location: Philadelphia Pennsylvania
Company / organization: Name: Environmental Protection Agency--EPA; NAICS: 924110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 29, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1036701961
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1036701961?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
For China Executive, Oil Rigs Are a 'Strategic Weapon'
Author: Spegele, Brian; Ma, Wayne
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Aug 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: BEIJING--When China launched its first deep-water oil rig in May, Cnooc Ltd. Chairman Wang Yilin delivered a message to employees and his Communist Party superiors about what it meant to Beijing's ambitions abroad.
"Large-scale deep-water rigs are our mobile national territory and a strategic weapon," he told a crowd gathered at Cnooc's glittering headquarters in central Beijing as well as rig workers by videoconference.
State-controlled Cnooc is using the rig to drill three wells this year in the South China Sea--an area with overlapping claims by China and other surrounding nations and an increasingly sore friction point between Beijing and Washington.
Mr. Wang now is spearheading Cnooc's $15.1 billion offer to acquire Canada's Nexen Inc., a blockbuster deal that needs U.S. regulatory approval because of Nexen's energy assets in the Gulf of Mexico.
It is the latest deal in a dual role that Mr. Wang has assumed since taking Cnooc's reins last year: running his company as a profit-driven multinational enterprise overseas, and promoting it as a political and strategic asset at home.
Tension between those two roles has sparked worries in China, where some people even inside his company fear that Cnooc's politically charged moves in the South China Sea could be viewed as too aggressive. Mr. Wang has led Cnooc to defend China's sovereignty claims there, despite competing claims in some parts of the sea by Vietnam, the Philippines and others.
That adds to other concerns in China's oil industry, including worries that Cnooc moved to announce the Nexen deal before the U.S. presidential election, in which China has become a heated political issue.
"The timing just doesn't look good," said a person with close ties to China's major oil companies. "If it doesn't go through, the danger is really severe" for other Chinese companies with ambitions in North America.
Mr. Wang wasn't available for an interview.
"We are respectful of the regulatory requirements across all the respective jurisdictions," the company said. "We aim to comply with all of the regulatory and government processes and procedures and to cooperate with all regulatory authorities."
Cnooc's recent moves underscore how oil executives including Mr. Wang are using overseas deals to boost political credentials. They come as China has ordered state-controlled enterprises to seek business beyond its shores and as the Communist Party seeks younger leaders who are internationally savvy and competent in business.
"It's going to be a feather in [his] political cap" if Mr. Wang is able to successfully complete the Nexen deal, said Erica Downs, who has written about China's oil executives for the Brookings Institution in Washington.
Mr. Wang, 55 years old, appears to be vying for higher office, said analysts and people with direct knowledge of Cnooc's operations, adding that he appears to have high-level political backing.
As China's main offshore-oil company, Cnooc has been the Chinese company most involved with the South China Sea.
Cnooc in June said it was offering a new round of oil-and-gas blocks to foreign partners within what Vietnam says is its exclusive economic zone under the United Nations' Convention on the Law of the Sea.
Vietnam had already begun exploring the area and had signed deals with Italy's Eni SpA and Exxon Mobil Corp. to explore there. China says its claims in the South China Sea and its islands have belonged to the country for hundreds of years.
While Cnooc regularly offers blocks for foreign investment in the sea, the move marked its most significant offer in disputed waters. Inside Cnooc, the decision to auction blocks near Vietnam was a controversial one partly because it was seen as too aggressive, said one of the people with direct knowledge of Cnooc's operations.
Ultimately, the decision was driven more by the company itself than party or government higher-ups, the person said, adding that Cnooc felt pressured to act in part by intense public nationalism over sovereignty in the South China Sea.
With the Nexen deal, Cnooc would acquire the Canadian company's deep-water operations in the Gulf of Mexico. That would provide Cnooc, which mostly operates in shallow waters, with deep-water expertise that could be applied to the South China Sea.
Mr. Wang began his career at China's Petroleum Ministry in 1982 after receiving a bachelor's degree in petroleum geology and exploration from China University of Petroleum in 1982.
After the ministry was dissolved and replaced by China National Petroleum Corp., Mr. Wang spent the 1990s and early 2000s as a CNPC executive in China's ethnically restive yet resource-rich Xinjiang region, according to an official Cnooc biography.
A CNPC official said Mr. Wang kept a low-profile inside the company but was viewed as highly competent.
After rising to the No. 3 spot in CNPC in 2003, Mr. Wang landed the top job at Cnooc last year during a reorganization of the oil industry. Fu Chengyu, Cnooc's former chairman, took the top spot at China Petrochemical Corp., better known as Sinopec Group; Sinopec Chairman Su Shulin was tapped to become governor of the southeastern province of Fujian; and Mr. Wang was elevated to run Cnooc.
The government routinely shuffles the heads of China's major oil companies and other state-owned enterprises, serving to alleviate competition as well as to promote successful executives higher into the party or government.
Analysts said the move partly was designed to help bring Mr. Wang's decades of expertise in China's onshore oil fields to Cnooc. Cnooc typically has been focused offshore but has moved aggressively recently on land to target unconventional gas.
Mr. Wang is believed to have political backing as well. Zhou Yongkang, a member of China's all-powerful Politburo Standing Committee and former CNPC executive, is believed to be among those helping Mr. Wang's career, according to analysts and those with knowledge of Cnooc.
One person said Mr. Wang's work on the South China Sea appeared to be an effort to brandish his political credentials, showing political higher-ups he could defend Beijing's interests in one of the region's most volatile disputes.
"It's not a time when the other Chinese companies want to be making big moves in North America," said Neil Beveridge, an analyst at Sanford C. Bernstein. "To some extent, given the Nexen deal is in process, the other Chinese companies will have to stay on the sideline."
Write to Brian Spegele at and Wayne Ma at
Credit: By Brian Spegele And Wayne Ma
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 29, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1036702093
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1036702093?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The Administration Is No Friend of U.S. Oil Refineries
Author: Anonymous
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]30 Aug 2012: A.14.
ProQuest document link
Abstract:
Furthermore, with voters rejecting the energy rationing greenhouse gas (GHG) cap-and-trade scheme, the EPA is now moving forward with regulating GHGs under the Clean Air Act, despite the fact that EPA Administrator Lisa Jackson herself indicated such rules will do nothing to reduce global GHG emissions.
Full text: Your article "White House Worked with Buyout Firm to Save Plant" (Election 2012, Aug. 22) highlights President Obama's last-minute attempts to prevent a Philadelphia refinery from closing, but I would like to add the real factors that created the refinery's woes.
I applaud the agreement to keep the Philadelphia refinery open and thousands of workers employed, as well as any role the president or any other individual or entity played in such a pact. However, as someone with decades of experience in the refining and manufacturing sectors and one who tracks the industry on a daily basis, I can unequivocally say that the current administration is not working to keep refineries open. To the contrary, the untold irony of the Journal story is that President Obama's policies, coupled with a relentless campaign against fossil fuels, greatly contributed to Northeast refineries becoming threatened in the first place.
If President Obama is truly interested in saving refinery jobs over the long term, he will reverse his current policies that are inundating domestic refiners with costly and often conflicting regulations that threaten their competitiveness, while offering little or no environmental benefits.
The president's automobile mandate, disingenuously proposed under the guise of "Cafe standards," and the federal biofuels mandate will together lead to the unnatural destruction of demand for gasoline equivalent to 18 refinery closures.
If producing such fuels and vehicles were cost-effective and driven by consumer choices in the free market, so be it. However, these policies will only serve to artificially drive up consumer fuel costs and make buying a car a luxury. In relation to biofuels, such realities are why several states have joined a large coalition of auto, engine, food manufacturing, environmental and consumer groups in calling for major reforms to our nation's ethanol mandate.
The administration is also advancing new gasoline regulations that will raise consumer costs and could threaten additional refinery closures. Studies indicate these new regulations could lead to a six- to 25-cent-per-gallon increase in consumer fuel costs and up to seven refinery closures, depending on how stringent the Environmental Protection Agency decides to make the standards. Furthermore, with voters rejecting the energy rationing greenhouse gas (GHG) cap-and-trade scheme, the EPA is now moving forward with regulating GHGs under the Clean Air Act, despite the fact that EPA Administrator Lisa Jackson herself indicated such rules will do nothing to reduce global GHG emissions. These requirements conflict with many other existing regulations, which would force refiners to increase GHG emissions and threaten to send more refining jobs overseas.
Market factors certainly played a large part in threatening Northeast refinery operations; the facilities were facing high crude costs, the struggling economy and foreign competition. However, the Obama administration's policies and an uncertain regulatory future made the problems worse, not better. The fact, as you note, that the administration agreed to "loosen certain environmental restrictions" to help keep the refinery open is an admission of the adverse impacts the current regulatory environment is having on the domestic refining industry.
Furthermore, this administration has repeatedly discouraged energy exploration and energy production, contributing to higher refinery crude-oil costs. The most glaring example of such a policy is the president's decision to disapprove the Keystone XL pipeline, a project that would have created tens of thousands of jobs and provided our nation with a more secure oil source, greatly benefiting American refineries and consumers.
We hope the president's newfound willingness to recognize the benefits of one Northeast refinery and the jobs it provides translates into a reversal of current policies to ensure the viability of our entire domestic refining industry. Otherwise, more refining jobs are sure to be sent overseas.
Charles T. Drevna
President
American Fuel & Petrochemical Manufacturers
Washington
Subscribe to WSJ:
Subject: Petroleum refineries; Petroleum industry; Costs; Biodiesel fuels
Location: Philadelphia Pennsylvania
Company / organization: Name: Environmental Protection Agency--EPA; NAICS: 924110
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.14
Publication year: 2012
Publication date: Aug 30, 2012
Section: Letters to the Editor
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1036854719
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1036854719?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Chiefs Hope For High Prices Despite Shale 'Revolution'
Author: Hovland, Kjetil Malkenes
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 Aug 2012: n/a.
ProQuest document link
Abstract:
Oil has consistently hovered above $100 per barrel and Mr. Lance is among a collection of industry players here betting that prices can hold up even with new developments on the supply front, such as the shale-oil boom taking place in the U.S. "Certainly the liquids production that's come with the shale revolution in North America is starting to have an impact," Mr. Lance said.
Full text: STAVANGER, Norway--Oil executives, scrambling to squeeze more resources from existing fields and find additional sources of petroleum, are banking on a continued run of high prices to fund future growth.
"It's tough to imagine the world going back to $50 to $60 a barrel of oil," ConocoPhillips Chief Executive Ryan Lance said during an interview at Norway's Offshore Northern Seas oil conference, on the country's west coast.
Oil has consistently hovered above $100 per barrel and Mr. Lance is among a collection of industry players here betting that prices can hold up even with new developments on the supply front, such as the shale-oil boom taking place in the U.S.
"Certainly the liquids production that's come with the shale revolution in North America is starting to have an impact," Mr. Lance said. "It's too early to tell how big impact it will have on global oil prices, but as you look out on the future, 30, 40, 50 years, the demand is going to increase substantially."
Statoil ASA CEO Helge Lund said the Norwegian oil giant, as it formulates its base business case, assumes oil prices will remain high.
While higher prices can bolster the bottom line, oil executives say they also must fund the costs associated with boosting supply. Technology needed for extracting additional oil from existing fields and developing new fields in remote and hard-to-reach places, such as the Arctic's icy, deep waters, is pricey.
Mr. Lund said Statoil's oil fields can be run at a break-even price of less than $90 a barrel, but if prices dip, it may have trouble profitably launching future discoveries. The company earlier this week said it plans to dramatically increase the amount it spends on Arctic exploration.
"The industry is approaching more and more demanding resources, and there I think you may see even higher break-evens than $90 per barrel," Mr. Lund said.
In a June report, Statoil estimated the current cost of marginal oil barrels to be in the range of $75 to $90, up from just $30 to $35 a barrel in the early 2000s.
Rystad Energy suggests prices must stay above $110 a barrel to keep up with growing demand. The analysis firm, which presented its view at the conference, expects daily oil production to increase by 11 million barrels to 100 million barrels in 2020. That will require new sources.
"To make that possible, we need high oil prices, a lot of mobilization of capital, and mobilization of industrial capacity," managing director Jarand Rystad said. "That will happen with robust oil prices, $110 to $120 a barrel...[but] as soon as prices point downwards, $90, $80, some of the capital and involvement will disappear."
One closely watched development is the boom in North American shale oil. Production there is expected to roughly triple by 2020, to 6.5 million barrels a day, from 2 million to 2.5 million barrels a day now, according to Rystad Energy.
Mr. Rystad said the increase in U.S. shale oil has helped cap prices. "It's been a blessing," he said. "Without it, we would have had a much higher oil price for the last few years, which would have choked the world economy and set back the development in many parts of the world by several years."
But some fear the U.S. shale boom could lead to lower prices as more supply comes online.
"Suddenly, Texas' production is at level with Norway again," said Torbjorn Kjus, an analyst with DNB, Norway's biggest bank. He said demand is falling in the U.S. and Europe, leading him to expect global oil prices to ease to $90 by 2020. This could crimp development in the Arctic that is seen as critical to countries like Norway, where production is falling at a rate of 4% to 5% per year.
Oil executives are banking on the opposite.
"What we see now is oil prices above $100 a barrel, and I think that is more like the norm," said Ashley Heppenstall, the CEO of Lundin Petroleum AB. The Swedish oil company has a stake in the giant offshore discovery Johan Sverdrup in the North Sea, and holds acreage in the Arctic Barents Sea.
He said the company wouldn't change its Arctic exploration plans even if oil fell to $60, unless it believed the price would stay there. Meanwhile, "any challenges to supply" could lead oil prices to "spike significantly" from where they are today, he said.
"Let's say the [global production] goes to 100 million or 110 million barrels a day," Mr. Heppenstall said. "Declines will bring production down to 40 or 50 million. We need to find five or six new Saudi Arabias. We need shale, we need tar sands, we need new discoveries, we need [it] all."
Write to Kjetil Malkenes Hovland at
Credit: By Kjetil Malkenes Hovland
Subject: Petroleum industry; Energy economics; Oil shale
Location: Arctic region Norway United States--US
Company / organization: Name: ConocoPhillips Co; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 30, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1036961912
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1036961912?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Needs Reserve at Jackson Hole
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 Aug 2012: n/a.
ProQuest document link
Abstract:
The collapse in prices in August of that year had far more to do with fiscal wrangles in Washington and the capitals of Europe. [...]as energy economist Phil Verleger points out, expectations count.
Full text: Putting your foot on the gas and your hand on the parking brake is a good way to go nowhere. Or at least maybe that's what policy makers hope when it comes to oil prices.
But what if they're wrong?
If Ben Bernanke soft-launches another round of quantitative easing at Jackson Hole, Wyo., on Friday, similar to what he did in 2010, oil bulls will cheer. The Federal Reserve chairman's earlier efforts have helped stoke prices in the past.
In the six months after the first round of Treasury purchases was announced in March 2009, Brent crude oil rose by more than half. In contrast, gold, the more straightforward beneficiary of easy monetary policy, eked out just 11%. Much the same happened with QE2, with Brent outpacing gold handily in the six months that followed. Ditto for "Operation Twist" after September 2011.
Mr. Bernanke can't take all the, er, credit though. For example, QE1 was launched after oil had plummeted already in a way that gold hadn't, and prices were also buoyed by Chinese stimulus in 2009. Mr. Bernanke's 2010 Jackson Hole speech, meanwhile, came just ahead of the start of the Arab Spring and, in particular, the severe disruption to oil supply caused by Libya's civil war.
Still, low or negative real interest rates tend to juice hard assets. And with gasoline averaging above $3.70 a gallon at the pump, any tailwind from monetary policy could hurt the consumers it is nominally meant to help. Francisco Blanch of BofA Merrill Lynch estimates more QE could boost oil prices by 14%.
But could another policy measure offset this? Talk of a release of oil from the Strategic Petroleum Reserve, or SPR, has become louder in recent weeks.
Regardless of the justification for a release, though, it might have little effect and could actually end up worsening things. The last release, announced in June 2011, had at best a temporary effect. The collapse in prices in August of that year had far more to do with fiscal wrangles in Washington and the capitals of Europe.
Moreover, as energy economist Phil Verleger points out, expectations count. Almost two-thirds of the industrialized world's oil stocks are controlled by companies, not governments. A release of SPR barrels, suggesting downward pressure on prices, would encourage companies to reduce inventories in expectation of restoring them more cheaply in the future.
Given that outside the U.S. oil and gasoline inventories are low, it is likely that an SPR-inspired price fall would quickly give way to even greater concerns about the level of stocks available and the potential for prices to rise when they are rebuilt. That is before even factoring in wild cards like Iranian tensions, the coming winter in the Northern Hemisphere or QE3 for that matter.
Write to Liam Denning at
Credit: By Liam Denning
Subject: Economic forecasts; Petroleum industry; Strategic petroleum reserve; Prices
Company / organization: Name: Merrill Lynch & Co Inc; NAICS: 523110, 523120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 30, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1037043046
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1037043046?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
South Korea Firms Dive Deep; Hyundai, Daewoo, Samsung Develop Technology for Getting Oil and Gas From Sea Floor
Author: Choi, Kyong-Ae
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 Aug 2012: n/a.
ProQuest document link
Abstract:
Over the past few years, Korea's big three shipbuilders--Hyundai Heavy Industries Co., Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co.--have advanced into energy-based projects such as floating platforms for oil wells.
Full text: GEOJEDO, South Korea--South Korean shipbuilders are looking to the bottom of the ocean for growth as their traditional business are drying up.
Over the past few years, Korea's big three shipbuilders--Hyundai Heavy Industries Co., Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co.--have advanced into energy-based projects such as floating platforms for oil wells.
Their aim now is to grab a large slice of the rapidly growing--and potentially much larger--market for pipes that transport oil and gas from the sea bed.
As the hunt for energy resources heads into increasingly deeper water, the market for such subsea equipment is expected to grow to $131 billion in 2020 from $26 billion last year, according to Norwegian oil-and-gas industry group Intsok.
The search for new markets comes as profit margins have tumbled and orders for ships have slowed to a trickle following the 2007-2008 financial crisis. The European debt crisis has dealt a further blow as clients on the Continent have had problems securing financing.
Samsung Heavy's orders from Europe fell 71% in the first half. Hyundai Heavy, South Korea's biggest shipbuilder, reached only 36% of its 2012 order target of $30.55 billion in the first seven months of the year. The company in July sold part of its stake in Hyundai Motor Co. for around $650 million to cover a cash shortage. Shipbuilders also have been ramping up bond issuance to raise funds.
As ship orders have tumbled, Korean shipbuilders have sought orders for energy projects, such as floating production, storage and offloading platforms. Over half of Daewoo Shipbuilding's current orders by value is for offshore projects.
But subsea equipment, which usually operates in depths of at least 500 meters, could be more lucrative. The market is likely to be close to three times the size of that for offshore production facilities by 2020, according to Intsok.
Houston-based FMC Technologies Inc., France's Technip SA and Norway's Aker Solutions ASA dominate the industry today.
"Korean shipbuilders really need to enter the market," said Cho Hong-chul, Daewoo Shipbuilding's vice president for offshore project management. "An increasing number of clients are placing an order for offshore facilities and subsea facilities in a packaged deal."
The main obstacle is technology. Subsea facilities typically are highly complex, requiring different manufacturing and installation processes than ships do. Robots are required to install subsea products in deep-sea areas, for example, but shipbuilders haven't developed such technology.
To address such challenges, the South Korean government in July said it would subsidize a project in which the big shipbuilders together will develop technology that allows them extract and transport resources buried as deep as 3,000 meters beneath the seafloor. Samsung Heavy and Daewoo Shipbuilding said they are considering alliances and acquisitions to speed access to subsea-related technology.
A push into the subsea market won't solve the shipbuilders' short-term woes. But the lengthy global economic downturn has made it clear that they need to reduce their dependence on commercial vessels such as container ships and oil tankers. The traditional shipbuilding business isn't expected to see a recovery for at least two years, since any economic rebound will take time to filter through to new ship orders. Meanwhile, Chinese shipyards are catching up in shipbuilding.
Kim Hong-gyun, an analyst at Dongbu Securities in Seoul, forecast that the portion of deep-water wells incorporating subsea facilities will double to reach 80% of overall oil blocks under development world-wide by 2015.
The South Korean government forecast $100 billion in exports of offshore technology, including subsea equipment, in 2025. "Now is the time to make inroads into the much bigger and more profitable subsea market," said Ju Hyun-dong, an Economy Ministry deputy director.
Credit: By Kyong-Ae Choi
Subject: Offshore oil wells; Oil exploration
Location: Korea South Korea
Company / organization: Name: Aker Solutions ASA; NAICS: 541330, 237990; Name: Hyundai Heavy Industries Co; NAICS: 336611; Name: Technip SA; NAICS: 541330; Name: FMC Technologies Inc; NAICS: 333298, 333922; Name: Hyundai Motor Co Ltd; NAICS: 336111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 30, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1037043451
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1037043451?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil-Poached Tuna With Cantaloupe Conserva
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]31 Aug 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: TUNA STEAK, generally revered by grill enthusiasts for its meaty quality, turns soft and flaky when poached in olive oil. For her final of four Slow Food Fast contributions, chef Jenn Louis calls for tuna prepared thusly and served under a fresh, confetti-like cantaloupe conserva. This fanciful pairing is almost as much fun to make as it is to eat.
The chef's two Portland, Ore., restaurants focus on vastly different types of food. Lincoln is a fine-dining spot whose classics include grilled octopus with paprika and greens, as well as braised rabbit with seasonal vegetables. Sunshine Tavern serves food the chef craves on days off (think house-made corn dogs and slushy margaritas). The unifying principle underlying all of Ms. Louis's cooking is that it feels celebratory. This recipe doesn't deviate.
Oil poaching, Ms. Louis said, may sound like a preparation better suited to restaurants, but it is home-cook-friendly. Unlike deep-frying, oil poaching entails cooking an ingredient at a low temperature until tender. Splattering is less of a concern here, as is precise timing. That said, it is best to err on the side of undercooking. "You don't want the tuna to cook too long or it will toughen," she said. Oil poaching also works well on fatty fish like salmon, but it transforms tuna's quality from steak-like to supple.
Once the oil is warm, add the tuna steaks, making sure they are completely submerged, and poach for about 8 minutes. After cooking in an oil bath infused with garlic, lemon and thyme, the fillets emerge succulent but not greasy.
To make this recipe quickly, prepare the melon relish, or "conserva," as Ms. Louis calls it, while the tuna cooks. Unlike classic Italian conservas, this raw relish is perishable. It does call for a fair number of ingredients, but nothing is gratuitous and the result is alive with color and flavor. The chili adds heat, the red onion tempers the melon's sweetness and adds personality, the herbs provide freshness, the cucumber lends a note of cool and the cantaloupe's honey flavor plays well with the savory ingredients. Tossed with just a bit of oil and seasoned with salt, the mélange is a stunner.
Ms. Louis likes to make the aioli (a garlic mayonnaise) from scratch, but she said using store-bought mayonnaise as a base is fine. Rich, sweet and dotted with salty bursts of caper and anchovy, the sauce puts leftover poaching oil to excellent use.
To assemble, smear some caper-spiked mayo in the center of each plate and top it off with a hunk of tuna. Generously spoon the bright relish on top, take a bite and let the sunshine in.
Kitty Greenwald
Oil-Poached Tuna With Cantaloupe Conserva
Total Time: 30 minutes Serves: 4
3 lemons (2 thinly sliced, 1 zested and juiced)
12 large garlic cloves (2 cloves roughly chopped)
6 sprigs fresh thyme
4 bay leaves
4 (6-7 ounce) tuna fillets
Salt and freshly ground black pepper
2 quarts plus ¼ cup olive oil, plus more as needed
¾ cups diced ripe cantaloupe
1 tablespoon minced red onion
5 large mint leaves, thinly sliced
5 large basil leaves, thinly sliced
¾ cup peeled, seeded and diced cucumber
1 red Fresno chili, seeded and stem removed, minced
1 lime, zested and juiced
1¼ cups mayonnaise
3 oil-packed anchovy fillets
3 tablespoons drained capers
What To Do
1. Place 2 sliced lemons, 10 garlic cloves, thyme and bay leaves in a deep, wide pot. Sprinkle tuna with salt and pepper and set aside. Add 2 quarts olive oil to pot. Over medium-low heat, warm oil gently (no small bubbles should form at pot's base) and monitor with a deep-fat thermometer. When oil reaches 130 degrees, after about 5 minutes, add tuna. Fish should be completely submerged (add extra oil, if needed). Poach at steady heat for 8 minutes. Using a knife, cut halfway through one fillet to make sure fish is almost cooked through (there should be no red). Remove pot from heat and let fish cool slightly in oil.
2.While tuna poaches, make melon conserva: In a medium bowl, mix melon, onion, mint, basil, cucumber, chili, ¼ cup oil and lime juice and zest. Season with salt and pepper, to taste. Set aside.
3. Make caper aioli: In a food processor, place mayonnaise, 2 cloves chopped garlic, ½ cup poaching oil (taken from cooling pot of fish), zest and juice of 1 lemon, anchovy fillets and capers. Purée until smooth. Season with salt, pepper and extra lemon juice, to taste.
4. To assemble, spoon 2 tablespoons caper aioli on center of four plates. Remove fish from oil. Top aioli with tuna and generously spoon relish over top.
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Aug 31, 2012
Section: Life and Style
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1037390035
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1037390035?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: South Korea Firms Dive Deep --- Hyundai, Daewoo, Samsung Develop Technology for Getting Oil and Gas From Sea Floor
Author: Choi, Kyong-Ae
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]04 Sep 2012: B.6.
ProQuest document link
Abstract:
Hyundai Heavy Industries Co., Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co. -- have advanced into energy-based projects such as floating platforms for oil wells.
Full text: GEOJEDO, South Korea -- South Korean shipbuilders are looking to the bottom of the ocean for growth as their traditional business is drying up.
Over the past few years, Korea's big three shipbuilders -- Hyundai Heavy Industries Co., Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co. -- have advanced into energy-based projects such as floating platforms for oil wells.
Their aim now is to grab a large slice of the rapidly growing -- and potentially much larger -- market for pipes that transport oil and gas from the sea bed.
As the hunt for energy resources heads into increasingly deeper water, the market for such subsea equipment is expected to grow to $131 billion in 2020 from $26 billion last year, according to Norwegian oil-and-gas industry group Intsok.
The search for new markets comes as profit margins have tumbled and orders for ships have slowed to a trickle following the 2007-2008 financial crisis. The European debt crisis has dealt a further blow as clients on the Continent have had problems securing financing.
Samsung Heavy's orders from Europe fell 71% in the first half. Hyundai Heavy, South Korea's biggest shipbuilder, reached only 36% of its 2012 order target of $30.55 billion in the first seven months of the year. The company in July sold part of its stake in Hyundai Motor Co. for around $650 million to cover a cash shortage. Shipbuilders also have been ramping up bond issuance to raise funds.
As ship orders have tumbled, Korean shipbuilders have sought orders for energy projects, such as floating production, storage and offloading platforms. More than half of Daewoo Shipbuilding's current orders by value are for offshore projects.
But subsea equipment, which usually operates in depths of at least 500 meters, could be more lucrative. The market is likely to be close to three times the size of that for offshore production facilities by 2020, according to Intsok.
Houston-based FMC Technologies Inc., France's Technip SA and Norway's Aker Solutions ASA dominate the industry currently.
"Korean shipbuilders really need to enter the market," said Cho Hong-chul, Daewoo Shipbuilding's vice president for offshore project management. "An increasing number of clients are placing an order for offshore facilities and subsea facilities in a packaged deal."
The main obstacle is technology. Subsea facilities typically are highly complex, requiring different manufacturing and installation processes than ships do. Robots are required to install subsea products in deep-sea areas, for example, but shipbuilders haven't developed such technology.
To address such challenges, the South Korean government in July said it would subsidize a project in which the big shipbuilders together will develop technology that allows them extract and transport resources buried as deep as 3,000 meters beneath the seafloor.
Samsung Heavy and Daewoo Shipbuilding said they are considering alliances and acquisitions to speed access to subsea-related technology.
A push into the subsea market won't solve the shipbuilders' short-term problems. But the lengthy global economic downturn has made it clear that they need to reduce their dependence on commercial vessels such as container ships and oil tankers. The traditional shipbuilding business isn't expected to experience a recovery for at least two years, because any economic rebound will take time to filter through to new ship orders. Meanwhile, Chinese shipyards are catching up in shipbuilding.
Kim Hong-gyun, an analyst at Dongbu Securities in Seoul, forecast that the portion of deep-water wells incorporating subsea facilities will double to reach 80% of overall oil blocks under development world-wide by 2015.
The South Korean government forecast $100 billion in exports of offshore technology, including subsea equipment, in 2025.
"Now is the time to make inroads into the much bigger and more profitable subsea market," said Ju Hyun-dong, an Economy Ministry deputy director.
Subscribe to WSJ:
Credit: By Kyong-Ae Choi
Subject: Shipbuilding; Energy resources
Location: South Korea
Company / organization: Name: Hyundai Heavy Industries Co; NAICS: 336611; Name: Daewoo Shipbuilding & Marine Engineering Co Ltd; NAICS: 336611; Name: Samsung Heavy Industries & Shipbuilding Co; NAICS: 336611
Classification: 9179: Asia & the Pacific; 1510: Energy resources
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.6
Publication year: 2012
Publication date: Sep 4, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1037734405
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1037734405?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
IEA Head: Oil Markets Reasonably Well-Supplied
Author: Sharma, Rakesh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]04 Sep 2012: n/a.
ProQuest document link
Abstract:
Oil markets are speculating that the IEA may release stockpiles as oil prices are heating up again on fears Middle-East supplies could be suspended if tensions with Iran boil over, potentially affecting the oil transport choke point in the Strait of Hormuz, or Saudi Arabia's crucial crude conduits are attacked.
Full text: NEW DELHI--Global crude-oil markets are reasonably well-supplied, but there are signs of tightening in refined fuel products, the head of the International Energy Agency said Tuesday.
"There is, not at this moment, any disruption in supply," Executive Director Maria van derv Hoeven told reporters on the sidelines of an industry conference when asked if the IEA was considering releasing stockpiles. "We are monitoring the markets. We are in touch with our members. And we stand ready to respond as necessary."
Oil markets are speculating that the IEA may release stockpiles as oil prices are heating up again on fears Middle-East supplies could be suspended if tensions with Iran boil over, potentially affecting the oil transport choke point in the Strait of Hormuz, or Saudi Arabia's crucial crude conduits are attacked.
Ms. Hoeven said high crude-oil prices are a cause of concern.
The Group of Seven leading industrialized economies last week appealed to the world's major oil producers to boost output but stopped short of coordinating a release of emergency stockpiles despite mounting worries about the damage from rising fuel costs on already weak economies.
Members of the Paris-based IEA last released emergency oil stocks in June 2011 to offset the loss of Libyan oil exports during its civil war, at a flow rate equivalent to around 2.0 million barrels a day.
Ms. Hoeven said the 28 member nations were free to unilaterally release emergency stockpiles.
"There are precedents for unilateral release by member IEA countries, Ms. Hoeven said. "It is not IEA's role to intervene in domestic sovereign decision by member countries about stocks," provided they meet their obligations on maintaining stockpiles, she added.
Although exports from Iran plummeted in July as a result of Western sanctions on Tehran, the drop was offset by higher production by other OPEC members like Saudi Arabia and a rise in production by the U.S. and Canada from tight deposits like oil sands, she said.
The IEA sees tightening in the refined-fuel market due to constraints in refining capacity because of issues like a recent fire at Venezuela's Amuay oil refinery, she said.
The refinery, Venezuela's largest with a production capacity of 645,000 barrels a day, last month was hit by a deadly explosion that killed more than 40 people and set several storage tanks on fire.
Write to Rakesh Sharma at
Credit: By Rakesh Sharma
Subject: Petroleum industry; Production capacity; Petroleum refineries
Location: Iran Strait of Hormuz Saudi Arabia
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: International Energy Agency; NAICS: 928120; Name: Group of Seven; NAICS: 926110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 4, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1037794031
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1037794031?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Uganda Rift Hinders Oil-Development Plans
Author: Bariyo, Nicholas; Amiel, Geraldine
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]04 Sep 2012: n/a.
ProQuest document link
Abstract:
Adding to the rift, the three companies had agreed to help fund a small 20,000 barrel-a-day refinery at an estimated cost of around $1.5 billion, and Uganda now wants them to build a larger facility capable of producing around 150,000 barrels a day of refined fuel products.
Full text: LONDON--Plans by Tullow Oil PLC, Total SA and Cnooc Ltd. to start pumping Ugandan crude face renewed setbacks as a growing rift between the partners and the East African nation delays an ambitious plan to develop the country's nascent oil sector.
Less than six months after Uganda approved Tullow's long-delayed $2.9 billion deal to split its oil licenses with Cnooc and Total, Uganda is withholding approval of the companies' development plan until several issues are resolved, chief of which is Uganda's desire for them to partly fund a large refinery.
With around 1.8 billion untapped barrels of oil, Uganda is expected soon to join Nigeria, Angola and Sudan among sub-Saharan Africa's major crude producers.
Tullow--and its predecessors--have faced a litany of problems that continue to push back the planned start of production.
Tullow bought out former partner, Heritage Oil PLC. They together used to co-own two oil blocks in the Lake Albertine rift basin basin, currently operated by Total and Cnooc.
In an interview, Uganda Junior Energy and Minerals Minister Peter Lokeris said he would rather see initial production delayed by several years than implement an unsustainable development plan.
"[Oil production] is a very big project, which we must handle carefully," said Mr. Lokeris. "Oil is a finite resource and it would benefit the Ugandan people better if it isn't rapidly exploited."
Tullow, Total and Cnooc want to sell crude on the open market and are considering $5 billion of investment in pipelines to the East African coast. Uganda insists that most of the oil be refined locally into fuel products, initially for domestic consumption and then for regional export. Adding to the rift, the three companies had agreed to help fund a small 20,000 barrel-a-day refinery at an estimated cost of around $1.5 billion, and Uganda now wants them to build a larger facility capable of producing around 150,000 barrels a day of refined fuel products.
A Tullow spokesman declined to comment on the issue, referring queries to previous statements. Tullow has said in the past that it doesn't intend to invest in a refinery, citing its lack of downstream expertise.
Speaking in July, Tullow Chief Operating Officer Paul McDade said: "Our view, very strongly, is that an export pipeline is required to underpin the overall [basin] development and the government of Uganda themselves are looking at refinery options."
In an earlier interview, Mr. Lokeris said Total, Cnooc and China's CNPC had expressed interest in building the refinery.
"Total understands the needs of the government of Uganda for a phased refinery to be built in Uganda, the capacities of which would address market demand," a Total spokeswoman said, without elaborating.
Cnooc didn't immediately respond to requests for comment.
The differences underscore the challenges inherent in building an oil industry from scratch in a poor, underdeveloped country.
Tullow, Total and Cnooc want to quickly recoup the $12 billion they expect to spend turning Uganda into an oil-producing nation. Uganda's leaders are under pressure to translate the newfound oil wealth into jobs.
Regional politics are also a consideration. Uganda is a key member of the East Africa Community trade bloc, which has emphasized the importance of greater local refining capacity as a means to boost growth.
In July, the Ugandan government appointed a panel to oversee oil development and Tullow, Total and Cnooc will only begin their investments in earnest when Uganda approves the plan.
The members of the panel have yet to be appointed and the government hasn't indicated when it expects to grant final approval for the projects.
According to Tullow, oil output from Uganda is expected 36 months after approval.
Yusuf Matovu, spokesman for Uganda's Energy and Minerals Ministry, said that although government is keen to ensure that the oil resources are exploited in time, every effort "must be taken to ensure that government gets the best deals out of every license and negotiations."
Write to Nicholas Bariyo at and Geraldine Amiel at
Credit: By Nicholas Bariyo and Geraldine Amiel
Subject: Petroleum refineries; Petroleum industry; Petroleum production
Location: Uganda
Company / organization: Name: Heritage Oil PLC; NAICS: 211111; Name: Total SA; NAICS: 447190, 324110, 211111; Name: Tullow Oil PLC; NAICS: 211111; Name: CNOOC Ltd; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 4, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1037806491
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1037806491?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. F urther reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Greens Against Green Energy; Big Solar gets the Big Oil treatment.
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]04 Sep 2012: n/a.
ProQuest document link
Abstract:
Recent work at the Center for Conservation Biology University of California, Riverside, suggests that soil disturbance from large-scale solar development may disrupt Pleistocene-era caliche deposits that release carbon to the atmosphere when exposed to the elements, thus 'negat[ing] the solar development C [carbon] gains.'" So solar energy, like corn ethanol, really doesn't reduce greenhouse gas emissions?
Full text: A couple of weeks ago we wondered if green lobbying groups would object to new Department of Interior rules to streamline environmental approval for solar energy projects on hundreds of thousands of acres of federal land. ("The Solar-Painted Desert," Aug. 13, 2012.) Well, here we go. Three environmental groups--Western Lands Project, Basin and Range Watch, and Solar Done Right--have filed a formal complaint of the kind that often presages a lawsuit.
The letter of protest to the Bureau of Land Management alleges that the agency "failed to analyze numerous impacts of solar energy plant development within several Solar Energy Zones" and that allowing "industrial-scale solar generation" could result in the "virtual privatization of public lands."
But here's the real shocker: The letter complains that "no scientific evidence has been presented to support the claim that these projects reduce greenhouse emissions." And "the opposite may be true. Recent work at the Center for Conservation Biology University of California, Riverside, suggests that soil disturbance from large-scale solar development may disrupt Pleistocene-era caliche deposits that release carbon to the atmosphere when exposed to the elements, thus 'negat[ing] the solar development C [carbon] gains.'"
So solar energy, like corn ethanol, really doesn't reduce greenhouse gas emissions? Now they tell us.
And there's more, says the letter: The environmental impact from these solar panels "are long-term (decades to centuries)" and they threaten the habitat of "endangered species, including the desert tortoise, Mojave fringe-toed lizard, flat-tailed horned lizard, golden eagle and desert bighorn."
Who knows if these objections have any factual basis. They're similar to the exaggerated complaints that greens have used for decades to kill or delay natural gas drilling, coal mining, road building, and the construction of dams for hydropower. But it's certainly news that some greens are even turning against green energy. Welcome to the club, Big Solar.
Subject: Solar energy; Environmental protection
Company / organization: Name: Bureau of Land Management; NAICS: 924120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 4, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1037817128
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1037817128?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Effort to Start Pumping Ugandan Oil Stalls; Plans by Tullow, Total and Cnooc for the Sector Face Setbacks as Government Withholds Approval Until Refinery Is Built
Author: Bariyo, Nicholas; Amiel, Geraldine
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 Sep 2012: n/a.
ProQuest document link
Abstract:
Adding to the rift, the three companies had agreed to help fund a small 20,000 barrel-a-day refinery at an estimated cost of around $1.5 billion, and Uganda now wants them to build a larger facility capable of producing around 150,000 barrels a day of refined fuel products.
Full text: LONDON--Plans by Tullow Oil PLC, Total SA and Cnooc Ltd. to start pumping Ugandan crude face renewed setbacks as a growing rift between the partners and the East African nation delays an ambitious plan to develop the country's nascent oil sector.
Less than six months after Uganda approved Tullow's long-delayed $2.9 billion deal to split its oil licenses with Cnooc and Total, Uganda is withholding approval of the companies' development plan until several issues are resolved, chief of which is Uganda's desire for them to partly fund a large refinery.
With around 1.8 billion untapped barrels of oil, Uganda is expected soon to join Nigeria, Angola and Sudan among sub-Saharan Africa's major crude producers.
Tullow--and its predecessors--have faced a litany of problems that continue to push back the planned start of production.
Tullow bought out former partner, Heritage Oil PLC. They together used to co-own two oil blocks in the Lake Albertine rift basin basin, currently operated by Total and Cnooc.
In an interview, Uganda Junior Energy and Minerals Minister Peter Lokeris said he would rather see initial production delayed by several years than implement an unsustainable development plan.
"[Oil production] is a very big project, which we must handle carefully," said Mr. Lokeris. "Oil is a finite resource and it would benefit the Ugandan people better if it isn't rapidly exploited."
Tullow, Total and Cnooc want to sell crude on the open market and are considering $5 billion of investment in pipelines to the East African coast. Uganda insists that most of the oil be refined locally into fuel products, initially for domestic consumption and then for regional export. Adding to the rift, the three companies had agreed to help fund a small 20,000 barrel-a-day refinery at an estimated cost of around $1.5 billion, and Uganda now wants them to build a larger facility capable of producing around 150,000 barrels a day of refined fuel products.
A Tullow spokesman declined to comment on the issue, referring queries to previous statements. Tullow has said in the past that it doesn't intend to invest in a refinery, citing its lack of downstream expertise.
Speaking in July, Tullow Chief Operating Officer Paul McDade said: "Our view, very strongly, is that an export pipeline is required to underpin the overall [basin] development and the government of Uganda themselves are looking at refinery options."
In an earlier interview, Mr. Lokeris said Total, Cnooc and China's CNPC had expressed interest in building the refinery.
"Total understands the needs of the government of Uganda for a phased refinery to be built in Uganda, the capacities of which would address market demand," a Total spokeswoman said, without elaborating.
Cnooc didn't immediately respond to requests for comment.
The differences underscore the challenges inherent in building an oil industry from scratch in a poor, underdeveloped country.
Tullow, Total and Cnooc want to quickly recoup the $12 billion they expect to spend turning Uganda into an oil-producing nation. Uganda's leaders are under pressure to translate the newfound oil wealth into jobs.
Regional politics are also a consideration. Uganda is a key member of the East Africa Community trade bloc, which has emphasized the importance of greater local refining capacity as a means to boost growth.
In July, the Ugandan government appointed a panel to oversee oil development and Tullow, Total and Cnooc will only begin their investments in earnest when Uganda approves the plan.
The members of the panel have yet to be appointed and the government hasn't indicated when it expects to grant final approval for the projects.
According to Tullow, oil output from Uganda is expected 36 months after approval.
Yusuf Matovu, spokesman for Uganda's Energy and Minerals Ministry, said that although government is keen to ensure that the oil resources are exploited in time, every effort "must be taken to ensure that government gets the best deals out of every license and negotiations."
Write to Nicholas Bariyo at and Geraldine Amiel at
Credit: By Nicholas Bariyo and Geraldine Amiel
Subject: Petroleum refineries; Petroleum industry; Petroleum production
Location: Uganda
Company / organization: Name: Heritage Oil PLC; NAICS: 211111; Name: Total SA; NAICS: 447190, 324110, 211111; Name: Tullow Oil PLC; NAICS: 211111; Name: CNOOC Ltd; NAICS: 211111
Publicationtitle: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 5, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1037817200
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1037817200?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Oil Project Stalls in Uganda --- Tullow, Total and Cnooc Face Setbacks as Government Withholds Plan Approval
Author: Bariyo, Nicholas; Amiel, Geraldine
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]05 Sep 2012: B.7.
ProQuest document link
Abstract:
Plans by Tullow Oil PLC, Total SA and Cnooc Ltd. to start pumping Ugandan crude face renewed setbacks as a rift between the partners and the East African nation delays an ambitious plan to develop the country's oil sector.
Full text: LONDON -- Plans by Tullow Oil PLC, Total SA and Cnooc Ltd. to start pumping Ugandan crude face renewed setbacks as a rift between the partners and the East African nation delays an ambitious plan to develop the country's oil sector.
Less than six months after Uganda approved Tullow's long-delayed $2.9 billion deal to split its oil licenses with China's Cnooc and France's Total, Uganda is withholding approval of the companies' development plan until several issues are resolved, chief of which is Uganda's desire for them to partly fund a large refinery.
With around 1.8 billion of untapped barrels of oil, Uganda is expected soon to join Nigeria, Angola and Sudan among sub-Saharan Africa's major crude producers.
London-listed Tullow -- and its predecessors -- have faced a litany of problems that continue to push back the planned start of production.
Tullow bought out former partner Heritage Oil PLC. They used to co-own two oil blocks in the Lake Albertine rift basin, currently operated by Total and Cnooc.
In an interview, Peter Lokeris, Uganda's junior energy and minerals minister, said he would rather see initial production delayed by several years than implement an unsustainable development plan.
"[Oil production] is a very big project, which we must handle carefully," said Mr. Lokeris. "Oil is a finite resource and it would benefit the Ugandan people better if it isn't rapidly exploited."
Tullow, Total and Cnooc want to sell crude on the open market and are considering $5 billion of investment in pipelines to the East African coast. Uganda insists that most of the oil be refined locally into fuel products, initially for domestic consumption and then for regional export. The three companies had agreed to help fund a small 20,000 barrel-a-day refinery at an estimated cost of around $1.5 billion, and Uganda now wants them to build a larger facility capable of producing around 150,000 barrels a day of refined fuel products.
A Tullow spokesman declined to comment on the issue, referring queries to previous statements. Tullow has said in the past that it doesn't intend to invest in a refinery, citing its lack of downstream expertise.
Speaking in July, Tullow Chief Operating Officer Paul McDade said: "Our view, very strongly, is that an export pipeline is required to underpin the overall [basin] development, and the government of Uganda themselves are looking at refinery options."
In an earlier interview, Mr. Lokeris said Total, Cnooc and China National Petroleum Corp. had expressed interest in building the refinery.
"Total understands the needs of the government of Uganda for a phased refinery to be built in Uganda, the capacities of which would address market demand," a Total spokeswoman said, without elaborating.
State-owned Cnooc didn't immediately respond to requests for comment.
The differences underscore the challenges inherent in building an oil industry from scratch in a poor, underdeveloped country. Tullow, Total and Cnooc want to quickly recoup the $12 billion they expect to spend turning Uganda into an oil-producing nation. Uganda's leaders are under pressure to translate the newfound oil wealth into jobs.
Regional politics are also a consideration. Uganda is a key member of the East Africa Community trade bloc, which has emphasized the importance of greater local refining capacity as a means to boost growth.
In July, the Ugandan government appointed a panel to oversee oil development, and Tullow, Total and Cnooc will only begin their investments in earnest when Uganda approves the plan.
The members of the panel have yet to be appointed and the government hasn't indicated when it expects to grant final approval for the projects.
According to Tullow, oil output from Uganda is expected 36 months after approval.
Yusuf Matovu, spokesman for Uganda's Energy and Minerals Ministry, said that although government is keen to ensure that the oil resources are exploited in time, every effort "must be taken to ensure that government gets the best deals out of every license and negotiations."
Subscribe to WSJ:
Credit: By Nicholas Bariyo and Geraldine Amiel
Subject: Petroleum refineries; Petroleum industry; Petroleum production
Location: China France Uganda
Company / organization: Name: China National Petroleum Corp; NAICS: 211111; Name: Heritage Oil PLC; NAICS: 211111; Name: Total SA; NAICS: 447190, 324110, 211111; Name: Tullow Oil PLC; NAICS: 211111; Name: CNOOC Ltd; NAICS: 211111
Classification: 8510: Petroleum industry; 9175: Western Europe; 9177: Africa; 9179: Asia & the Pacific
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.7
Publication year: 2012
Publication date: Sep 5, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1037869742
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1037869742?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Ghanaian Oil Surge Could Spell Trouble for Cocoa
Author: Rai, Neena; Gross, Jenny
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 Sep 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Ghana is poised to reap the benefits from its fast-growing oil industry, but this may come at the long-term expense of the country's cocoa industry.
Analysts predict dollar-denominated earnings from oil exports will drive up the value of the weak Ghanaian cedi over the next few years. This in turn will make exports of cocoa, now one of its biggest sources of export revenue, less competitive against other large producers like Nigeria and the Ivory Coast.
That may not matter much in the short term, as the world faces a shortage of cocoa beans, a key ingredient in the making of chocolate. Ghana is the world's second-largest exporter of cocoa beans, and a further fall in supply is likely to drive up the price of cocoa futures over the next few years.
Higher prices for cocoa might prompt some chocolate makers to reduce the amount of cocoa in chocolate bars or even shift to substitutes, as has happened in the past, eventually softening demand for the sweet bean and capping price gains.
The West African country produces only 85,000 barrels of oil a day--a drop in the ocean when compared with regional rival Nigeria's 2.5 million barrels a day. But its production is forecast to soar to 500,000 barrels a day by 2015, according to risk-analysis company Maplecroft.
Although the cedi has depreciated more than 17% against the dollar in the first six months of this year, a further influx of U.S. dollars into the oil sector could make cocoa more expensive for foreign buyers, said Ben Payton, an Africa analyst for Maplecroft.
"Were that to happen, Ghana's cocoa exports would become much less competitive" against other exporters like Ivory Coast, the world's biggest producer," he said.
Filip Peterson, commodities strategist at Swedish investment bank SEB in Stockholm, warns that uncertainty over cocoa supplies from the Ivory Coast makes investment in Ghana's sector vital. Lawmakers in Ivory Coast have accused loyalists of former President Laurent Gbagbo of being behind a recent spate of attacks, raising concerns about the country's viability as a secure global supplier of cocoa.
Another risk to supply is the possible advent later this year of El Niño, a weather phenomenon that brings dry weather and even drought to West Africa.
Overall, the London-based International Cocoa Organization predicts the global cocoa supplies will fall 19,000 metric tons short of global demand during the 2011-12 agricultural crop year.
Cocoa futures on the ICE Futures U.S. exchange have soared almost 20% this year, supported by a lack of rainfall across West Africa, hampering the quality of the sweet beans. Cocoa futures for front-month delivery surged 4.3% Wednesday to settle at $2,702 a ton, a 10-month high.
Cocoa has long been a crucial export for Ghana. Export earnings totaled $3.8 billion during the first quarter of 2012, up 23% from a year earlier and driven by cocoa, oil and gold, according to the Bank of Ghana, the country's central bank. In the first quarter of 2011, cocoa bean receipts brought in 61% of the country's total export earnings.
But investment money is flowing to oil, not cocoa. Ghana ranked third among sub-Saharan Africa for foreign direct investment in 2010, at an estimated $2,5 billion, according to a joint report from the African Development Bank and African Development Fund. --
"Given that most of the FDI [funding] has gone to extractive industries, the government will need to find ways to better exploit this favorable wind, including ensuring that adequate resources flow to other priority sectors such as agriculture and agribusiness...if it is to diversify the economy and realize its development goals," the report said.
Edward George, head of soft-commodity research at pan-African banking group Ecobank, warns that the extent to which oil could overtake cocoa in importance as a foreign-exchange earner depends on international oil prices remaining high and more oil being discovered off the coast of Ghana. --
"In my view, agriculture will always remain the main provider of employment and a livelihood to the vast majority of the population, as typically the oil sector creates little new employment," he said.
Credit: By Neena Rai And Jenny Gross
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 5, 2012
column: Market Focus
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1037983218
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1037983218?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Indian Rupee Weakens; Dollar Rises to INR56.00 on Buying by Oil Companies
Author: Khushita Vasant
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 Sep 2012: n/a.
ProQuest document link
Abstract:
The rupee had gained earlier, tracking the euro's rise against most major currencies following reports that the European Central Bank -- at a meeting later in the global day -- could announce plans to buy unlimited three-year government bonds.
Full text: MUMBAI--The Indian rupee fell to the key level of 56 against the U.S. dollar Thursday as oil companies bought the greenback to pay for imports, traders said.
The dollar was quoting at 56.00 rupees at 0450 GMT, its highest level in three weeks. In late Asian trade Wednesday, the dollar was at 55.91 rupees.
The rupee had gained earlier, tracking the euro's rise against most major currencies following reports that the European Central Bank -- at a meeting later in the global day -- could announce plans to buy unlimited three-year government bonds.
But the rupee soon fell as the euro came off its highs.
The Indian currency isn't getting much support from local stocks either, with the Bombay Stock Exchange's benchmark Sensex trading nearly flat.
Write to Khushita Vasant at khushita.vasant@dowjones.com
Credit: By Khushita Vasant
Subject: Euro
Location: United States--US
Company / organization: Name: European Central Bank; NAICS: 521110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 6, 2012
column: DJ FX Trader
Section: Forex
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1038035051
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1038035051?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Crude-Oil Prices Shrug But Hold On to Gains
Author: Strumpf, Dan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 Sep 2012: n/a.
ProQuest document link
Abstract:
Oil prices ended slightly higher, shrugging off a report that showed a steep drop in U.S. oil inventories and new measures by the European Central Bank to shore up Europe's economy.
Full text: Oil prices ended slightly higher, shrugging off a report that showed a steep drop in U.S. oil inventories and new measures by the European Central Bank to shore up Europe's economy.
Many market watchers called the inventory drop transitory, while voicing skepticism over the effectiveness of the new ECB measures.
"I was a little skeptical of the whole rally," said Peter Donovan, vice president at Vantage Trading, an oil options brokerage. "A lot of people have put a lot of hope in the ECB plan, but having the whole thing work out is a much bigger issue."
He added: "And as far as inventories were concerned, was anybody not expecting a substantial draw after production came off [following Hurricane Isaac]?"
Light, sweet crude for October delivery settled up 17 cents, or 0.2%, at $95.53 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures U.S. exchange rose 40 cents, or 0.4%, to $113.49 a barrel.
Oil prices had spent much of the day more than 1.5% higher, lifted by comments from European Central Bank President Mario Draghi, who announced a range of new measures to stimulate Europe's economy.
Prices also got a boost from a government report that showed Hurricane Isaac disrupted domestic oil production and imports last week, sending U.S. stockpiles tumbling. But crude prices shed the bulk of their gains during the final hours of trading.
U.S. crude stockpiles plunged 7.4 million barrels last week, the biggest one-week drop in inventories since December, according to the Energy Information Administration. Analysts surveyed by Dow Jones Newswires had expected oil inventories to fall 5.6 million barrels. Traders watch the weekly EIA report for cues on supply and demand in the world's biggest oil consumer.
Much of the decline was driven by falling oil imports, which were disrupted after Hurricane Isaac closed down shipping. U.S. oil output fell 12%, to its lowest level in a year due to precautionary rig shutdowns in the Gulf of Mexico.
"It all had to do with a lot of production shut in," said Tony Rosado, a broker at Dorado Energy Services. "The refineries had to get crude from somewhere," so they turned to oil held in storage.
Still, traders and analysts said the steep inventory drop was likely a one-time event as delayed oil shipments are delivered in coming weeks and production comes back online.
Front-month October reformulated gasoline blendstock, or RBOB, settled up 4.12 cents, or 1.4%, to $2.9910 a gallon. October heating oil rose 2.49 cents, or 0.8%, to $3.1425 a gallon.
Write to Dan Strumpf at
Credit: By Dan Strumpf
Subject: Petroleum industry; Central banks; Crude oil prices; Petroleum production
Location: United States--US Europe
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210; Name: Dow Jones Newswires; NAICS: 519110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 6, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1038128888
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1038128888?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Democrats Party on Corporations' Tab; Obama Won't Take Lobbyists' Donations, but Business Underwrites Good Times in Charlotte; Oil Sponsors Night at a Pub
Author: Mullins, Brody; Crittenden, Michael R
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Sep 2012: n/a.
ProQuest document link
Abstract:
Tobacco giant Altria Group Inc. and brewer Anheuser-Busch InBev NV were among several companies that helped pay for Tuesday's Montana "Big Sky" party, a regular convention favorite capped by an appearance from Sen. Max Baucus, the Democratic chairman of the Senate's tax-writing committee.
Full text: CHARLOTTE, N.C.--Democrats went to great lengths to make their convention appear free of corporate influence. And then came the parties.
The 2,500-person "Light Up The Night" welcoming concert Monday with singer John Legend was paid for by Duke Energy Corp. and the Washington lobbying arms of the nuclear, natural gas and electricity industries.
On Tuesday, hip-hop artist Common rocked the house at an invitation-only event sponsored by a handful of corporate lobbies, including those representing the recording industry, drug companies and News Corp., owner of The Wall Street Journal.
The same night, Maryland's Democratic Gov. Martin O'Malley and his Celtic rock band, O'Malley's March, jammed an Irish bar paid for by the oil industry and the Democratic Governors Association.
Some of the companies most active at the convention frequently battle Mr. Obama and Democrats on policy matters in Washington, including the oil and drug companies and Wall Street firms.
The president has sought to cast himself as free of ties to "special interests"--in particular, corporate money. He banned donations from lobbyists and corporate PACs to his campaign and the Democratic National Committee. He prohibits registered lobbyists from working for him in the White House. The convention barred corporate contributions to fund the formal nominating proceedings themselves, though planners accepted corporate money for other expenses.
Rhetoric aside, both sides--companies and Democrats--remain dependent on each other. Corporate money has tilted Republican this year, but even so, the Democratic Party and its candidates have collected $565 million from company PACs and executives, according to the nonpartisan Center for Responsive Politics. Republicans have received $715 million from company PACs and executives.
The Democrats' sum is about 75% of the total amount of campaign money they have received so far this election season in itemized donations. Democrats have received $37 million in donations from labor unions, according to the Center.
Corporations and industries, meantime, need the support of Democrats to pursue their goals in Washington. Many of the companies sponsored similar events at the GOP convention last week in Tampa, Fla. Few would comment publicly about their sponsorship.
Melanie Roussell, a spokeswoman for the Democratic National Committee, said Democrats have "instituted the strongest and furthest-reaching rules ever established governing fundraising and special interest access at a convention, which reflect the president's strong and consistent record of increasing accountability and decreasing corporate and special interest influence."
A spokeswoman for one corporate sponsor, FedEx Corp.'s Maury Donahue, said the company "recognizes the importance of playing an active role in the political process, including participation at national events such as the Republican and Democratic national conventions." She added that the company's "engagement helps ensure our customers' business interests are protected."
Tobacco giant Altria Group Inc. and brewer Anheuser-Busch InBev NV were among several companies that helped pay for Tuesday's Montana "Big Sky" party, a regular convention favorite capped by an appearance from Sen. Max Baucus, the Democratic chairman of the Senate's tax-writing committee.
Wal-Mart Stores Inc., a company repeatedly attacked by Democrats, sponsored a reception Wednesday for the leaders of the Center for American Progress, a leading liberal think tank in Washington run by John Podesta, a chief of staff when Bill Clinton was president.
A concert Wednesday night with rapper Flo Rida and "Desperate Housewives" star Eva Longoria was sponsored by Washington law and lobbying firm Akin Gump Strauss Hauer & Feld LLP, insurance firm Prudential Financial Inc. and FedEx.
Alex Yudelson, a delegate from upstate New York, wrestled with what he saw as a point of tension spawned by corporate sponsorship. The "problem is do you stand up for your principles 100% of the time or do you play the game," he asked.
Some Democrats said the events aren't a big deal. "I'm not sure how much delegates pay attention to that, I don't pay a lot of attention," said Sen. Richard Durbin, an Illinois Democrat. "To say that the convention was dominated by X industry or X corporation, I don't see it."
Jerome Pandell, a delegate from Danville, Calif., said Mr. Obama has inoculated himself from criticism about the presence of corporations because he has banned donation from lobbyists and corporate PACs.
He said good politicians should be allowed to "take anyone's money, drink their booze...and then vote against everything they want."
Write to Brody Mullins at and Michael R. Crittenden at
Credit: By Brody Mullins and Michael R. Crittenden
Subject: Political action committees--PAC; Corporate sponsorship; Breweries; Lobbyists
People: Legend, John
Company / organization: Name: Republican Party; NAICS: 813940; Name: News Corp; NAICS: 511110, 515120, 551112; Name: Duke Energy Corp; NAICS: 221122, 237210; Name: Democratic National Committee; NAICS: 813940; Name: FedEx Corp; NAICS: 484110, 492110, 551114; Name: Center for Responsive Politics; NAICS: 541720; Name: Democratic Party; NAICS: 813940; Name: Democratic Governors Association; NAICS: 813940
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 7, 2012
Section: US
Publisher: Dow Jones & C ompany Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1038159217
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1038159217?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Crude-Oil Prices Shrug But Hold On to Gains
Author: Strumpf, Dan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]07 Sep 2012: C.4.
ProQuest document link
Abstract:
Oil prices ended slightly higher, shrugging off a report that showed a steep drop in U.S. oil inventories and new measures by the European Central Bank to shore up Europe's economy.
Full text: Oil prices ended slightly higher, shrugging off a report that showed a steep drop in U.S. oil inventories and new measures by the European Central Bank to shore up Europe's economy.
Many market watchers called the inventory drop transitory, while voicing skepticism over the effectiveness of the new ECB measures.
"I was a little skeptical of the whole rally," said Peter Donovan, vice president at Vantage Trading, an oil options brokerage. "A lot of people have put a lot of hope in the ECB plan, but having the whole thing work out is a much bigger issue."
He added: "And as far as inventories were concerned, was anybody not expecting a substantial draw after production came off [following Hurricane Isaac]?"
Light, sweet crude for October delivery settled up 17 cents, or 0.2%, at $95.53 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures U.S. exchange rose 40 cents, or 0.4%, to $113.49.
Oil prices had spent much of the day more than 1.5% higher, lifted by comments from European Central Bank President Mario Draghi, who announced a range of new measures to stimulate Europe's economy.
Prices also got a boost from a government report that showed Hurricane Isaac disrupted domestic oil production and imports last week, sending U.S. stockpiles tumbling. But crude prices shed the bulk of their gains during the final hours of trading.
U.S. crude stockpiles plunged 7.4 million barrels last week, the biggest one-week drop in inventories since December, according to the Energy Information Administration. Analysts surveyed by Dow Jones Newswires had expected oil inventories to fall 5.6 million barrels.
Much of the decline was driven by falling oil imports, which were disrupted after Hurricane Isaac closed down shipping. Still, traders and analysts said the steep inventory drop was likely a one-time event as delayed oil shipments are delivered in coming weeks and production comes back online.
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Credit: By Dan Strumpf
Subject: Futures trading; Crude oil prices; Commodity prices
Location: United States--US
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Sep 7, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1038209575
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1038209575?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Convention Journal -- Celebrations: Democrats Party on Corporations' Tab --- Obama Won't Take Lobbyists' Donations, but Business Underwrites Good Times in Charlotte; Oil Sponsors Night at a Pub
Author: Mullins, Brody; Crittenden, Michael R
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]07 Sep 2012: A.5.
ProQuest document link
Abstract:
Tobacco giant Altria Group Inc. and brewer Anheuser-Busch InBev NV were among several companies that helped pay for Tuesday's Montana "Big Sky" party, a regular convention favorite capped by an appearance from Sen. Max Baucus, the Democratic chairman of the Senate's tax-writing committee.
Full text: CHARLOTTE, N.C. -- Democrats went to great lengths to make their convention appear free of corporate influence. And then came the parties.
The 2,500-person "Light Up The Night" welcoming concert Monday with singer John Legend was paid for by Duke Energy Corp. and the Washington lobbying arms of the nuclear, natural gas and electricity industries.
On Tuesday, hip-hop artist Common rocked the house at an invitation-only event sponsored by a handful of corporate lobbies, including those representing the recording industry, drug companies and News Corp., owner of The Wall Street Journal.
The same night, Maryland's Democratic Gov. Martin O'Malley and his Celtic rock band, O'Malley's March, jammed an Irish bar paid for by the oil industry and the Democratic Governors Association.
Some of the companies most active at the convention frequently battle Mr. Obama and Democrats on policy matters in Washington, including the oil and drug companies and Wall Street firms.
The president has sought to cast himself as free of ties to "special interests" -- in particular, corporate money. He banned donations from lobbyists and corporate PACs to his campaign and the Democratic National Committee. He prohibits registered lobbyists from working for him in the White House. The convention barred corporate contributions to fund the formal nominating proceedings themselves, though planners accepted corporate money for other expenses.
Rhetoric aside, both sides -- companies and Democrats -- remain dependent on each other. Corporate money has tilted Republican this year, but even so, the Democratic Party and its candidates have collected $565 million from company PACs and executives, according to the nonpartisan Center for Responsive Politics. Republicans have received $715 million from company PACs and executives.
The Democrats' sum is about 75% of the total amount of campaign money they have received so far this election season in itemized donations. Democrats have received $37 million in direct donations from labor unions, according to the Center, though that doesn't include money the unions have spent on their own get-out-the-vote efforts. Unions, as well as corporations, also contribute millions to super PACs.
Corporations and industries, meantime, need the support of Democrats to pursue their goals in Washington. Many of the companies sponsored similar events at the GOP convention last week in Tampa, Fla. Few would comment publicly about their sponsorship.
Melanie Roussell, a spokeswoman for the Democratic National Committee, said Democrats have "instituted the strongest and furthest-reaching rules ever established governing fundraising and special interest access at a convention, which reflect the president's strong and consistent record of increasing accountability and decreasing corporate and special interest influence."
A spokeswoman for one corporate sponsor, FedEx Corp.'s Maury Donahue, said the company "recognizes the importance of playing an active role in the political process, including participation at national events such as the Republican and Democratic national conventions." She added that the company's "engagement helps ensure our customers' business interests are protected."
Tobacco giant Altria Group Inc. and brewer Anheuser-Busch InBev NV were among several companies that helped pay for Tuesday's Montana "Big Sky" party, a regular convention favorite capped by an appearance from Sen. Max Baucus, the Democratic chairman of the Senate's tax-writing committee.
Wal-Mart Stores Inc., a company repeatedly attacked by Democrats, sponsored a reception Wednesday for the leaders of the Center for American Progress, a leading liberal think tank in Washington run by John Podesta, a chief of staff when Bill Clinton was president.
A concert Wednesday night with rapper Flo Rida and "Desperate Housewives" star Eva Longoria was sponsored by Washington law and lobbying firm Akin Gump Strauss Hauer & Feld LLP, insurance firm Prudential Financial Inc. and FedEx.
Alex Yudelson, a delegate from upstate New York, wrestled with what he saw as a point of tension spawned by corporate sponsorship. The "problem is do you stand up for your principles 100% of the time or do you play the game," he asked.
Jerome Pandell, a delegate from Danville, Calif., said Mr. Obama has inoculated himself from criticism about the presence of corporations because he has banned donation from lobbyists and corporate PACs.
He said good politicians should be allowed to "take anyone's money, drink their booze . . . and then vote against everything they want."
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Credit: By Brody Mullins and Michael R. Crittenden
Subject: Presidential elections; Political finance; Lobbyists; Political conventions; Social life & customs
Location: United States--US Charlotte North Carolina
Company / organization: Name: Democratic Party; NAICS: 813940
Classification: 9190: United States; 1210: Politics & political behavior; 3100: Capital & debt management
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.5
Publication year: 2012
Publication date: Sep 7, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1038219259
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1038219259?accountid= 7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.K. Gives Tax Breaks to Spur North Sea Oil Development
Author: Flynn, Alexis; Winning, Nick
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Sep 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: LONDON--The U.K. government Friday announced a tax break to encourage investment in older oil and gas fields in the North Sea, a move the industry said will spur the sort of spending needed to squeeze resources from reservoirs that may otherwise be abandoned.
Oil and gas firms investing in certain mature North Sea fields--known as brown fields--will be eligible for up to £250 million ($397 million) in tax relief, and an additional £500 million will be shielded for projects in fields already paying the petroleum revenue tax. This would provide tax relief of up to £80 million and £160 million, respectively.
The U.K. Treasury said the long-term tax revenues generated are expected to significantly outweigh the initial cost of the allowance, estimated at £100 million a year.
The move comes amid mounting pressure on the U.K. government, from business groups and voters, to do more to boost an economy that contracted for a third consecutive quarter between April and June. It also follows a contentious tax rise last year on North Sea production, which the industry characterized as creating uncertainty around continued investment in the mature, declining basin and some observers said contributed to an 18% fall in output in 2011.
Chancellor of the Exchequer George Osborne said the tax change will give companies the incentive to get the most out of older fields, create jobs and generate more revenue for taxpayers.
Industry body Oil & Gas U.K. hailed the move, saying it could attract at least £2 billion in fresh investment.
Mike Tholen, the body's economic director, said the tax relief would have "an immediate impact," as it would spur spending on the kind of enhanced recovery techniques needed to squeeze the remaining oil out of the U.K.'s older reservoirs.
"This initiative will sustain production from many mature fields, enabling more oil and gas to be recovered from them and postponing decommissioning by a number of years," said Mr. Tholen, adding that it could lead to an additional 150 million barrels of oil equivalent being produced from the North Sea.
Write to Alexis Flynn at alexis.flynn@dowjones.com
Write to Nicholas Winning at nick.winning@dowjones.com
Credit: By Alexis Flynn and Nick Winning
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 7, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1038358247
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1038358247?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Shell May Bid in Iraq's Next Oil Auction
Author: Flynn, Alexis
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Sep 2012: n/a.
ProQuest document link
Abstract:
"Every government wants to ensure that they get the largest possible slice of the pie for the national resource holder but, at the same time, they have to attract international investment because they need the expertise, technology and skills that international investment can bring." Besides the tough remuneration fee in the last round, some bidders were put off by a new clause to the model contract that forbids oil companies from signing contracts with Iraq's semi autonomous northern region of Kurdistan, where petroleum is also plentiful.
Full text: LONDON--Royal Dutch Shell PLC is considering taking part in Iraq's next auction of oil exploration rights, provided the opportunities on offer are sufficiently lucrative.
Iraq has said it would provide better incentives to foreign oil and gas firms than it did in a previous tender in May. Not one Western major made a bid in that round, with only a handful of the 12 unexplored plots up for grabs awarded, mostly to smaller independent companies.
"The license terms have to be attractive and they have to be competitive," said Mark Carne, Shell's executive vice president for the Middle East and North Africa. "We have to decide where to best use our human resources and our financial capital on a global basis, so we will bid for licenses in those places that are competitive and, if they're not competitive, then we will use our resources elsewhere."
Shell already has a sizable portfolio in Iraq and has emerged as one of the biggest postwar investors in the country. The Anglo-Dutch major is developing the huge Majnoon field and recently signed an agreement worth $17.2 billion to capture and process natural gas flared from southern Iraq's giant oil fields.
Iraq has proved reserves of 143.1 billion barrels of oil and 3.2 trillion cubic meters of gas, both of which are among the highest such deposits in the world.
Along with ramping up oil production, Iraq is keen to increase gas extraction to help boost its low levels of electricity output.
In the country's previous licensing auctions, Iraq has offered foreign firms so-called service contracts rather than a share in any resources they discover. Because service contracts only guarantee a flat fee per barrel of oil produced, companies have been reluctant to invest in exploring the undiscovered blocks without some assurance that they can recoup their costs and turn a profit.
"Every government, in a way, has the same dilemma," said Mr. Carne. "Every government wants to ensure that they get the largest possible slice of the pie for the national resource holder but, at the same time, they have to attract international investment because they need the expertise, technology and skills that international investment can bring."
Besides the tough remuneration fee in the last round, some bidders were put off by a new clause to the model contract that forbids oil companies from signing contracts with Iraq's semi autonomous northern region of Kurdistan, where petroleum is also plentiful. U.S. energy giant Exxon Mobil Corp. was barred from taking part in the latest bidding round as punishment for signing deals with Kurdistan.
Hassan Hafidh contributed to this article.
Write to Alexis Flynn at
Credit: By Alexis Flynn
Subject: Oil fields; Petroleum industry; Competition; Energy economics; Natural gas
Location: Iraq Middle East North Africa
Company / organization: Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Exxon Mobil Corp; NAICS: 447110, 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 7, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1038358348
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1038358348?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iran Oil Exports Fall, Embassy Shut
Author: Tracy, Tennille; Vieira, Paul
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Sep 2012: n/a.
ProQuest document link
Abstract:
Iran, a member of the Organization of the Petroleum Exporting Countries, holds the world's fourth-largest proven oil reserves.
Full text: International sanctions helped drive down Iran's oil exports nearly 45% in July, a new report showed, while Canada said on Friday it had closed its embassy in Tehran and would expel all Iranian diplomats in Canada.
Iran is "the most significant threat to global peace and security in the world today," Canadian Foreign Affairs Minister John Baird said of the embassy closure, the latest step by a Western nation to isolate Iran.
"Our diplomats serve Canada as civilians, and their safety is our No. 1 priority," he said. "It just got to a point where we just are very uncomfortable, putting their lives at risk."
Mr. Baird cited Iran's support for the Assad regime in Syria, and Tehran's routine threats to harm Israel as further reasons to suspend diplomatic relations. He said Canada would also formally list Iran as a state sponsor of terrorism. Representatives at the Iran Embassy in Ottawa couldn't be reached for comment.
The European Union began a full embargo on Iranian oil on July 1, while U.S. sanctions that took effect in July target banks that process oil payments with Iran's central bank, in a bid to push Tehran to compromise over its nuclear program. High-level international negotiations last convened in June.
A group of European countries has been working on further sanctions which could target Iran's financial and energy sectors, with a view to passing the measures next month, EU diplomats said.
"We must increase the pressure on Iran, intensify sanctions, add further to the EU sanctions already in force which are having a serious impact on Iran," U.K. Foreign Minister William Hague said on Friday on his way to a meeting of EU diplomats in Cyprus.
German Foreign Minister Guido Westerwelle said he sees a growing consensus for additional Iran sanctions.
In a sign of some success in Western efforts so far, India cut oil imports from Iran by 42% in July compared with June, while Chinese imports were down 28% over the same period, according to Rhodium Group, which gathers information from customs data and other sources. Japan didn't import any Iranian oil during the month, it said.
Iran delivered an average of 940,000 barrels a day in July, down from 1.7 million barrels in June, Rhodium said. That is a slightly bigger drop than the International Energy Agency found in earlier estimates, which didn't include country-by-country tallies.
Iran's oil profits dropped to an estimated $2.9 billion in July, Rhodium said, down from $9.8 billion in the same month last year. The numbers don't reflect revenue Iran is collecting from oil it is allegedly smuggling out of the country.
Energy analysts cautioned that oil-trade data were volatile and the picture could change in coming months as Iran tries new ways to reach foreign markets. Among other things, Iran's customers may overcome difficulties getting their oil shipments insured.
In addition, if global oil prices continue their upward trend, cheaper Iranian oil will become more attractive. "The temptation for Beijing to allow traders to buy discounted Iranian spot cargoes and relieve some pressure from the market would become pretty compelling," Rhodium Group partner Trevor Houser said.
Mr. Houser said Iran's oil shipments were likely to remain below 1.3 million barrels a day this year, an increase from July's numbers but still low in historic terms.
Iran, a member of the Organization of the Petroleum Exporting Countries, holds the world's fourth-largest proven oil reserves.
The State Department handed out six-month exemptions to its sanctions to all major buyers of Iranian oil, including top importers China, India and Japan. The State Department said the countries had significantly reduced their purchases of Iran's oil.
U.S. officials will be watching whether figures for August and September follow the July trend as they determine which countries qualify for a second round of exemptions from the sanctions.
"Countries which continue to significantly reduce purchases of crude oil from Iran may be eligible for a renewed exception," said a State Department spokeswoman. She declined to say when the department will decide.
China, the largest single buyer of Iran's oil in 2011, has declined to commit to reducing Iranian oil imports, saying it has no obligation to follow Washington's dictates. Beijing's imports have nonetheless been decreasing, and price disputes with Iran--rather than political considerations--has played a role.
The odds of the Obama administration holding back exemptions for major buyers of Iranian oil are still very low, said Mike Zolandz, a partner at the law firm SNR Denton, which is involved in sanctions law.
The White House, although concerned about keeping up pressure on Iran, also wants to avoid a diplomatic tangle with China and other influential global players, Mr. Zolandz said.
China's decision to continue importing Iranian oil is "reasonable, justified and legitimate," said Geng Shuang, a spokesman for the Chinese Embassy in Washington. "China always opposes one country's imposition of unilateral sanctions on another country on the grounds of its domestic laws," he said.
Laurence Norman contributed to this article.
Write to Tennille Tracy at
Credit: By Tennille Tracy and Paul Vieira
Subject: Petroleum industry; Sanctions; International trade; International relations-US; Diplomatic & consular services
Location: United States--US Canada Iran
People: Baird, John R
Company / organization: Name: European Union; NAICS: 926110, 928120; Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 7, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: News papers
Language of publication: English
Document type: News
ProQuest document ID: 1038369709
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1038369709?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Democrats Party on Corporations' Tab; Obama Won't Take Lobbyists' Donations, but Business Underwrites Good Times in Charlotte; Oil Sponsors Night at a Pub
Author: Mullins, Brody; Crittenden, Michael R
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 Sep 2012: n/a.
ProQuest document link
Abstract:
Tobacco giant Altria Group Inc. and brewer Anheuser-Busch InBev NV were among several companies that helped pay for Tuesday's Montana "Big Sky" party, a regular convention favorite capped by an appearance from Sen. Max Baucus, the Democratic chairman of the Senate's tax-writing committee.
Full text: CHARLOTTE, N.C.--Democrats went to great lengths to make their convention appear free of corporate influence. And then came the parties.
The 2,500-person "Light Up The Night" welcoming concert Monday with singer John Legend was paid for by Duke Energy Corp. and the Washington lobbying arms of the nuclear, natural gas and electricity industries.
On Tuesday, hip-hop artist Common rocked the house at an invitation-only event sponsored by a handful of corporate lobbies, including those representing the recording industry, drug companies and News Corp., owner of The Wall Street Journal.
The same night, Maryland's Democratic Gov. Martin O'Malley and his Celtic rock band, O'Malley's March, jammed an Irish bar paid for by the oil industry and the Democratic Governors Association.
Some of the companies most active at the convention frequently battle Mr. Obama and Democrats on policy matters in Washington, including the oil and drug companies and Wall Street firms.
The president has sought to cast himself as free of ties to "special interests"--in particular, corporate money. He banned donations from lobbyists and corporate PACs to his campaign and the Democratic National Committee. He prohibits registered lobbyists from working for him in the White House. The convention barred corporate contributions to fund the formal nominating proceedings themselves, though planners accepted corporate money for other expenses.
Rhetoric aside, both sides--companies and Democrats--remain dependent on each other. Corporate money has tilted Republican this year, but even so, the Democratic Party and its candidates have collected $565 million from company PACs and executives, according to the nonpartisan Center for Responsive Politics. Republicans have received $715 million from company PACs and executives.
The Democrats' sum is about 75% of the total amount of campaign money they have received so far this election season in itemized donations. Democrats have received $37 million in donations from labor unions, according to the Center.
Corporations and industries, meantime, need the support of Democrats to pursue their goals in Washington. Many of the companies sponsored similar events at the GOP convention last week in Tampa, Fla. Few would comment publicly about their sponsorship.
Melanie Roussell, a spokeswoman for the Democratic National Committee, said Democrats have "instituted the strongest and furthest-reaching rules ever established governing fundraising and special interest access at a convention, which reflect the president's strong and consistent record of increasing accountability and decreasing corporate and special interest influence."
A spokeswoman for one corporate sponsor, FedEx Corp.'s Maury Donahue, said the company "recognizes the importance of playing an active role in the political process, including participation at national events such as the Republican and Democratic national conventions." She added that the company's "engagement helps ensure our customers' business interests are protected."
Tobacco giant Altria Group Inc. and brewer Anheuser-Busch InBev NV were among several companies that helped pay for Tuesday's Montana "Big Sky" party, a regular convention favorite capped by an appearance from Sen. Max Baucus, the Democratic chairman of the Senate's tax-writing committee.
Wal-Mart Stores Inc., a company repeatedly attacked by Democrats, sponsored a reception Wednesday for the leaders of the Center for American Progress, a leading liberal think tank in Washington whose board chairman is John Podesta, a chief of staff when Bill Clinton was president.
A concert Wednesday night with rapper Flo Rida and "Desperate Housewives" star Eva Longoria was sponsored by Washington law and lobbying firm Akin Gump Strauss Hauer & Feld LLP, insurance firm Prudential Financial Inc. and FedEx.
Alex Yudelson, a delegate from upstate New York, wrestled with what he saw as a point of tension spawned by corporate sponsorship. The "problem is do you stand up for your principles 100% of the time or do you play the game," he asked.
Some Democrats said the events aren't a big deal. "I'm not sure how much delegates pay attention to that, I don't pay a lot of attention," said Sen. Richard Durbin, an Illinois Democrat. "To say that the convention was dominated by X industry or X corporation, I don't see it."
Jerome Pandell, a delegate from Danville, Calif., said Mr. Obama has inoculated himself from criticism about the presence of corporations because he has banned donation from lobbyists and corporate PACs.
He said good politicians should be allowed to "take anyone's money, drink their booze...and then vote against everything they want."
Write to Brody Mullins at and Michael R. Crittenden at
Credit: By Brody Mullins and Michael R. Crittenden
Subject: Political action committees--PAC; Corporate sponsorship; Breweries; Lobbyists
People: Legend, John
Company / organization: Name: Republican Party; NAICS: 813940; Name: News Corp; NAICS: 511110, 515120, 551112; Name: Duke Energy Corp; NAICS: 221122, 237210; Name: Democratic National Committee; NAICS: 813940; Name: FedEx Corp; NAICS: 484110, 492110, 551114; Name: Center for Responsive Politics; NAICS: 541720; Name: Democratic Party; NAICS: 813940; Name: Democratic Governors Association; NAICS: 813940
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 8, 2012
Section: US
Publisher: Dow Jones & C ompany Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1038457221
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1038457221?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Iran Oil Exports Fall, Embassy Shut
Author: Tracy, Tennille; Vieira, Paul
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]08 Sep 2012: A.7.
ProQuest document link
Abstract:
Iran, a member of the Organization of the Petroleum Exporting Countries, holds the world's fourth-largest proven oil reserves. ---
Full text: International sanctions helped drive down Iran's oil exports nearly 45% in July, a new report showed, while Canada said on Friday it had closed its embassy in Tehran and would expel all Iranian diplomats in Canada.
Iran is "the most significant threat to global peace and security in the world today," Canadian Foreign Affairs Minister John Baird said of the embassy closure, the latest step by a Western nation to isolate Iran.
"Our diplomats serve Canada as civilians, and their safety is our No. 1 priority," he said.
Mr. Baird cited Iran's support for the Assad regime in Syria, and Tehran's routine threats to harm Israel as further reasons to suspend diplomatic relations. He said Canada would also formally list Iran as a state sponsor of terrorism. Representatives at the Iran Embassy in Ottawa couldn't be reached to comment.
The European Union began a full embargo on Iranian oil on July 1, while U.S. sanctions that took effect in July target banks that process oil payments with Iran's central bank, in a bid to push Tehran to compromise over its nuclear program. High-level international talks were last held in June.
A group of European countries has been working on further sanctions that could target Iran's financial and energy sectors, with a view to passing the measures next month, EU diplomats said.
"We must increase the pressure on Iran," U.K. Foreign Minister William Hague said on Friday on his way to a meeting of EU diplomats in Cyprus. German Foreign Minister Guido Westerwelle said he sees a growing consensus for additional Iran sanctions.
In a sign of some success in Western efforts so far, India cut oil imports from Iran by 42% in July compared with June, while Chinese imports were down 28% over the period, according to Rhodium Group, which gathers information from customs data and other sources. Japan didn't import any Iranian oil in July, it said.
Iran delivered an average of 940,000 barrels a day in July, down from 1.7 million barrels in June, Rhodium said. That is a slightly bigger drop than the International Energy Agency found in earlier estimates.
Iran's oil profits dropped to an estimated $2.9 billion in July, Rhodium said, down from $9.8 billion in July 2011. The numbers don't reflect revenue Iran is collecting from oil it exports covertly.
Energy analysts cautioned that oil-trade data were volatile and the picture could change in coming months as Iran tries new ways to reach foreign markets.
In addition, if global oil prices continue their upward trend, cheaper Iranian oil will become more attractive. "The temptation for Beijing to allow traders to buy discounted Iranian spot cargoes and relieve some pressure from the market would become pretty compelling," Rhodium Group partner Trevor Houser said.
Mr. Houser said Iran's oil shipments were likely to remain below 1.3 million barrels a day this year, an increase from July's numbers but still low in historic terms. Iran, a member of the Organization of the Petroleum Exporting Countries, holds the world's fourth-largest proven oil reserves.
---
Laurence Norman contributed to this article.
Subscribe to WSJ:
Credit: By Tennille Tracy and Paul Vieira
Subject: Crude oil; International trade; Diplomatic & consular services; Sanctions; International relations
Location: Israel Canada Syria Iran
Company / organization: Name: European Union; NAICS: 926110, 928120
Classification: 9179: Asia & the Pacific; 1300: International trade & foreign investment
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.7
Publication year: 2012
Publication date: Sep 8, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1038585651
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1038585651?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iranian Oil Goes Private
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 Sep 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: LONDON--Iran has exported a crude-oil cargo through the private sector for the first time, Iranian media said Sunday, as it seeks new ways to circumvent mounting sanctions.
The Iranian private sector has delivered an oil consignment to a foreign company using non-Iranian oil tankers, Hassan Khosrojerdi, head of Iran's Oil, Gas and Petrochemical Products Exporters' Association, told the Mehr news agency.
Until recently, the state-owned National Iranian Oil Co. was the exclusive marketer of the country's oil on international markets--the source of the majority of its export revenue.
But an agreement has been made with an Iranian consortium comprising private firms to export 20% of its oil exports to international markets, including the European Union, Mr. Khosrojerdi said.
In recent months, the West has been increasing pressure on Iran, and making stronger accusations that the Islamic Republic is developing nuclear weapons--allegations Tehran denies. The sanctions have culminated with a full-fledged embargo banning Iran oil from the EU while U.S. restrictions against Tehran's central bank have forced Asian buyers to reduce their crude imports from the Middle-Eastern nation.
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 9, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1038529636
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1038529636?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Supplies Appear Tighter in Crisis Mirror
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 Sep 2012: n/a.
ProQuest document link
Abstract:
Ever since the 1970s, the central question in oil markets has been: "Psst, got a spare barrel?" Spare barrels, be they inventories in tanks or mothballed capacity to pump reserves, are key for determining oil prices.
Full text: Ever since the 1970s, the central question in oil markets has been: "Psst, got a spare barrel?"
Spare barrels, be they inventories in tanks or mothballed capacity to pump reserves, are key for determining oil prices. When they are scarce, prices rise to encourage new supply and destroy demand.
That is the perception in much of the market today. When analysts look at inventories, they tend to look at the past five years for comparison. U.S. stocks of products such as gasoline and diesel are now running below the five-year average, and European oil inventories are at the bottom of the range.
However, rear-view mirrors only work when they aren't cracked. The years 2007 to 2011 included a peak in the precrisis bubble, the subsequent crash, and important changes in oil supply and demand dynamics.
For example, this June saw the lowest U.S. gasoline stocks for that month since 2007. But U.S. demand for the fuel has dropped in the intervening time. So in June 2007, inventories covered 22.5 days of gasoline demand. This June, despite lower stocks, they covered almost 25 days--the highest level for that month since 1999.
Similarly, since January 2008, total U.S. stocks of crude oil and refined products have climbed 8% to just over 1.8 billion barrels. Yet days of net imports covered, based on trailing averages, have jumped 63% to 228, the highest in almost 19 years. That reflects both lower demand and higher domestic production.
The same issue applies across the broader Organization for Economic Cooperation and Development group of countries, according to Morgan Stanley. OECD refined product stocks as a multiple of demand and exports hit the bottom of the five-year range in June. But when looked at for the more stable preceding five-year period, from 2003 to 2007, this year's figures look more in line.
The immediate implication is that investor perceptions of tight supply, which have underpinned Brent crude's 26% rally since late June, may be distorted.
It also has a bearing on one particular set of oil inventories much in the news ahead of November's U.S. elections: the Strategic Petroleum Reserve, or SPR. Energy Economist Phil Verleger points out that falling net imports translate to a lower requirement for strategic stocks. By his calculation, the 90 days of imports that the U.S. is required to hold under its obligations to the International Energy Agency translate right now to about 700 million barrels--roughly the SPR's level today.
But projections of rising U.S. supply and flat or falling demand mean the SPR requirement could shrink further. Citigroup projects the U.S. net imports of oil potentially falling to 6.6 million barrels a day by 2015, down from 7.9 million in the 12 months that ended in June. That implies the SPR could fall to 594 million barrels, or 14.6%, and still meet the 90-day requirement.
By 2020, Citi sees the import requirement falling to a mere 1.3 million barrels a day, leaving the U.S. needing an SPR of just 117 million barrels, one-sixth its current size. Selling off the excess between the end of this year and 2020 would add, on average, 198,000 barrels a day to global supply. That might not sound like much, but it equates to almost 30% of last year's increase in global oil demand.
Such reductions might seem unlikely, although the growing share of ally and neighbor Canada in the net-import mix might allay security concerns. And assuming a price of $100 a barrel, tapping some of the SPR's roughly $70 billion of working capital is tempting for politicians trying to cut deficits (this happened before in 1996 and 1997).
Either way, as with so much else, the profound changes in North America's energy balance are turning the concept of stockpiling on its head.
Write to Liam Denning at
Credit: By Liam Denning
Subject: Petroleum industry; Supply & demand; Stocks; Strategic petroleum reserve
Location: United States--US
Company / organization: Name: Citigroup Inc; NAICS: 551111; Name: Organization for Economic Cooperation & Development; NAICS: 928120; Name: Morgan Stanley; NAICS: 523110, 523120, 523920; Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 9, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1038537296
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1038537296?a ccountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Tehran Holds Talks With Cairo on Oil Sales
Author: Faucon, Benoît; Said, Summer
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 Sep 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Iran is in talks to sell oil to Egypt, officials on both sides say, part of a broader push to make up for lost European Union sales and a renewed engagement between the two countries.
Tehran has approached Cairo to sell two million barrels of oil--valued at more than $200 million--that are part of a stock of unsold Iranian crude stuck in the Egyptian port of Sidi Kerir because of international sanctions against Tehran, a person familiar with the approach said.
An Iranian oil official said the two sides have held talks on the matter.
"Between Iran and Egypt, there is some discussion. There is the idea they [will] import some oil from Iran," the official in Tehran said.
Egyptian Oil Minister Osama Kamal told the state-run Al-Ahram newspaper last week that Cairo has "no objection" to importing and refining Iranian oil.
He spoke after Egyptian President Mohammed Morsi attended a summit of the Nonaligned Movement of mainly developing countries in Tehran in August, the first visit by an Egyptian leader in decades.
Tehran cut ties with Cairo after its Islamic Revolution in 1979 because of Egypt's peace accord with Israel. Iran hasn't delivered any oil to Egypt in the 33 years since.
Iranian leaders supported the 2011 uprising that brought Mr. Morsi, an Islamist, to power.
Iran badly needs new oil buyers after a EU oil embargo and U.S. pressure on its Asian clients more than halved its crude exports to 900,000 barrels a day. The West has stepped up sanctions against Iran, alleging new evidence that Tehran is developing nuclear weapons. Iran says its nuclear program is for peaceful purposes.
A decision by Egypt to purchase Iranian oil could place it in conflict with the Obama administration. Under recently passed U.S. legislation, foreign firms purchasing Iranian energy products can be banned from using the U.S. financial systems unless their government has obtained a waiver from Washington. To date, Cairo has neither sought a waiver, nor been granted one.
Egypt consumes just 709,000 barrels of oil a day, according to BP PLC's authoritative statistical report, so alone it won't be able to make up Tehran's lost oil sales.
It remains to be seen if it could ever agree to make a move as sensitive as buying Iranian oil.
"It's very preliminary. It has not been completed," the Iranian oil official said.
Such a move would surely anger Washington, possibly imperiling Egypt's ties with the U.S.
Cairo is in talks to get $1 billion in debt relief from the U.S., which has spearheaded a global push to isolate Iran because of the nuclear dispute.
Iran and Egypt are also at odds over Syria, after Mr. Morsi recently called Tehran's ally an oppressive and illegitimate regime.
On Monday, diplomats from Turkey, Saudi Arabia, Iran and Egypt held a meeting in Cairo that aimed to work out a resolution to Syria's civil war.
Write to Benoît Faucon at and Summer Said at
Credit: By Benoît Faucon and Summer Said
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 10, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1038810777
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1038810777?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Big Gulf of Mexico Oil Deal Is Struck
Author: González, Ángel; Gilbert, Daniel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 Sep 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: HOUSTON--Plains Exploration & Production Co. plunged into oil drilling in the deep waters of the Gulf of Mexico on Monday, committing to a $6 billion purchase of holdings from two energy giants, in a move that surprised investors and sent the Houston-based company's shares tumbling nearly 11%.
Plains, whose market capitalization was about $4.7 billion after the deal, agreed to pay $5.5 billion to BP PLC and $560 million to Royal Dutch Shell PLC for offshore fields in the Gulf that are known to produce oil. To finance the transactions, the company will take on about $7 billion in debt and plans to sell natural-gas assets.
As a result of the purchase, Plains aims to double its offshore payroll to about 300 and increase production by 40%, but the debt will tie up a significant part of its new cash flow for a few years. The company said it would use hedges to lock in prices for a significant portion of its oil production to ensure it will be able to make its debt payments.
The deal marks Plains' return to the Gulf of Mexico, where it scaled back after the 2010 Deepwater Horizon disaster, which killed 11 rig workers and touched off the largest offshore oil spill in U.S. history.
Now, Plains, like the rest of the energy industry, is stepping up its pursuit of oil and moving away from producing natural gas amid a glut that has driven down gas prices. Producing more oil is likely to strengthen Plains's cash flow, but some analysts criticized the deal.
"No one understands the upside, and neither do I," said Subash Chandra, an analyst at Jefferies & Co., who questioned the wisdom of buying oil properties when prices are high and selling gas properties when their value is low. The move probably isn't a harbinger of more such deals, he said, adding, "This is a Plains special."
In 4 p.m. trading Monday on the New York Stock Exchange, the company's shares were down $4.24 at $36.09.
Plains Chief Executive Jim Flores said the deal was a rare opportunity to boost oil production and a chance for an independent energy producer to get a stake in a business that has been dominated by the biggest energy companies with the deepest pockets.
"This will be the first opportunity for an independent to do that in the deep water because the infrastructure has been so expensive," Mr. Flores said on a conference call.
Mr. Flores tried to pull out of the Gulf of Mexico after the Deepwater Horizon blast in April 2010, saying at the time that operating in deep water left the company with an exposure "that we may not need or can stand, with the new costs and rates and liabilities that are out there."
Plains sold its shallow-water Gulf fields to McMoRan Exploration Co. for about $818 million in cash and stock but found it harder to find a buyer for its deep-water holdings. Last year it sold a 20% stake in a subsidiary that holds those assets to private-equity firm EIG Global Energy Partners. But with its new deal, Plains is buying into fields where oil has been discovered, and so isn't shouldering the riskiest aspects of exploring for new deposits in deep water.
Investment bankers said that Mr. Flores has the mentality of a trader who jumps on what he sees as opportunities to buy oil and gas assets cheaply. The company has accumulated a grab bag of assets, including oil fields in Vietnam and California.
Mr. Flores made a fortune in the Gulf with his previous company, Ocean Energy Inc., but in shallow water. Oil fields there were originally developed by major oil companies with deep pockets, which sold them to smaller players as the big players left to plumb deeper waters for bigger finds.
Ryan Dezember contributed to this article.
Write to Ángel González at and Daniel Gilbert at
Plains at a Glance
Key facts about independent energy producer Plains Exploration & Production Co.:
Founded: 2002
Headquarters: Houston
Full-time workforce: 900
CEO: James C. Flores
2011 revenue: $1.96 billion
2011 production: 49% oil, 51% natural gas
2011 year-end reserves: equivalent of 411 million barrels of oil
WSJ Research
Credit: By Ángel González And Daniel Gilbert
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 10, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1038835262
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1038835262?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Tehran Holds Talks With Cairo on Oil Sales
Author: Faucon, Benoît; Said, Summer
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]11 Sep 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Iran is in talks to sell oil to Egypt, officials on both sides say, part of a broader push to make up for lost European Union sales and a renewed engagement between the two countries.
Tehran has approached Cairo to sell two million barrels of oil--valued at more than $200 million--that are part of a stock of unsold Iranian crude stuck in the Egyptian port of Sidi Kerir because of international sanctions against Tehran, a person familiar with the approach said.
An Iranian oil official said the two sides have held talks on the matter.
"Between Iran and Egypt, there is some discussion. There is the idea they [will] import some oil from Iran," the official in Tehran said.
Egyptian Oil Minister Osama Kamal told the state-run Al-Ahram newspaper last week that Cairo has "no objection" to importing and refining Iranian oil.
He spoke after Egyptian President Mohammed Morsi attended a summit of the Nonaligned Movement of mainly developing countries in Tehran in August, the first visit by an Egyptian leader in decades.
Tehran cut ties with Cairo after its Islamic Revolution in 1979 because of Egypt's peace accord with Israel. Iran hasn't delivered any oil to Egypt in the 33 years since.
Iranian leaders supported the 2011 uprising that brought Mr. Morsi, an Islamist, to power.
Iran badly needs new oil buyers after a EU oil embargo and U.S. pressure on its Asian clients more than halved its crude exports to 900,000 barrels a day. The West has stepped up sanctions against Iran, alleging new evidence that Tehran is developing nuclear weapons. Iran says its nuclear program is for peaceful purposes.
A decision by Egypt to purchase Iranian oil could place it in conflict with the Obama administration. Under recently passed U.S. legislation, foreign firms purchasing Iranian energy products can be banned from using the U.S. financial systems unless their government has obtained a waiver from Washington. To date, Cairo has neither sought a waiver, nor been granted one.
"Any foreign bank, anywhere, that knowingly processes a significant transaction to pay for Iranian oil can lose its direct access to the United States financial system, unless the bank's home jurisdiction has been determined to have significantly reduced its crude oil purchases from Iran," a Treasury official said Monday.
Egypt consumes just 709,000 barrels of oil a day, according to BP PLC's authoritative statistical report, so alone it won't be able to make up Tehran's lost oil sales.
It remains to be seen if it could ever agree to make a move as sensitive as buying Iranian oil.
"It's very preliminary. It has not been completed," the Iranian oil official said.
Such a move would surely anger Washington, possibly imperiling Egypt's ties with the U.S.
Cairo is in talks to get $1 billion in debt relief from the U.S., which has spearheaded a global push to isolate Iran because of the nuclear dispute.
Iran and Egypt are also at odds over Syria, after Mr. Morsi recently called Tehran's ally an oppressive and illegitimate regime.
On Monday, diplomats from Turkey, Saudi Arabia, Iran and Egypt held a meeting in Cairo that aimed to work out a resolution to Syria's civil war.
Jay Solomon contributed to this article.
Write to Benoît Faucon at and Summer Said at
Credit: By Benoît Faucon and Summer Said
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 11, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1038860969
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1038860969?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Cairo Considers Buying Oil From Tehran
Author: Faucon, Benoit; Said, Summer; Solomon, Jay
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]11 Sep 2012: A.6.
ProQuest document link
Abstract:
"Any foreign bank, anywhere, that knowingly processes a significant transaction to pay for Iranian oil can lose its direct access to the United States financial system, unless the bank's home jurisdiction has been determined to have significantly reduced its crude oil purchases from Iran," a Treasury official said Monday.
Full text: Iran is in talks to sell oil to Egypt, officials on both sides say, part of a broader push to make up for lost sales to the European Union, in a renewed engagement between the two countries.
Tehran has approached Cairo to sell two million barrels of oil -- valued at more than $200 million -- that are part of a stock of unsold Iranian crude stuck in the Egyptian port of Sidi Kerir because of international sanctions against Tehran, a person familiar with the approach said. An Iranian oil official said the two sides have held talks on the matter.
"Between Iran and Egypt, there is some discussion. There is the idea they [will] import some oil from Iran," the official said.
Egyptian Oil Minister Osama Kamal told the state-run Al-Ahram newspaper last week that Cairo has "no objection" to importing and refining Iranian oil.
He spoke after Egyptian President Mohammed Morsi attended a summit of the Nonaligned Movement of mainly developing countries in Tehran in August, the first visit by an Egyptian leader in decades.
Tehran cut ties with Cairo after its Islamic Revolution in 1979 because of Egypt's peace accord with Israel. Iran hasn't delivered any oil to Egypt in the 33 years since.
Iranian leaders supported the 2011 uprising that brought Mr. Morsi, an Islamist, to power.
Iran badly needs new oil buyers after a EU oil embargo and U.S. pressure on its Asian clients more than halved its crude exports to 900,000 barrels a day. The West has stepped up sanctions against Iran, alleging new evidence that Tehran is developing nuclear weapons. Iran says its nuclear program is for peaceful purposes.
A decision by Egypt to purchase Iranian oil could place it in conflict with the Obama administration.
"Any foreign bank, anywhere, that knowingly processes a significant transaction to pay for Iranian oil can lose its direct access to the United States financial system, unless the bank's home jurisdiction has been determined to have significantly reduced its crude oil purchases from Iran," a Treasury official said Monday.
Subscribe to WSJ:
Credit: By Benoit Faucon, Summer Said and Jay Solomon
Subject: Petroleum industry; Embargoes & blockades; Crude oil
Location: United States--US Egypt Iran
People: Morsi, Mohammed
Company / organization: Name: Al-Ahram; NAICS: 511110, 551112; Name: European Union; NAICS: 926110, 928120
Classification: 9180: International; 1510: Energy resources; 1300: International trade & foreign investment; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.6
Publication year: 2012
Publication date: Sep 11, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1038890471
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1038890471?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Big Deal Struck for Gulf Oil
Author: Gonzalez, Angel; Gilbert, Daniel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]11 Sep 2012: B.5.
ProQuest document link
Abstract:
[...]of the purchase, Plains aims to double its offshore payroll to about 300 and boost production by 40%, but the debt will tie up a significant part of its new cash flow for a few years.
Full text: HOUSTON -- Plains Exploration & Production Co. plunged into oil drilling in the deep waters of the Gulf of Mexico on Monday, committing to a $6 billion purchase of holdings from two energy giants, in a move that surprised investors and sent the Houston-based company's shares tumbling nearly 11%.
Plains, whose market capitalization was about $4.7 billion after the deal, agreed to pay $5.5 billion to BP PLC and $560 million to Royal Dutch Shell PLC for offshore fields in the Gulf that are known to produce oil. To finance the transactions, the company will take on about $7 billion in debt and plans to sell natural-gas assets.
As a result of the purchase, Plains aims to double its offshore payroll to about 300 and boost production by 40%, but the debt will tie up a significant part of its new cash flow for a few years. The company said it would use hedges to lock in prices for a significant portion of its oil production to ensure it will be able to make its debt payments.
The deal marks Plains' return to the Gulf of Mexico, where it scaled back after the 2010 Deepwater Horizon disaster, which killed 11 rig workers and touched off the largest offshore oil spill in U.S. history.
Now, Plains, like the rest of the energy industry, is stepping up its pursuit of oil and moving away from producing natural gas amid a glut that has driven down gas prices. Producing more oil is likely to strengthen Plains's cash flow, but some analysts criticized the deal.
"No one understands the upside, and neither do I," said Subash Chandra, an analyst at Jefferies & Co., who questioned the wisdom of buying oil properties when prices are high and selling gas properties when their value is low. The move probably isn't a harbinger of more such deals, he said, adding, "This is a Plains special."
Plains Chief Executive Jim Flores said the deal was a rare opportunity to boost oil production and a chance for an independent energy producer to get a stake in a business that has been dominated by the biggest energy companies with the deepest pockets.
"This will be the first opportunity for an independent to do that in the deep water because the infrastructure has been so expensive," Mr. Flores said on a conference call.
Mr. Flores tried to pull out of the Gulf of Mexico after the Deepwater Horizon blast in April 2010, saying at the time that operating in deep water left the company with an exposure "that we may not need or can stand, with the new costs and rates and liabilities that are out there."
Plains sold its shallow-water Gulf fields to McMoRan Exploration Co. for about $818 million in cash and stock but found it harder to find a buyer for its deep-water holdings. Last year it sold a 20% stake in a subsidiary that holds those assets to private-equity firm EIG Global Energy Partners. But with its new deal, Plains is buying into fields where oil has been discovered, and so isn't shouldering the riskiest aspects of exploring for new deposits in deep water.
Investment bankers said that Mr. Flores has the mentality of a trader who jumps on what he sees as opportunities to buy oil and gas assets cheaply. The company has accumulated a grab bag of assets, including oil fields in Vietnam and California.
Mr. Flores made a fortune in the Gulf with his previous company, Ocean Energy Inc., but in shallow water. Oil fields there were originally developed by major oil companies, which sold them to smaller players as the big players left to plumb deeper waters for bigger finds.
---
Ryan Dezember contributed to this article.
Plains at a Glance
Key facts about independent energy producer Plains Exploration & Production Co.:
-- Headquarters: Houston
-- Full-time workforce: 900
-- CEO: James C. Flores
-- 2011 revenue: $1.96 billion
-- 2011 production: 49% oil, 51% natural gas
-- 2011 year-end reserves: equivalent of 411 million barrels of oil
WSJ Research
Subscribe to WSJ:
Credit: By Angel Gonzalez and Daniel Gilbert
Subject: Energy industry; Petroleum industry; Acquisitions & mergers; Asset acquisitions; Natural gas; Oil exploration; Offshore drilling
Location: California
Company / organization: Name: Plains Exploration & Production Co; NAICS: 213112; Name: BP PLC; NAICS: 447110, 324110, 211111; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210
Classification: 9180: International; 8510: Petroleum industry; 2330: Acquisitions & mergers
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.5
Publication year: 2012
Publication date: Sep 11, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1038893826
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1038893826?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Release of Oil Stocks to Lower Prices Is Crude Idea
Author: Kent, Sarah
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]11 Sep 2012: n/a.
ProQuest document link
Abstract:
Countries' strategic oil reserves are intended to provide a cushion in times of supply disruptions in order to avoid oil-price spikes. Since it was established in 1973, the U.S. has used its Strategic Petroleum Reserves just three time in emergencies--during the first Gulf war; when Hurricane Katrina shut Gulf of Mexico production in 2005; and as part of a coordinated release by the IEA after the Libyan political crisis last year.
Full text: Oil has returned to the political agenda as Western governments grapple with soaring energy prices, but observers say a release of emergency oil stockpiles would have only a limited effect.
Prices of both U.S. benchmark West Texas Intermediate and Brent crude have soared around 15% since the start of July, turbo-charged by expectations of more monetary easing from the Federal Reserve this Thursday and geopolitical tension in the Middle East.
And in the U.S. over the past month, gasoline prices have risen uncomfortably near $4 a gallon--a level last reached in 2008 just before the recession hit and prices crashed. The level is generally viewed as a pinch point for consumers and has been accompanied by widely publicized comments from White House officials that the U.S. is again considering tapping its oil stocks.
The rising prices and mounting concerns over the economic impact have increased political pressure to bring them under control. With a U.S. election just two months away, speculation in the market has reached a fever pitch that the U.S. could act unilaterally to release emergency stocks or even push for a coordinated release.
During its meeting at the start of September, the Group of Seven leading industrialized economies appealed to the world's major oil producers to boost output, though the group stopped short of coordinating a release of emergency stockpiles. And governments outside of the U.S. have kept silent on whether they see a reserves release as necessary.
Analysts warn that while a stockpile release could cause an immediate drop of $5-$10 a barrel in the price of oil, the affect would likely be temporary.
"Any stock release in relation to prices is going to be short-lived, in essence because the measure is not there to replace supply volumes," said Harry Tchilinguirian, head of commodity strategy at BNP Paribas.
Many market participants cite ample supply and view the current rise in prices as largely unrelated to the fundamental situation. Saudi Arabia's oil minister, Ali al-Naimi, Monday spoke out against high oil prices, stressing that the market is adequately supplied. The International Energy Agency--the consumer organization charged with coordinating emergency oil releases--has also rejected the current need for additional supply.
Countries' strategic oil reserves are intended to provide a cushion in times of supply disruptions in order to avoid oil-price spikes.
Since it was established in 1973, the U.S. has used its Strategic Petroleum Reserves just three time in emergencies--during the first Gulf war; when Hurricane Katrina shut Gulf of Mexico production in 2005; and as part of a coordinated release by the IEA after the Libyan political crisis last year.
However, in recent years governments have increasingly seemed to view the release of oil stocks as a political expedient, rather than an emergency measure, analysts say.
The last time discussions of a reserves release made the headlines was back in March--just ahead of the French presidential election and when the price of Brent crude oil rose above $120 a barrel.
"There's a shifting paradigm in terms of how people see strategic stocks, and to be more precise, how the current U.S. administration sees strategic stocks," Mr. Tchiliguirian said.
A potential release is like a "Sword of Damocles" hanging over the market, Mr. Tchilinguirian added. Whether it will happen is uncertain, but if it does prices will fall.
However, the impact of a stock release on prices is difficult to predict and the more frequently it is used, the less effective it becomes as a tool, say analysts.
Last year's release of stockpiles to make up for a Libyan export shutdown during the country's civil war brought down prices only briefly. U.S. oil futures fell some 5% initially but bounced back higher within a week.
"In hindsight it looks like last year they mistimed the release because the impact wasn't lasting," said Ole Hansen, head of commodity strategy at Saxo Bank. "If you have to resort to strategic releases on annual basis then the impact of that method will wane over time," he added.
Still, if and when a release actually occurs may in the end be irrelevant. Many market watchers believe mere speculation over the possibility of a stock release is enough to help keep prices from rising even higher than their current level.
"The ongoing debate about the release of strategic reserves in the U.S. is preventing oil from making any stronger gains," said Commerzbank in a note published Monday.
Credit: By Sarah Kent
Subject: Petroleum industry; Oil reserves; Recessions; Consumer organizations
Location: United States--US Middle East
Company / organization: Name: BNP Paribas; NAICS: 522110; Name: International Energy Agency; NAICS: 928120; Name: Group of Seven; NAICS: 926110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 11, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1038949787
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1038949787?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Most U.S. Oil, Gas Production Back Online Post-Isaac
Author: Sider, Alison
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]11 Sep 2012: n/a.
ProQuest document link
Abstract:
Analysts say oil companies usually take several days to ramp up energy production after evacuations because they need to restaff far-off facilities and check the integrity of well bores, pipeline connections and the safety of the platforms to make sure the storm didn't cause any hidden damage.
Full text: Energy companies in the U.S. Gulf of Mexico have brought back nearly all of the region's offshore oil and gas production capacity in the wake of Hurricane Isaac.
Some 4% of the Gulf's oil production and 5% of the region's natural gas output remained offline, according to U.S. regulators, which noted that shut-in production has been somewhat slow to return because of damage to onshore processing facilities.
But economists and analysts said that Isaac's impact on the economy is expected to be little more than a blip, especially compared with the havoc wrought by big hurricanes like Katrina and Rita in the last decade.
Analysts say oil companies usually take several days to ramp up energy production after evacuations because they need to restaff far-off facilities and check the integrity of well bores, pipeline connections and the safety of the platforms to make sure the storm didn't cause any hidden damage.
Kyle Cooper, managing partner at Houston's IAF Energy Advisors, said companies are being more cautious about their U.S. Gulf facilities in the wake of the 2010 Deepwater Horizon disaster. "I've been told the inspection process is much more rigorous and much longer," he said.
The methodical process of bringing production back online hasn't had much impact on energy markets. At the height of the storm, Isaac pushed gasoline prices up between 10 and 15 cents, with the bulk of the impact felt in the U.S. Gulf region, said Chris Lafakis, senior economist at Moody's Analytics.
But the storm is likely no longer a factor in markets for refined products like gasoline and heating oil, he said.
Gene McGillian, an analyst and broker at Tradition Energy, said refineries were slower to restart than some might have expected. But markets are more concerned now with whether the Federal Reserve will decide to pour more money into the economy through a fresh round of bond-buying, or quantitative easing, than with Isaac's lingering impact.
Mr. Lafakis said Isaac didn't cause the same kind of infrastructure damage that cut into economic growth as storms such as Hurricanes Katrina and Rita in 2005, or Hurricane Gustav in 2008.
"I think all those storms were more damaging from an economic perspective. Those storms also produced more lasting damage in terms of energy prices and energy production," he said.
In all, IHS Global Insight estimates that Isaac is responsible for an estimated 13 million barrels of lost oil production and 28 billion cubic feet of lost gas production--together worth about $1.57 billion.
"In terms of real GDP growth this production loss would knock at most 0.16 percentage point off annualized real GDP growth," said IHS economist Gregory Draco. "It's a relatively small impact," he said.
Dozens of platforms and processing facilities were damaged by Hurricanes Katrina and Rita and remained evacuated for months after the storm. For example, in December of 2005, three months after Rita made landfall, 26.2% of oil production and 19.4% of natural gas production remained shut in.
By comparison, all but two of the 596 production platforms operating in the U.S. Gulf and all but one of the 76 rigs there have been restaffed since evacuating before Isaac.
While Katrina left an estimated $120 billion in infrastructure damage in its wake, Isaac is so far estimated to have caused about $1.5 to $3 billion in insured losses, with total losses likely about three or four times that amount, Mr. Draco said.
One reason for that is that Isaac, which made landfall as a Category 1 Hurricane and quickly weakened into a tropical storm, lacked the high wind speeds that caused damage in the past.
"It was a fairly large storm in terms of expanse but didn't pack a ton of power like previous hurricanes," RBC Capital Markets analyst Leo Mariani said.
The BSEE said shut-in production comes to about 57,439 barrels of oil a day and 213 million cubic feet a day of natural gas.
Credit: By Alison Sider
Subject: Economic forecasts; Petroleum production; Petroleum industry; Evacuations & rescues; Production capacity; Natural gas; Insured losses; Gasoline prices; Storm damage; Hurricanes; Gross Domestic Product--GDP; Economists
Company / organization: Name: Moodys Investors Service Inc; NAICS: 522110, 523930, 561450
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 11, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1038966289
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1038966289?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited wi thout permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Euro-Zone Output Rises, Oil Prices Push Inflation Up
Author: Hannon, Paul
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 Sep 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Industrial production in the 17 countries that share the euro rebounded in July, while higher energy prices led to a pickup in the annual rate of inflation in August making it less likely that the European Central Bank will cut its key interest rate.
The rise in industrial production was larger than expected, driven by a surge in the manufacture of capital goods. It was just large enough to offset a decline of the same magnitude in June, and is unlikely to herald a return to sustained growth as the production of consumer goods declined.
The rebound in factory output does suggest that the euro-zone economy may be more resilient than many economists had suspected, and continuing to draw strength from sales of factory equipment to large developing economies where business investment is stronger than in the currency area.
The European Union's official statistics agency Eurostat Wednesday said industrial production in the currency area was 0.6% higher than in June, but 2.3% lower than in July 2011. That was a stronger outcome than had been expected, with economists surveyed last week estimating that production rose by 0.1%.
The rebound was almost entirely due to a 2.4% increase in capital goods, led by a 1.3% increase in German output. That increase was partly offset by declines of 0.5% in the production of durable consumer goods, and a 0.6% decline in nondurable consumer goods.
That combination suggests that the pickup was led by exports to developing economies, and held back by weak domestic demand.
Figures released separately by national statistics agencies Wednesday indicated that the annual rate of inflation picked up in August, driven by rising oil prices.
That is bad news for the euro-zone economy, and makes it less likely that the European Central Bank will cut its key interest rate in coming months. Rising inflation damages the currency area's already anemic growth prospects, since it will likely weaken consumer spending already under pressure from rising unemployment and slow wage growth.
Germany's De Statis statistics agency Wednesday said consumer prices rose by 0.4% from July and by 2.1% from August 2011. It had previously estimated that prices rose 2.0% on the year. The annual price increase was driven by 7.6% rise in energy prices.
Spain's National Statistics Institute, or INE, said consumer prices rose by 2.7% from August 2011, a significant pickup from the 2.2% rate of inflation recorded in July. Higher gasoline prices were behind the surge.
The French national statistics office Insee said consumer prices in the euro zone's second largest economy rose by 2.1% in the 12 months to August, while energy prices rose 3.6% from July and 6.9% from August 2011.
Eurostat last month estimated that the annual rate of inflation across the euro zone as a whole picked up to 2.6% from 2.4% in July. Economists said the national figures released Wednesday make it likely that pickup will be confirmed when Eurostat releases its final estimate Friday.
"Taking these three releases together and pending the final Italian print, we continue to expect the final euro area August (inflation rate) to be unrevised from the preliminary estimate of 2.6%," said François Cabau, an economist at Barclays bank.
Write to Paul Hannon at
Credit: By Paul Hannon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 12, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1039102945
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1039102945?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Most U.S. Oil, Gas Production Back Online Post-Isaac
Author: Sider, Alison
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 Sep 2012: n/a.
ProQuest document link
Abstract:
Analysts say oil companies usually take several days to ramp up energy production after evacuations because they need to restaff far-off facilities and check the integrity of well bores, pipeline connections and the safety of the platforms to make sure the storm didn't cause any hidden damage.
Full text: Energy companies in the U.S. Gulf of Mexico have brought back nearly all of the region's offshore oil and gas production capacity in the wake of Hurricane Isaac.
Some 4% of the Gulf's oil production and 5% of the region's natural gas output remained offline, according to U.S. regulators, which noted that shut-in production has been somewhat slow to return because of damage to onshore processing facilities.
But economists and analysts said that Isaac's impact on the economy is expected to be little more than a blip, especially compared with the havoc wrought by big hurricanes like Katrina and Rita in the last decade.
Analysts say oil companies usually take several days to ramp up energy production after evacuations because they need to restaff far-off facilities and check the integrity of well bores, pipeline connections and the safety of the platforms to make sure the storm didn't cause any hidden damage.
Kyle Cooper, managing partner at Houston's IAF Energy Advisors, said companies are being more cautious about their U.S. Gulf facilities in the wake of the 2010 Deepwater Horizon disaster. "I've been told the inspection process is much more rigorous and much longer," he said.
The methodical process of bringing production back online hasn't had much impact on energy markets. At the height of the storm, Isaac pushed gasoline prices up between 10 and 15 cents, with the bulk of the impact felt in the U.S. Gulf region, said Chris Lafakis, senior economist at Moody's Analytics.
But the storm is likely no longer a factor in markets for refined products like gasoline and heating oil, he said.
Gene McGillian, an analyst and broker at Tradition Energy, said refineries were slower to restart than some might have expected. But markets are more concerned now with whether the Federal Reserve will decide to pour more money into the economy through a fresh round of bond-buying, or quantitative easing, than with Isaac's lingering impact.
Mr. Lafakis said Isaac didn't cause the same kind of infrastructure damage that cut into economic growth as storms such as Hurricanes Katrina and Rita in 2005, or Hurricane Gustav in 2008.
"I think all those storms were more damaging from an economic perspective. Those storms also produced more lasting damage in terms of energy prices and energy production," he said.
In all, IHS Global Insight estimates that Isaac is responsible for an estimated 13 million barrels of lost oil production and 28 billion cubic feet of lost gas production--together worth about $1.57 billion.
"In terms of real GDP growth this production loss would knock at most 0.16 percentage point off annualized real GDP growth," said IHS economist Gregory Daco. "It's a relatively small impact," he said.
Dozens of platforms and processing facilities were damaged by Hurricanes Katrina and Rita and remained evacuated for months after the storm. For example, in December of 2005, three months after Rita made landfall, 26.2% of oil production and 19.4% of natural gas production remained shut in.
By comparison, all but two of the 596 production platforms operating in the U.S. Gulf and all but one of the 76 rigs there have been restaffed since evacuating before Isaac.
While Katrina left an estimated $120 billion in infrastructure damage in its wake, Isaac is so far estimated to have caused about $1.5 to $3 billion in insured losses, with total losses likely about three or four times that amount, Mr. Daco said.
One reason for that is that Isaac, which made landfall as a Category 1 Hurricane and quickly weakened into a tropical storm, lacked the high wind speeds that caused damage in the past.
"It was a fairly large storm in terms of expanse but didn't pack a ton of power like previous hurricanes," RBC Capital Markets analyst Leo Mariani said.
The BSEE said shut-in production comes to about 57,439 barrels of oil a day and 213 million cubic feet a day of natural gas.
Corrections & Amplifications
An earlier version of this article incorrectly spelled IHS economist Gregory Daco's name as Draco.
Credit: By Alison Sider
Subject: Economic forecasts; Petroleum production; Petroleum industry; Evacuations & rescues; Production capacity; Natural gas; Insured losses; Gasoline prices; Storm damage; Hurricanes; Gross Domestic Product--GDP; Economists
Company / organization: Name: Moodys Investors Service Inc; NAICS: 522110, 523930, 561450
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 12, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1039118187
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1039118187?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited wi thout permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Shell Advances Oil-Rich Shale Drive With Deal
Author: Flynn, Alexis
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 Sep 2012: n/a.
ProQuest document link
Abstract:
LONDON--Royal Dutch Shell PLC's shift toward investing in oil-rich shale in the U.S. gained traction Wednesday with a $1.93 billion deal for a slice of Chesapeake Energy Corp.'s Permian Basin acreage in Texas.
Full text: LONDON--Royal Dutch Shell PLC's shift toward investing in oil-rich shale in the U.S. gained traction Wednesday with a $1.93 billion deal for a slice of Chesapeake Energy Corp.'s Permian Basin acreage in Texas.
Shell's move is part of a strategic shift in focus to "liquid-rich" shales, shale rock that contains higher values of oil instead of, or as well as, natural gas.
The Anglo-Dutch company said it would acquire 618,000 acres of land from Chesapeake with proven production of about 26,000 barrels of oil equivalent and which holds "significant growth potential" for future expansion.
The deal was part of a number of asset sales unveiled by Chesapeake, as the U.S. natural-gas producer continues its push to scale back its debt and concentrate on more-profitable oil production. In addition to the Shell deal, Chesapeake said it would sell other parts of its Permian Basin acreage to Chevron Corp. and Houston-based EnerVest Ltd. In all, Chesapeake raised about $6.9 billion from the Permian sales and other asset divestments Wednesday.
Recent advances in production techniques have helped to unlock an abundance of U.S. natural gas but also served to push U.S. gas prices to the lowest level in decades. Chesapeake, like many of its rivals, has been hurt by stubbornly low prices and moved to scale back gas production and spending.
However, Shell is better positioned than its rivals to benefit from low U.S. gas prices because it has proprietary technology that allows it to turn cheap natural gas into more expensive transport fuels like diesel. Its move into liquid-rich shale is seen by analysts as a way of shoring up its overall production portfolio.
Shell, one of the European oil firms to have most heavily invested in U.S. shale gas, said in February that it plans to produce about a quarter of a million barrels of oil equivalent from oil-rich shale by 2017.
Analysts said the Wednesday's deal, an unexpected addition to Shell's previously flagged capital spending, appeared to be an opportunistic response to Chesapeake's asset sale.
"It's a pretty decent deal," said Jason Gammel of Macquarie Equity Research, explaining that Shell has bought the type of liquid-rich acreage it said it planned to at a reasonable price.
"At around $2 billion, it's well within the range of what Shell can afford given its superior cash generation, and other divestments further down the track will offset the cost," said Mr. Gammel.
However, others said the move meant Shell was unlikely to return more money to shareholders any time soon.
The deal showed "the check book is out," said Investec's Stuart Joyner. "It's probably part of a growing acquisition trend that will cap the dividend," he added.
Saabira Chaudhuri contributed to this article.
Write to Alexis Flynn at
Credit: By Alexis Flynn
Subject: Natural gas; Petroleum industry; Divestments; Capital expenditures
Location: United States--US Permian Basin Texas
Company / organization: Name: Chevron Corp; NAICS: 324110, 211111; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Chesapeake Energy Corp; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 12, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1039123533
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1039123533?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Security Fears Cloud Libyan Oil Growth
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 Sep 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: LONDON--Heightened security fears after the killing of the U.S. envoy to Libya will further slow the return of foreign oil workers to the country, potentially threatening Libya's plans to boost oil output and grow its economy, according to oil company executives and consultants.
"It's a serious blow to Libya in terms of security," said Tarek Alwan, head of consultancy SOC Libya, which advises international companies investing in the North African nation. "It will delay the return of international oil companies and expatriates."
Oil companies were beefing up their security precautions on Wednesday in the aftermath of the killing of Ambassador Christopher Stevens and three other American diplomats by suspected religious extremists in the eastern city of Benghazi. One European oil company told visiting foreign staff to stay at their Tripoli hotels as a precautionary measure, according to a Libyan oil professional.
Following the ousting of Moammar Gadhafi last year, Libya has surprised analysts by bringing its oil production close to pre-revolution levels much faster than analysts had expected.
Foreign oil companies with production interests in Libya--such as Germany's Wintershall AG, Eni SpA of Italy and Total SA of France--have sent back expatriate workers.
But even before the U.S. envoy's killing Tuesday, attacks on Western interests in June and political protests this summer had already caused some oil-service companies and those with exploration concessions to revise their staffing plans for Libya.
That threatened the country's plans to boost output to 2.2 million barrels a day over the next three years, up 40% from present levels. Such an increase would be enough to overtake Angola to become the eighth largest producer in the Organization of the Petroleum Exporting Countries.
Back in July, Libyan production dropped by 200,000 barrels a day for a short period when protests over parliamentary elections disrupted operations at the country's largest terminal in el-Sider, in eastern Libya.
When it resumed its operations in May, BP PLC, which has by far the largest exploration plans in Libya, involving investment of $900 million, said the move would pave the way for a return of its expatriates. But three months on, a spokesman for the British company said it had yet to send its foreign staff back because the situation isn't considered safe enough.
Mr. Alwan said he knew of one international consultancy active in the oil sector had that pulled out completely from Benghazi, the capital of Libya's eastern region where the majority of the country's oil is produced, after a British diplomatic convoy was attacked in June.
When foreign staff return, Libyan oil managers say they are sometimes guarded by armored convoys when traveling to and from the airport. Restaurants where they plan to dine are checked first by security guards.
Once Libya accelerates plans to boost production, the reluctance of foreign oil workers to return could leave the country short of specialists in gas-injection equipment--needed to boost production from existing fields--and geologists and seismic workers needed for exploration of new fields, according to a Libyan oil manager at a large European oil operation.
Still, some Libyan officials are hopeful that the formation of a new government--expected to take place soon following elections in July--will lead to serious measures to improve security.
The tragedy "will be an incentive to be more dedicated about security," said Ahmed Shawki, head of marketing at the state-owned National Oil Co. "Other [oil-producing] countries had a worse situation," he added. "Look at Iraq."
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 12, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1039126638
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1039126638?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Security Fears Cloud Libyan Oil Growth
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Sep 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: LONDON--Heightened security fears after the killing of the U.S. envoy to Libya will further slow the return of foreign oil workers to the country, potentially threatening Libya's plans to boost oil output and grow its economy, according to oil company executives and consultants.
"It's a serious blow to Libya in terms of security," said Tarek Alwan, head of consultancy SOC Libya, which advises international companies investing in the North African nation. "It will delay the return of international oil companies and expatriates."
Oil companies were beefing up their security precautions on Wednesday in the aftermath of the killing of Ambassador Christopher Stevens and three other American diplomats by suspected religious extremists in the eastern city of Benghazi. One European oil company told visiting foreign staff to stay at their Tripoli hotels as a precautionary measure, according to a Libyan oil professional.
Following the ousting of Moammar Gadhafi last year, Libya has surprised analysts by bringing its oil production close to pre-revolution levels much faster than analysts had expected.
Foreign oil companies with production interests in Libya--such as Germany's Wintershall AG, Eni SpA of Italy and Total SA of France--have sent back expatriate workers.
But even before the U.S. envoy's killing Tuesday, attacks on Western interests in June and political protests this summer had already caused some oil-service companies and those with exploration concessions to revise their staffing plans for Libya.
That threatened the country's plans to boost output to 2.2 million barrels a day over the next three years, up 40% from present levels. Such an increase would be enough to overtake Angola to become the eighth largest producer in the Organization of the Petroleum Exporting Countries.
Back in July, Libyan production dropped by 200,000 barrels a day for a short period when protests over parliamentary elections disrupted operations at the country's largest terminal in el-Sider, in eastern Libya.
When it resumed its operations in May, BP PLC, which has by far the largest exploration plans in Libya, involving investment of $900 million, said the move would pave the way for a return of its expatriates. But three months on, a spokesman for the British company said it had yet to send its foreign staff back because the situation isn't considered safe enough.
Mr. Alwan said he knew of one international consultancy active in the oil sector had that pulled out completely from Benghazi, the capital of Libya's eastern region where the majority of the country's oil is produced, after a British diplomatic convoy was attacked in June.
When foreign staff return, Libyan oil managers say they are sometimes guarded by armored convoys when traveling to and from the airport. Restaurants where they plan to dine are checked first by security guards.
Once Libya accelerates plans to boost production, the reluctance of foreign oil workers to return could leave the country short of specialists in gas-injection equipment--needed to boost production from existing fields--and geologists and seismic workers needed for exploration of new fields, according to a Libyan oil manager at a large European oil operation.
Still, some Libyan officials are hopeful that the formation of a new government--expected to take place soon following elections in July--will lead to serious measures to improve security.
The tragedy "will be an incentive to be more dedicated about security," said Ahmed Shawki, head of marketing at the state-owned National Oil Co. "Other [oil-producing] countries had a worse situation," he added. "Look at Iraq."
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 13, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1039258010
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1039258010?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The Journal Report: Investing in Energy; Making Sense of the U.S. Oil Boom; Daniel Yergin talks about where it's coming from and what it will mean for the U.S.--and the world
Author: González, Ángel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Sep 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: The U.S. has long been seen as an energy hog. Thanks to hydraulic fracturing and deep water technology, it is now pumping more oil than it has in more than a decade, and its growing status as a crude producer is taking the world by storm.
In a conversation with The Wall Street Journal, Daniel Yergin, the energy industry's most prominent chronicler, talks about the American oil renaissance and its profound implications for the U.S. in a changing world. Mr. Yergin, currently vice chairman of IHS, a consulting firm in Englewood, Colo., is the author of "The Quest: Energy, Security, and the Remaking of the Modern World." His history of the oil industry, "The Prize," earned a Pulitzer Prize.
Here are edited excerpts from the conversation.
Energy Boom
WSJ: The U.S. is experiencing an unprecedented boom in oil production. How did this happen? Where is it taking us?
MR. YERGIN: The last time we had a presidential election, the U.S. was going to run out of oil. Since then, U.S. oil production has grown about 25%. As has happened in the past, technology has opened doors people didn't know were there or didn't think could be opened.
We expect to see tight-oil production [oil extracted from dense rock formations] grow dramatically over the rest of this decade. If you take what's happening in the U.S. and what's happening in Brazil and Canada, we're going to see a rebalancing of global oil flows. By the end of this decade, the Western Hemisphere may be importing very little oil from the Eastern Hemisphere.
WSJ: What difference does that make to U.S. oil consumers?
MR. YERGIN: Until a couple of years ago, people didn't focus on the economic impact of domestic energy production. Over one million jobs have been created by the development of unconventional gas. It makes the U.S. more competitive. You can see how the growing recognition of the economic impact is changing the political discourse about energy in the U.S., including, very clearly, in the presidential campaign. You would not have had this kind of discussion about energy in 2008.
[The new flow] changes the geopolitical perspective about energy. The U.S. is going to be relatively more self-sufficient and less dependent on foreign energy. We're already independent in terms of coal and natural gas; greater reliance on regional and domestic supplies increases our sense of security.
WSJ: Will this weaken the U.S.-Saudi relationship?
MR. YERGIN:We don't get a lot of our oil from the Middle East as it is today, but the strategic interests are very strong; obviously they're highlighted by continuing tension over Iran's nuclear program.
WSJ: What is China's role after the rebalancing of global oil?
MR. YERGIN: There was much heightened concern about energy security in China in the middle of the last decade; now there's much more self-confidence in their ability to buy what they need, a bigger appreciation of a flexible global market. But China clearly intends to have a bigger presence on the world stage; it is participating in antipiracy efforts off the coast of Somalia.
In some ways, China will become a partner--it will come to have a role in the security of the flow of energy. This can go on a very constructive, cooperative fashion, or it can go on in a fashion which creates greater risk. This is going to be one of the major focuses of the U.S.-China relationship.
WSJ: Critics have said the potential of unconventional fields--shale and tight oil--is exaggerated. Is this boom real?
MR. YERGIN: The proof is in the numbers. Shale gas (2% of U.S. gas production at the start of the century) is now almost 40% of U.S. gas production. And using this technology in new areas and established oil fields has really revitalized U.S. oil production.
WSJ: Can you put this boom in historical perspective?
MR. YERGIN: During the oil industry's first century, the U.S. was the world's dominant oil producer. During World War II, six out of seven barrels of oil used by the Allies came from the U.S. After World War II, the U.S. became a net importer of oil, and it was during the 1970s that it came to be a huge importer.
The last time we had a presidential campaign, the U.S. seemed set to continue along this path. The only question seemed to be: At what pace would imports grow? Since then, we've seen a big turnaround--from importing 60% of our crude in 2005 to 42% today. This is a big change, and that number will continue to go down as production increases and we continue to be more efficient in terms of the automobiles that we drive.
The U.S. is not going to go back to its position as the unquestioned major source of world oil. But our production will continue to grow. It is a great turnaround.
WSJ: What sparked it?
MR. YERGIN: The main thing here is the new ability to use in oil fields technologies that were developed for shale gas. It's technology and entrepreneurship, initiative, people having different ideas and acting on them.
WSJ: Can the U.S. boom be replicated elsewhere?
MR. YERGIN:It's what happens above ground in terms of policy, fiscal regime, infrastructure, logistics, pipelines. All those things are critical.
Our analysis suggests that China has a bigger unconventional gas potential than the U.S. But the timing will be different. In Argentina, it's not only the resource. There are very problematic government policies combined with great uncertainty about the fiscal regime and prices. The timing will be controlled not by the physical resource, but by the whole system above ground.
The Russians are very interested in tight oil in western Siberia, which could be a whole new renaissance for that area. But it's still early days.
Next Challenges
WSJ: What are the big challenges to U.S. development of unconventional energy?
MR. YERGIN: In the mid-Atlantic states there's still a lot of controversy about shale-gas development. Public acceptability is important. The environmental question needs to be addressed--it will be addressed. There's a much more intense focus on the water aspect than a few years ago. Also, transportation, pipelines and terminals in North America are struggling to catch up with the new production.
Mr. González is Houston bureau chief for Dow Jones Newswires. He can be reached at .
Credit: By Ángel González
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 13, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1039270613
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1039270613?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil and the Ghost of 1920
Author: Bussey, John
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Sep 2012: n/a.
ProQuest document link
Abstract:
The Jones Act, he says, boosts the economy by keeping roughly 74,000 maritime jobs in the U.S., helps national security by making a fleet available for the military, and assures homeland security by keeping transportation in the hands of U.S. citizens. [...]during a decline in refining capacity in the Northeast earlier this year, the U.S. Energy Information Administration said refined products from other locales might not easily reach the market.
Full text: The surge of new American shale oil heading down pipelines to the Gulf Coast will do two things:
It will depress oil prices at some points along the route, presenting a big opportunity for refineries and consumers to enjoy a windfall of cheaper fuel.
And it will test a protectionist shipping law that may impede these gains. You've probably never heard of the Jones Act. But it is either essential for national security or a vast barnacle on the hull of U.S. growth, depending on your point of view.
The Jones Act, known formally as the Merchant Marine Act of 1920, requires that any shipment from one U.S. port to another be carried on vessels built in the U.S., owned by U.S. citizens, and operated by a U.S. crew. The restrictions, in part, reflected Washington's post-World War I desire to have a guaranteed merchant marine.
But there's a price for that. The law can drive up the cost of coastal and inland shipping, push traffic onto rail and trucks, and create other dislocations.
"You have to ask what's good for the country," says Tom Allegretti, the CEO of American Waterways Operators, a trade group for ship owners. The Jones Act, he says, boosts the economy by keeping roughly 74,000 maritime jobs in the U.S., helps national security by making a fleet available for the military, and assures homeland security by keeping transportation in the hands of U.S. citizens.
"Opening that trade to foreign vessels and crews going through the internal arteries, going by [a] stadium in Pittsburgh? It would be mindless to repeal the law," he says.
"That's ludicrous," responds Sen. John McCain, a hawk on national security who has tried, and failed, to revoke the law. "Thousands of foreign ships put into our ports and don't present a problem to our national security." He says the law is just "protectionism" for the shipping industry and unions. "These arguments are laughable."
Some 40,000 vessels--tankers, freighters, ferries, tugs, barges--are governed by the Jones Act, many of them committed to specific runs, such as Alaska to California.
Ed Morse, an energy expert at Citigroup, says the Gulf Coast will soon be "super saturated" with oil from fields such as the Bakken in North Dakota and the Eagle Ford in Texas. Refineries in the Northeast want to replace their expensive imports with that oil. But, he says, the tight supply of Jones Act ships and their rates are "a problem."
John Demopoulos of Argus Media, which tracks pricing, estimates that foreign-flagged carriers could move oil from the Gulf Coast to the Northeast for about $1.20 a barrel, compared with $4 a barrel on U.S. ships.
Already the Northeast refineries are turning to more costly rail transport (sufficient West-East pipelines don't exist). Questions about ship availability also prompted Washington to waive the Jones Act last year when it released oil from the Strategic Petroleum Reserve and during operations after Hurricane Katrina. Authorities needed substantial and fast action, and they called in foreign ships.
Similarly, during a decline in refining capacity in the Northeast earlier this year, the U.S. Energy Information Administration said refined products from other locales might not easily reach the market.
"Vessel constraints" were top of mind, as were "Jones Act vessel rates, which seem to run two to three times foreign-flag ship rates," the agency said. "But since Jones Act vessels are not readily available, actual transportation costs might have to be considerably higher than current rates to bid scarce vessels away from their current business."
Jim Henry, president of the Transportation Institute, which represents ship owners, says "supply and demand will rule here." If the market needs more ships, "we'll construct new vessels to meet the demand. You can build ships in American shipyards very competitively."
But demand is already here. Rail lines are seeing a jump in requests to move oil to the East. As for the competitive pricing of America's protected shipyards, just ask Bob Kunkel. A marine engineer, he sought to start a business moving cargo on the East Coast on special container ships. He needed four new vessels.
Mr. Kunkel said the ships cost about $35 million to $50 million to build in Europe. But under the Jones Act, he'd need to buy American. The U.S. price: more than $100 million per ship. He shelved his business plans.
And there are other disjunctures: GE wanted to ship a big wind turbine to Kenya from the U.S., part of a potentially larger export deal. Its export financing from the U.S. required using an American ship. But GE says few Jones Act ships could handle the large load, and the cost was so high--20% of the cost of the turbine--that the company shipped the machine from its German plant instead.
Similarly, Hancock Lumber near Portland, Maine, has for years been trying to ship its product from Maine to Puerto Rico. The company says it can't find a U.S. ship to handle the business.
"We're still incurring the high cost of trucking the lumber from our saw mills to Florida and barging it from there," Hancock's Kevin Hynes says.
As for the oil that's gathering in the Gulf Coast, this bulletin: Recently, the newly commissioned tanker American Phoenix, built by BAE Systems in Mobile, Ala., sailed to Bayway, N.J., from Corpus Christi, Texas. It offloaded a valued cargo: Eagle Ford shale oil.
There was buzz in maritime circles about the load.
That's because the Phoenix and its rare delivery are--for the moment at least--an exception that proves the rule.
Write to John Bussey at ; follow him on Twitter .
Credit: By John Bussey
Subject: Shipping industry; Petroleum refineries; Pipelines; National security; Federal legislation
Location: United States--US California
People: McCain, John
Company / organization: Name: Citigroup Inc; NAICS: 551111; Name: American Waterways Operators; NAICS: 8139 20
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 13, 2012
column: The Business
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1039271117
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1039271117?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil and the Ghost of 1920
Author: Bussey, John
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]14 Sep 2012: n/a.
ProQuest document link
Abstract:
The Jones Act, he says, boosts the economy by keeping roughly 74,000 maritime jobs in the U.S., helps national security by making a fleet available for the military, and assures homeland security by keeping transportation in the hands of U.S. citizens. [...]during a decline in refining capacity in the Northeast earlier this year, the U.S. Energy Information Administration said refined products from other locales might not easily reach the market.
Full text: The surge of new American shale oil heading down pipelines to the Gulf Coast will do two things:
It will depress oil prices at points along the route, presenting a big opportunity for refineries and consumers to enjoy a windfall of cheaper fuel.
And it will test a protectionist shipping law that may impede these gains. Most people probably have never heard of the Jones Act. It is either essential for national security or a vast barnacle on the hull of U.S. growth, depending on your point of view.
The Jones Act, known formally as the Merchant Marine Act of 1920, requires that any shipment from one U.S. port to another be carried on vessels built in the U.S., owned by U.S. citizens, and operated by a U.S. crew. The restrictions, in part, reflected Washington's post-World War I desire to have a guaranteed merchant marine.
But there's a price for that. The law can drive up the cost of coastal and inland shipping, push traffic onto rail and trucks, and create other dislocations.
"You have to ask what's good for the country," says Tom Allegretti, the CEO of American Waterways Operators, a trade group for ship owners. The Jones Act, he says, boosts the economy by keeping roughly 74,000 maritime jobs in the U.S., helps national security by making a fleet available for the military, and assures homeland security by keeping transportation in the hands of U.S. citizens.
"Opening that trade to foreign vessels and crews going through the internal arteries, going by [a] stadium in Pittsburgh? It would be mindless to repeal the law," he says.
"That's ludicrous," responds Sen. John McCain, a hawk on national security who has tried, and failed, to revoke the law. "Thousands of foreign ships put into our ports and don't present a problem to our national security." He says the law is just "protectionism" for the shipping industry and unions. "These arguments are laughable."
Some 40,000 vessels--tankers, freighters, ferries, tugs, barges--are governed by the Jones Act, many of them committed to specific runs, such as Alaska to California.
Ed Morse, an energy expert at Citigroup, says the Gulf Coast will soon be "super saturated" with oil from fields such as the Bakken in North Dakota and the Eagle Ford in Texas. Refineries in the Northeast want to replace their expensive imports with that oil. But, he says, the tight supply of Jones Act ships and their rates are "a problem."
John Demopoulos of Argus Media, which tracks pricing, estimates that foreign-flagged carriers could move oil from the Gulf Coast to the Northeast for about $1.20 a barrel, compared with $4 a barrel on U.S. ships.
Already the Northeast refineries are turning to more costly rail transport (sufficient West-East pipelines don't exist). Questions about ship availability also prompted Washington to waive the Jones Act last year when it released oil from the Strategic Petroleum Reserve and during operations after Hurricane Katrina. Authorities needed substantial and fast action, and they called in foreign ships.
Similarly, during a decline in refining capacity in the Northeast earlier this year, the U.S. Energy Information Administration said refined products from other locales might not easily reach the market.
"Vessel constraints" were top of mind, as were "Jones Act vessel rates, which seem to run two to three times foreign-flag ship rates," the agency said. "But since Jones Act vessels are not readily available, actual transportation costs might have to be considerably higher than current rates to bid scarce vessels away from their current business."
Jim Henry, president of the Transportation Institute, which represents ship owners, says "supply and demand will rule here." If the market needs more ships, "we'll construct new vessels to meet the demand. You can build ships in American shipyards very competitively."
But demand is already here. Rail lines are seeing a jump in requests to move oil to the East. As for the competitive pricing of America's protected shipyards, just ask Bob Kunkel. A marine engineer, he sought to start a business moving cargo on the East Coast on special container ships. He needed four new vessels.
Mr. Kunkel said the ships cost about $35 million to $50 million to build in Europe. But under the Jones Act, he'd need to buy American. The U.S. price: more than $100 million per ship. He shelved his business plans.
And there are other disjunctures: GE wanted to ship a big wind turbine to Kenya from the U.S., part of a potentially larger export deal. Its export financing from the U.S. required using an American ship. But GE says few Jones Act ships could handle the large load, and the cost was so high--20% of the cost of the turbine--that the company shipped the machine from its German plant instead.
Similarly, Hancock Lumber near Portland, Maine, has for years been trying to ship its product from Maine to Puerto Rico. The company says it can't find a U.S. ship to handle the business.
"We're still incurring the high cost of trucking the lumber from our saw mills to Florida and barging it from there," Hancock's Kevin Hynes says.
As for the oil that's gathering in the Gulf Coast, this bulletin: Recently, the newly commissioned tanker American Phoenix, built by BAE Systems in Mobile, Ala., sailed to Bayway, N.J., from Corpus Christi, Texas. It offloaded a valued cargo: Eagle Ford shale oil.
There was buzz in maritime circles about the load.
That's because the Phoenix and its rare delivery are--for the moment at least--an exception that proves the rule.
Write to John Bussey at ; follow him on Twitter .
Credit: By John Bussey
Subject: Shipping industry; Petroleum refineries; Pipelines; National security; Federal legislation
Location: United States--US California
People: McCain, John
Company / organization: Name: Citigroup Inc; NAICS: 551111; Name: American Waterways Operators; NAICS: 8139 20
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 14, 2012
column: The Business
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1039303018
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1039303018?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The Business: Oil and the Ghost of 1920
Author: Bussey, John
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]14 Sep 2012: B.1.
ProQuest document link
Abstract:
The Jones Act, he says, boosts the economy by keeping roughly 74,000 maritime jobs in the U.S., helps national security by making a fleet available for the military, and assures homeland security by keeping transportation in the hands of U.S. citizens. [...]during a decline in refining capacity in the Northeast earlier this year, the U.S. Energy Information Administration said refined products from other locales might not easily reach the market.
Full text: The surge of new American shale oil heading down pipelines to the Gulf Coast will do two things:
It will depress oil prices at points along the route, presenting a big opportunity for refineries and consumers to enjoy a windfall of cheaper fuel.
And it will test a protectionist shipping law that may impede these gains. Most people probably have never heard of the Jones Act. It is either essential for national security or a vast barnacle on the hull of U.S. growth, depending on your point of view.
The Jones Act, known formally as the Merchant Marine Act of 1920, requires that any shipment from one U.S. port to another be carried on vessels built in the U.S., owned by U.S. citizens, and operated by a U.S. crew. The restrictions, in part, reflected Washington's post-World War I desire to have a guaranteed merchant marine.
But there's a price for that. The law can drive up the cost of coastal and inland shipping, push traffic onto rail and trucks, and create other dislocations.
"You have to ask what's good for the country," says Tom Allegretti, the CEO of American Waterways Operators, a trade group for ship owners. The Jones Act, he says, boosts the economy by keeping roughly 74,000 maritime jobs in the U.S., helps national security by making a fleet available for the military, and assures homeland security by keeping transportation in the hands of U.S. citizens.
"Opening that trade to foreign vessels and crews going through the internal arteries, going by [a] stadium in Pittsburgh? It would be mindless to repeal the law," he says.
"That's ludicrous," responds Sen. John McCain, a hawk on national security who has tried, and failed, to revoke the law. "Thousands of foreign ships put into our ports and don't present a problem to our national security." He says the law is just "protectionism" for the shipping industry and unions. "These arguments are laughable."
Some 40,000 vessels -- tankers, freighters, ferries, tugs, barges -- are governed by the Jones Act, many of them committed to specific runs, such as Alaska to California.
Ed Morse, an energy expert at Citigroup, says the Gulf Coast will soon be "super saturated" with oil from fields such as the Bakken in North Dakota and the Eagle Ford in Texas. Refineries in the Northeast want to replace their expensive imports with that oil. But, he says, the tight supply of Jones Act ships and their rates are "a problem."
John Demopoulos of Argus Media, which tracks pricing, estimates that foreign-flagged carriers could move oil from the Gulf Coast to the Northeast for about $1.20 a barrel, compared with $4 a barrel on U.S. ships.
Already the Northeast refineries are turning to more costly rail transport (sufficient West-East pipelines don't exist). Questions about ship availability also prompted Washington to waive the Jones Act last year when it released oil from the Strategic Petroleum Reserve and during operations after Hurricane Katrina. Authorities needed substantial and fast action, and they called in foreign ships.
Similarly, during a decline in refining capacity in the Northeast earlier this year, the U.S. Energy Information Administration said refined products from other locales might not easily reach the market.
"Vessel constraints" were top of mind, as were "Jones Act vessel rates, which seem to run two to three times foreign-flag ship rates," the agency said. "But since Jones Act vessels are not readily available, actual transportation costs might have to be considerably higher than current rates to bid scarce vessels away from their current business."
Jim Henry, president of the Transportation Institute, which represents ship owners, says "supply and demand will rule here." If the market needs more ships, "we'll construct new vessels to meet the demand. You can build ships in American shipyards very competitively."
But demand is already here. Rail lines are seeing a jump in requests to move oil to the East. As for the competitive pricing of America's protected shipyards, just ask Bob Kunkel. A marine engineer, he sought to start a business moving cargo on the East Coast on special container ships. He needed four new vessels.
Mr. Kunkel said the ships cost about $35 million to $50 million to build in Europe. But under the Jones Act, he'd need to buy American. The U.S. price: more than $100 million per ship. He shelved his business plans.
And there are other disjunctures: GE wanted to ship a big wind turbine to Kenya from the U.S., part of a potentially larger export deal. Its export financing from the U.S. required using an American ship. But GE says few Jones Act ships could handle the large load, and the cost was so high -- 20% of the cost of the turbine -- that the company shipped the machine from its German plant instead.
Similarly, Hancock Lumber near Portland, Maine, has for years been trying to ship its product from Maine to Puerto Rico. The company says it can't find a U.S. ship to handle the business.
"We're still incurring the high cost of trucking the lumber from our saw mills to Florida and barging it from there," Hancock's Kevin Hynes says.
As for the oil that's gathering in the Gulf Coast, this bulletin: Recently, the newly commissioned tanker American Phoenix, built by BAE Systems in Mobile, Ala., sailed to Bayway, N.J., from Corpus Christi, Texas. It offloaded a valued cargo: Eagle Ford shale oil.
There was buzz in maritime circles about the load.
That's because the Phoenix and its rare delivery are -- for the moment at least -- an exception that proves the rule.
Subscribe to WSJ:
Credit: By John Bussey
Subject: Shipping industry; Petroleum refineries; National security; Pipelines; Federal legislation
Location: United States--US California
People: McCain, John
Company / organization: Name: Citigroup Inc; NAICS: 551111; Name: American Waterways Operators; NAICS: 8139 20
Classification: 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.1
Publication year: 2012
Publication date: Sep 14, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1039330522
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1039330522?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Crude Oil Climbs To 4-Month High
Author: Strumpf, Dan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]14 Sep 2012: n/a.
ProQuest document link
Abstract:
The Fed's announcement on Thursday of a new bond-buying plan sent the dollar sliding for a second straight session, boosting the price of dollar-denominated commodities such as crude oil, as a weaker greenback makes these commodities more attractive to holders of other currencies.
Full text: Oil prices climbed to a four-month high and briefly topped a $100 a barrel in the wake of the Federal Reserve's latest plan to boost the U.S. economy.
The Fed's announcement on Thursday of a new bond-buying plan sent the dollar sliding for a second straight session, boosting the price of dollar-denominated commodities such as crude oil, as a weaker greenback makes these commodities more attractive to holders of other currencies.
Although many traders had expected the Fed to act on Thursday, the open-ended nature of the stimulus program took many market participants by surprise, which prompted more buying of oil on Friday.
"When the Fed is opening up their checkbook you can't get in the way," said Phil Flynn, analyst at Price Futures Group, a commodities brokerage in Chicago. The bond purchases, which inject money into the economy, are "extremely bullish and this is what popped us over 100 bucks."
Light, sweet crude for October delivery settled up 69 cents, or 0.7%, at $99 a barrel on the New York Mercantile Exchange, its highest finish since May 3. During intraday trading, oil prices rose as high as $100.42 a barrel.
Brent crude on the ICE Futures U.S. exchange rose 78 cents, or 0.7%, to $116.66 a barrel.
The Federal Reserve on Thursday announced a plan to buy $40 billion in mortgage-backed securities every month and said it would keep buying until the job market improves. The measure was seen as an unusually strong commitment by the central bank, whose previous bond-buying initiatives came with a specific end date.
Oil prices have risen 2.6% this month, largely on expectations that the Fed would act.
Even as oil prices have risen, demand for crude in the U.S. remains at its lowest levels in years as high unemployment keeps motorists off the road. The U.S. is the world's biggest consumer of crude.
Tensions in the Middle East have also kept crude prices elevated. Sanctions on Iran have kept the country's oil off the market and spurred worries of a possible military conflict or supply blockade. The recent spate of anti-American violence in the Arab world has also raised concerns.
"The market is wickedly strong, and a lot of that has to do with what's going on overseas," said Tony Rosado, broker at Dorado Energy Services in New York.
Front-month October reformulated gasoline blendstock, or RBOB, settled up 5.34 cents, or 1.8%, at $3.0156 a gallon. October heating oil rose 2.82 cents, or 0.9%, to $3.2395 a gallon.
Write to Dan Strumpf at
Credit: By Dan Strumpf
Subject: Petroleum industry; Crude oil prices
Location: United States--US Chicago Illinois
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 14, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1039434332
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1039434332?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
South Sudan Shakes Up Oil Sector
Author: Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]14 Sep 2012: n/a.
ProQuest document link
Abstract:
[...]a top official in South Sudan's national oil company said Exxon Mobil Corp. and Kuwait Petroleum Corp.'s Kufpec have "agreed in principal" to take over the other parts of the block long held by Total.
Full text: KAMPALA, Uganda--South Sudan Friday issued the biggest revision of its oil-exploration rights yet, seizing a giant license area long held by Total SA and slicing it into three as the newly independent nation attempts to hasten crude production and secure much-needed revenue.
The move is South Sudan's latest attempt to remove itself from oil deals signed before its secession from Sudan. It comes amid renewed tensions with its northern neighbor over who should control the oil-rich regions that straddle their border.
South Sudan said its decision was prompted in part by Total's failure to expedite exploration in the block, which it received more than 30 years ago.
International tenders for two parts of the roughly 74,000-square-mile block, located in South Sudan's restive Jonglei state, are expected to be issued in the next few days as the country seeks to attract more investors to its oil sector, said Information Minister Barnaba Benjamin. Total will keep one of the three sections.
"This is a new country, we are not bound by Total's agreement with Sudan" Mr. Benjamin said, adding that the government had already reached an agreement with Total to split the block.
South Sudan's oil law passed late last year stipulates that it isn't bound to deals agreed with the Khartoum government. Earlier this year, South Sudan renegotiated and signed a new contract with Petrodar, a consortium involving Chinese and Malaysian oil companies.
When asked whether South Sudan would compensate Total for the loss of two-thirds of its license, he suggested that it wouldn't, reiterating that the government wasn't party to the previous deal.
Mr. Benjamin said the government had lost patience with the French oil company, citing its lack of activity in the region even after the civil war ended in 2005. Total halted exploration activities in the block in the mid-1980s amid civil unrest between Sudan and South Sudan.
"We need new players now, we gave Total enough time to start work in the block, which they have not utilized" Mr. Benjamin said.
Total declined to comment on the issue.
Meanwhile, a top official in South Sudan's national oil company said Exxon Mobil Corp. and Kuwait Petroleum Corp.'s Kufpec have "agreed in principal" to take over the other parts of the block long held by Total.
"The block will be given to these three companies," he said. "They have accepted in principal." Exxon said in a statement that it doesn't comment on potential opportunities or commercial decisions.
The continuing standoff between the erstwhile foes prevents the South from exporting its oil through the North, meaning South Sudan is under pressure to reverse years of declining crude output with fresh discoveries.
Luke Patey, a researcher on Sudan for the Danish Institute of International Studies, said the shake-up of South Sudan's oil blocks is a way for the government to put pressure on Total to restart exploration.
"On the one hand, [Sudan's ruling party] the SPLM was upset that Total maintained contact and a contract with Khartoum during the civil war, and on the other hand, the SPLM realizes that Total is an oil major and can make things happen," Mr. Patey said.
"This is balancing those interests by keeping Total, but trying to put pressure on them to do something and reinvigorate the oil industry there."
South Sudan is encouraging more exploration activities to bolster its oil reserves, which are under threat after years of limited exploration due to the insecurity. The country's 350,000 barrels-a-day oil output is expected to plummet sharply in coming years, according to analysts.
Despite the end of formal hostilities, border areas like Jonglei state, where the block is located, remain unstable. The area remains infested with cattle rustlers and armed tribal militias, which South Sudan claims are backed by Sudan.
Since South Sudan's secession from Sudan in July last year, tensions over a range of disputes have remained. The armies of the two countries were embroiled in a spate of clashes along the poorly marked 1,120-mile-long border early this year, threatening to culminate in an all-out war.
The two countries face United Nations sanctions if they don't resolve their feud by Sept. 22.
In the most recent spat, South Sudan Friday accused Sudan of using war planes to violate its airspace in two oil-rich border states, as crunch talks aimed at resolving the border impasse continue in Ethiopia. Sudan denied the accusations. A deal in Ethiopia would allow land locked South Sudan to resume exporting its oil through Sudanese pipelines.
Transit crude shipments were halted in January, after the feud flared up over much the south should pay for using Sudanese pipelines and ports, throwing the economies of both states into turmoil.
Jenny Gross contributed to this article.
Credit: By Nicholas Bariyo
Subject: Petroleum industry; Genocide
Location: Uganda Sudan South Sudan
Company / organization: Name: Kuwait Petroleum Corp; NAICS: 211111; Name: Total SA; NAICS: 447190, 324110, 211111; Name: Exxon Mobil Corp; NAICS: 447110, 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 14, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1039434507
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1039434507?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The Journal Report: Investing in Energy; OPEC Looks to the Sun for Strength; Middle Eastern countries figure the less oil they consume, the more they have to export
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]14 Sep 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Middle Eastern members of OPEC are finally diversifying their energy base, pouring hundreds of billions of dollars into harnessing that other resource they feature in vast quantities: sunshine.
But it isn't what you think. The Saudis, Abu Dhabi and Iran aren't racing to burnish their green credentials by reducing their carbon footprints. They are investing in solar-power production mainly for one reason: to help them export even more oil and gas.
'Logical Focus'
Like most countries, members of the Organization of Petroleum Exporting Countries rely on crude oil and natural gas to generate their own electricity for air-conditioning and other power needs. This reduces the amount of hydrocarbons they can sell abroad. During the summer the Saudis burn as much as one million barrels a day of crude oil--about 10% of their current production--for their own power consumption.
In a speech last year in Poland, Saudi Arabia's oil minister, Ali al-Naimi, made it clear the world's largest oil exporter aspires to be a solar powerhouse. "Oil is not the kingdom's only energy wealth: Saudi Arabia is blessed with an abundance of sunshine," he said, adding that such realities "make solar energy a natural, logical focus."
But in a speech delivered in January, Mr. al-Naimi elaborated on his country's thinking behind its push for solar. "I see renewable energy sources as...helping to prolong our continued export of crude oil," he said.
Saudi Arabia tops the list of Middle Eastern nations with plans to use solar energy to supplement local electricity needs. The Saudis aim to fill one-third of their power needs with solar and are seeking investments of $109 billion by 2032 to accomplish that goal.
In North Africa, Algeria plans to rely on clean energy--the majority solar--for 40% of its needs in 2030. Algeria is also supporting the Desertec project--a consortium that seeks to tap solar and wind power in the Sahara as a new source of electricity for Europe. The estimated total cost of that project is a staggering $500 billion over 40 years.
Elsewhere in the Mideast, plans are more modest, with countries generally seeking to fill 5% to 10% of domestic electricity and water-desalinization needs with solar power. Dubai has plans for a $3.26 billion park of solar plants, due to start producing by the end of 2013. Abu Dhabi expects to start generating power later this year from what it has dubbed the world's largest concentrated-solar-power project. Concentrated solar power uses mirrors or lenses to direct a large area of sunlight onto a small area--potentially increasing the energy produced.
Adding Reach
In Iran, where local power contractor Ghods Niroo Engineering Co. is working on a new solar plant near Tehran, two large power plants already capture solar energy, including a 250-kilowatt facility in the desert region of Yazd. In addition to freeing up fossil fuel for export, solar also makes sense to power isolated regions.
Some oil producers are pondering how much they should bet on solar compared with other renewable energy sources. A mechanical expert at Iranian power-generation company Mapna Group who asked not to be named estimates the cost of producing solar energy at $3,000 a kilowatt, compared with $1,800 a kilowatt for wind.
Solar energy has potential, he says. "But it will be expensive."
Mr. Faucon is a reporter for Dow Jones Newswires in London. He can be reached at.
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 14, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1039434535
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1039434535?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Security Fears Cloud Libyan Oil Growth
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]14 Sep 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: LONDON--Heightened security fears after the killing of the U.S. envoy to Libya will further slow the return of foreign oil workers to the country, potentially threatening Libya's plans to boost oil output and grow its economy, according to oil company executives and consultants.
"It's a serious blow to Libya in terms of security," said Tarek Alwan, head of consultancy SOC Libya, which advises international companies investing in the North African nation. "It will delay the return of international oil companies and expatriates."
Oil companies were beefing up their security precautions on Wednesday in the aftermath of the killing of Ambassador Christopher Stevens and three other American diplomats by suspected religious extremists in the eastern city of Benghazi. One European oil company told visiting foreign staff to stay at their Tripoli hotels as a precautionary measure, according to a Libyan oil professional.
Following the ousting of Moammar Gadhafi last year, Libya has surprised analysts by bringing its oil production close to pre-revolution levels much faster than analysts had expected.
Foreign oil companies with production interests in Libya--such as Germany's Wintershall AG, Eni SpA of Italy and Total SA of France--have sent back expatriate workers.
But even before the U.S. envoy's killing Tuesday, attacks on Western interests in June and political protests this summer had already caused some oil-service companies and those with exploration concessions to revise their staffing plans for Libya.
That threatened the country's plans to boost output to 2.2 million barrels a day over the next three years, up 40% from present levels. Such an increase would be enough to overtake Angola to become the eighth largest producer in the Organization of the Petroleum Exporting Countries.
Back in July, Libyan production dropped by 200,000 barrels a day for a short period when protests over parliamentary elections disrupted operations at the country's largest terminal in el-Sider, in eastern Libya.
When it resumed its operations in May, BP PLC, which has by far the largest exploration plans in Libya, involving investment of $900 million, said the move would pave the way for a return of its expatriates. But three months on, a spokesman for the British company said it had yet to send its foreign staff back because the situation isn't considered safe enough.
Mr. Alwan said he knew of one international consultancy active in the oil sector had that pulled out completely from Benghazi, the capital of Libya's eastern region where the majority of the country's oil is produced, after a British diplomatic convoy was attacked in June.
When foreign staff return, Libyan oil managers say they are sometimes guarded by armored convoys when traveling to and from the airport. Restaurants where they plan to dine are checked first by security guards.
Once Libya accelerates plans to boost production, the reluctance of foreign oil workers to return could leave the country short of specialists in gas-injection equipment--needed to boost production from existing fields--and geologists and seismic workers needed for exploration of new fields, according to a Libyan oil manager at a large European oil operation.
Still, some Libyan officials are hopeful that the formation of a new government--expected to take place soon following elections in July--will lead to serious measures to improve security.
The tragedy "will be an incentive to be more dedicated about security," said Ahmed Shawki, head of marketing at the state-owned National Oil Co. "Other [oil-producing] countries had a worse situation," he added. "Look at Iraq."
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 14, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1039546422
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1039546422?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Crude Oil Climbs To 4-Month High
Author: Strumpf, Dan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]15 Sep 2012: B.4.
ProQuest document link
Abstract:
The Fed's announcement on Thursday of a new bond-buying plan sent the dollar sliding for a second consecutive session, boosting the price of dollar-denominated commodities such as crude oil, as a weaker greenback makes these commodities more attractive to holders of other currencies.
Full text: Oil prices climbed to a four-month high and briefly topped a $100 a barrel in the wake of the Federal Reserve's latest plan to boost the U.S. economy.
The Fed's announcement on Thursday of a new bond-buying plan sent the dollar sliding for a second consecutive session, boosting the price of dollar-denominated commodities such as crude oil, as a weaker greenback makes these commodities more attractive to holders of other currencies.
Although many traders had expected the Fed to act on Thursday, the open-ended nature of the stimulus program took many market participants by surprise, which prompted more buying of oil on Friday.
"When the Fed is opening up their checkbook you can't get in the way," said Phil Flynn, analyst at Price Futures Group, a commodities brokerage in Chicago. The bond purchases, which inject money into the economy, are "extremely bullish and this is what popped us over 100 bucks."
Light, sweet crude for October delivery settled up 69 cents, or 0.7%, at $99 a barrel on the New York Mercantile Exchange, its highest finish since May 3. During intraday trading, oil prices rose as high as $100.42 a barrel. Brent crude on the ICE Futures U.S. exchange rose 78 cents, or 0.7%, to $116.66 a barrel.
The Federal Reserve on Thursday announced a plan to buy $40 billion in mortgage-backed securities every month and said it would keep buying until the job market improves. The measure was seen as an unusually strong commitment by the central bank, whose previous bond-buying initiatives came with a specific end date.
Oil prices have risen 2.6% this month, largely on expectations that the Fed would act.
Even as oil prices have risen, demand for crude in the U.S. remains at its lowest levels in years as high unemployment keeps motorists off the road. The U.S. is the world's biggest consumer of crude.
Tensions in the Middle East also have kept crude prices elevated. Sanctions on Iran have kept the country's oil off the market and spurred worries of a possible military conflict or supply blockade. The recent spate of anti-American violence in the Arab world also has raised concerns.
"The market is wickedly strong, and a lot of that has to do with what's going on overseas," said Tony Rosado, broker at Dorado Energy Services in New York.
Front-month October reformulated gasoline blendstock, or RBOB, settled up 5.34 cents, or 1.8%, at $3.0156 a gallon.
October heating oil rose 2.82 cents, or 0.9%, to $3.2395 a gallon.
Subscribe to WSJ:
Credit: By Dan Strumpf
Subject: Futures trading; Commodity prices; Crude oil prices
Location: United States--US
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.4
Publication year: 2012
Publication date: Sep 15, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1039592014
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1039592014?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
A Treasure in California's Oil Patch
Author: Bary, Andrew
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]16 Sep 2012: WSJ.2.
ProQuest document link
Abstract:
Morgan Stanley energy analyst Evan Calio last week boosted his price targets on the refiners, arguing in a client note that "structural changes" should underpin industry profits and that companies are getting more shareholder friendly with dividends, amid ample profits and reduced capital expenditures.
Full text: U.S. oil refiners have been one of the strongest groups in the stock market this year with an average gain of more than 60%.
The industry is benefiting from strong earnings, higher dividends, restructuring moves and better long-term prospects.
Shares of Tesoro (TSO), the West Coast refiner, have risen about 75% this year to around $41, and there could further appreciation because the company is still valued cheaply based on its earnings.
Tesoro now trades for seven times projected 2012 earnings of $6 a share. The company initiated a 1% dividend earlier this summer and could substantially increase its payout in the coming years, according to Paul Cheng, a Barclays energy analyst.
"It's our favorite stock in the group," says Mr. Cheng. He figures Tesoro and other major independent refiners, including Marathon Petroleum, Phillips 66, Valero Energy and HollyFrontier, are capable of paying 4% dividends.
Only HollyFrontier now has a dividend above 4%. Mr. Cheng carries an "overweight" rating on Tesoro and an admittedly high price target of $84. A more realistic target might be $60, or 10 times estimated 2012 earnings.
Morgan Stanley energy analyst Evan Calio last week boosted his price targets on the refiners, arguing in a client note that "structural changes" should underpin industry profits and that companies are getting more shareholder friendly with dividends, amid ample profits and reduced capital expenditures.
A key structural change is the growth in domestic oil production, which has resulted in U.S. oil being priced at a discount to world prices. Many refiners are buying crude at advantageous prices and selling gasoline and other petroleum products at relatively high prices.
Tesoro pulled off a coup last month when it reached a deal to buy a refinery south of Los Angeles from BP for $1.175 billion.
By Tesoro's calculation, it paid virtually nothing for the refinery when considering the value of other assets in the deal, including pipelines and other energy infrastructure.
Tesoro CEO Gregory Goff called the deal "transformational" and "immediately and highly accretive" to earnings.
The transaction, if approved by antitrust regulators, will boost Tesoro's refining capacity by 40% to more than 900,000 barrels per day. Tesoro was uniquely positioned to execute the transaction because it already operated a refinery next to the BP facility and owns pipeline assets in California.
The company is coming off an excellent second quarter, when it earned $2.75 a share, above Wall Street estimates. And the current quarter could be just as strong, helped by a fire last month at a large Chevron refinery near San Francisco that cut production at the plant and boosted California gasoline prices.
A highly profitable Tesoro could be one of the better plays in the improving refinery industry.
Credit: By Andrew Bary
Subject: Petroleum refineries; Petroleum industry; Energy policy; Corporate profits; Earnings; Dividends
Location: United States--US California
Company / organization: Name: Morgan Stanley; NAICS: 523110, 523120, 523920; Name: Valero Energy Corp; NAICS: 486210, 324110, 211111
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Source details: Sunday Edition
Pages: WSJ.2
Publication year: 2012
Publication date: Sep 16, 2012
Section: Personal Finance
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1039669505
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1039669505?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
A Treasure in California's Oil Patch
Author: Bary, Andrew
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 Sep 2012: n/a. [Duplicate]
ProQuest document link
Abstract:
Morgan Stanley energy analyst Evan Calio last week boosted his price targets on the refiners, arguing in a client note that "structural changes" should underpin industry profits and that companies are getting more shareholder friendly with dividends, amid ample profits and reduced capital expenditures.
Full text: U.S. oil refiners have been one of the strongest groups in the stock market this year with an average gain of more than 60%.
The industry is benefiting from strong earnings, higher dividends, restructuring moves and better long-term prospects.
Shares of Tesoro (TSO), the West Coast refiner, have risen about 75% this year to around $41, and there could further appreciation because the company is still valued cheaply based on its earnings.
Tesoro now trades for seven times projected 2012 earnings of $6 a share. The company initiated a 1% dividend earlier this summer and could substantially increase its payout in the coming years, according to Paul Cheng, a Barclays energy analyst.
"It's our favorite stock in the group," says Mr. Cheng. He figures Tesoro and other major independent refiners, including Marathon Petroleum, Phillips 66, Valero Energy and HollyFrontier, are capable of paying 4% dividends.
Only HollyFrontier now has a dividend above 4%. Mr. Cheng carries an "overweight" rating on Tesoro and an admittedly high price target of $84. A more realistic target might be $60, or 10 times estimated 2012 earnings.
Morgan Stanley energy analyst Evan Calio last week boosted his price targets on the refiners, arguing in a client note that "structural changes" should underpin industry profits and that companies are getting more shareholder friendly with dividends, amid ample profits and reduced capital expenditures.
A key structural change is the growth in domestic oil production, which has resulted in U.S. oil being priced at a discount to world prices. Many refiners are buying crude at advantageous prices and selling gasoline and other petroleum products at relatively high prices.
Tesoro pulled off a coup last month when it reached a deal to buy a refinery south of Los Angeles from BP for $1.175 billion.
By Tesoro's calculation, it paid virtually nothing for the refinery when considering the value of other assets in the deal, including pipelines and other energy infrastructure.
Tesoro CEO Gregory Goff called the deal "transformational" and "immediately and highly accretive" to earnings.
The transaction, if approved by antitrust regulators, will boost Tesoro's refining capacity by 40% to more than 900,000 barrels per day. Tesoro was uniquely positioned to execute the transaction because it already operated a refinery next to the BP facility and owns pipeline assets in California.
The company is coming off an excellent second quarter, when it earned $2.75 a share, above Wall Street estimates. And the current quarter could be just as strong, helped by a fire last month at a large Chevron refinery near San Francisco that cut production at the plant and boosted California gasoline prices.
A highly profitable Tesoro could be one of the better plays in the improving refinery industry.
Andrew Bary is associate editor of Barron's. For more stories, see.
Credit: By Andrew Bary
Subject: Petroleum refineries; Petroleum industry; Energy policy; Corporate profits; Earnings; Dividends
Location: United States--US California
Company / organization: Name: Morgan Stanley; NAICS: 523110, 523120, 523920; Name: Valero Energy Corp; NAICS: 486210, 324110, 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 16, 2012
Section: Personal Finance
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1039670154
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1039670154?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The Journal Report: Investing in Energy; OPEC Looks to the Sun for Strength; Middle Eastern countries figure the less oil they consume, the more they have to export
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 Sep 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Middle Eastern members of OPEC are finally diversifying their energy base, pouring hundreds of billions of dollars into harnessing that other resource they feature in vast quantities: sunshine.
But it isn't what you think. The Saudis, Abu Dhabi and Iran aren't racing to burnish their green credentials by reducing their carbon footprints. They are investing in solar-power production mainly for one reason: to help them export even more oil and gas.
'Logical Focus'
Like most countries, members of the Organization of Petroleum Exporting Countries rely on crude oil and natural gas to generate their own electricity for air-conditioning and other power needs. This reduces the amount of hydrocarbons they can sell abroad. During the summer the Saudis burn as much as one million barrels a day of crude oil--about 10% of their current production--for their own power consumption.
In a speech last year in Poland, Saudi Arabia's oil minister, Ali al-Naimi, made it clear the world's largest oil exporter aspires to be a solar powerhouse. "Oil is not the kingdom's only energy wealth: Saudi Arabia is blessed with an abundance of sunshine," he said, adding that such realities "make solar energy a natural, logical focus."
But in a speech delivered in January, Mr. al-Naimi elaborated on his country's thinking behind its push for solar. "I see renewable energy sources as...helping to prolong our continued export of crude oil," he said.
Saudi Arabia tops the list of Middle Eastern nations with plans to use solar energy to supplement local electricity needs. The Saudis aim to fill one-third of their power needs with solar and are seeking investments of $109 billion by 2032 to accomplish that goal.
In North Africa, Algeria plans to rely on clean energy--the majority solar--for 40% of its needs in 2030. Algeria is also supporting the Desertec project--a consortium that seeks to tap solar and wind power in the Sahara as a new source of electricity for Europe. The estimated total cost of that project is a staggering $500 billion over 40 years.
Elsewhere in the Mideast, plans are more modest, with countries generally seeking to fill 5% to 10% of domestic electricity and water-desalinization needs with solar power. Dubai has plans for a $3.26 billion park of solar plants, due to start producing by the end of 2013. Abu Dhabi expects to start generating power later this year from what it has dubbed the world's largest concentrated-solar-power project. Concentrated solar power uses mirrors or lenses to direct a large area of sunlight onto a small area--potentially increasing the energy produced.
Adding Reach
In Iran, where local power contractor Ghods Niroo Engineering Co. is working on a new solar plant near Tehran, two large power plants already capture solar energy, including a 250-kilowatt facility in the desert region of Yazd. In addition to freeing up fossil fuel for export, solar also makes sense to power isolated regions.
Some oil producers are pondering how much they should bet on solar compared with other renewable energy sources. A mechanical expert at Iranian power-generation company Mapna Group who asked not to be named estimates the cost of producing solar energy at $3,000 a kilowatt, compared with $1,800 a kilowatt for wind.
Solar energy has potential, he says. "But it will be expensive."
Mr. Faucon is a reporter for Dow Jones Newswires in London. He can be reached at .
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 16, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1039768788
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1039768788?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Investing in Energy (A Special Report) --- OPEC Looks to the Sun for Strength: Middle Eastern countries figure the less oil they consume, the more they have to export
Author: Faucon, Benoit
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]17 Sep 2012: R.5.
ProQuest document link
Abstract:
Like most countries, members of the Organization of Petroleum Exporting Countries rely on crude oil and natural gas to generate their own electricity for air-conditioning and other power needs.
Full text: Middle Eastern members of OPEC are finally diversifying their energy base, pouring hundreds of billions of dollars into harnessing that other resource they feature in vast quantities: sunshine.
But it isn't what you think. The Saudis, Abu Dhabi and Iran aren't racing to burnish their green credentials by reducing their carbon footprints. They are investing in solar-power production mainly for one reason: to help them export even more oil and gas.
Like most countries, members of the Organization of Petroleum Exporting Countries rely on crude oil and natural gas to generate their own electricity for air-conditioning and other power needs. This reduces the amount of hydrocarbons they can sell abroad. During the summer the Saudis burn as much as one million barrels a day of crude oil -- about 10% of their current production -- for their own power consumption.
In a speech last year in Poland, Saudi Arabia's oil minister, Ali al-Naimi, made it clear the world's largest oil exporter aspires to be a solar powerhouse. "Oil is not the kingdom's only energy wealth: Saudi Arabia is blessed with an abundance of sunshine," he said, adding that such realities "make solar energy a natural, logical focus."
But in a speech delivered in January, Mr. al-Naimi elaborated on his country's thinking behind its push for solar. "I see renewable energy sources as . . . helping to prolong our continued export of crude oil," he said.
Saudi Arabia tops the list of Middle Eastern nations with plans to use solar energy to supplement local electricity needs. The Saudis aim to fill one-third of their power needs with solar and are seeking investments of $109 billion by 2032 to accomplish that goal.
In North Africa, Algeria plans to rely on clean energy -- the majority solar -- for 40% of its needs in 2030. Algeria is also supporting the Desertec project -- a consortium that seeks to tap solar and wind power in the Sahara as a new source of electricity for Europe. The estimated total cost of that project is a staggering $500 billion over 40 years.
Elsewhere in the Mideast, plans are more modest, with countries generally seeking to fill 5% to 10% of domestic electricity and water-desalinization needs with solar power. Dubai has plans for a $3.26 billion park of solar plants, due to start producing by the end of 2013. Abu Dhabi expects to start generating power later this year from what it has dubbed the world's largest concentrated-solar-power project. Concentrated solar power uses mirrors or lenses to direct a large area of sunlight onto a small area -- potentially increasing the energy produced.
In Iran, where local power contractor Ghods Niroo Engineering Co. is working on a new solar plant near Tehran, two large power plants already capture solar energy, including a 250-kilowatt facility in the desert region of Yazd. In addition to freeing up fossil fuel for export, solar also makes sense to power isolated regions.
Some oil producers are pondering how much they should bet on solar compared with other renewable energy sources. A mechanical expert at Iranian power-generation company Mapna Group who asked not to be named estimates the cost of producing solar energy at $3,000 a kilowatt, compared with $1,800 a kilowatt for wind.
Solar energy has potential, he says. "But it will be expensive."
---
Mr. Faucon is a reporter for Dow Jones Newswires in London. He can be reached at benoit.faucon@wsj.com.
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Credit: By Benoit Faucon
Subject: Alternative energy sources; Petroleum industry; Series & special reports; Solar energy; Energy policy
Location: Iran Abu Dhabi United Arab Emirates Saudi Arabia
People: Naimi, Ali I
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910
Classification: 1520: Energy policy; 9178: Middle East
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: R.5
Publication year: 2012
Publication date: Sep 17, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: Feature
ProQuest document ID: 1039874121
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1039874121?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Shell Delays Quest to Strike Arctic Oil
Author: González, Ángel; Winkley, Ben
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Sep 2012: n/a.
ProQuest document link
Abstract:
LONDON--Oil and gas company Royal Dutch Shell PLC said Monday it suspended plans to drill in the Arctic region during 2012 after damage to safety equipment.
Full text: Royal Dutch Shell PLC said Monday it would push back to next year its plans to find oil in Alaska's Arctic offshore after a key oil-containment system was damaged during a test.
The delay is a major setback for the Anglo-Dutch oil giant, which has spent six years and $4.5 billion in a bid to open up one of the world's last great oil frontiers, which geologists say contains vast amounts of oil and gas.
Shell's effort had been hampered by delays due to regulatory issues, mishaps and persistent sea ice, but it had expected to drill wells to depths where they might strike oil before harsh weather set in between late September and late October. Now, it will have to focus solely on drilling the initial stages of the exploration wells, known as "top holes," reaching a limited depth. Shell said it would concentrate on drilling as many of these as possible before winter ice takes hold.
Analysts with Tudor, Pickering, Holt & Co. said the delay is "disappointing news," as the drilling campaign "was a landmark event and major potential catalyst for the stock this year." Shell's American depositary shares were up 0.4% at $72.83 late afternoon Monday in New York.
Marvin Odum, the head of Shell's exploration and production operations in the Americas, said in an interview that "it's a disappointment that we won't be drilling into hydrocarbons this year." He added, however, the company has been successful at building the basis of a multiyear exploration program and expectations for its outcome haven't changed.
Shell was expecting to receive a permit from U.S. authorities to drill wells all the way to oil-bearing depths once its Arctic Containment System, a newly designed set of safety equipment designed to contain oil spills, was successfully tested. But during a final test, a containment dome, designed to be put on top of a leaking well, was damaged, it said. "It is clear that some days will be required to repair and fully assess dome readiness," Shell said in a statement. "We are disappointed that the dome has not yet met our stringent acceptance standards."
Mr. Odum said Shell would seek to make sure the containment system works as soon as possible, even if it isn't intended for use this year.
Shell had begun drilling the top hole of a Chukchi Sea well Sept. 9 but the following day had to suspend operations to move its drilling vessel away from encroaching sea ice. The company said it expects to resume drilling the top hole there in the coming days. Another drill ship in the Beaufort Sea is expected to begin drilling a top hole after local inhabitants finish the fall whale hunt and the company receives a permit from U.S. regulators.
Shell, which has assembled a fleet of more than 20 vessels for its Arctic campaign, says that the wells it plans to drill off Alaska don't present major technical complexities, since they are in shallow water and have normal pressures. The harsh environment, the danger of sea ice and the remoteness of the area present major logistical challenges, however. There has also been fierce resistance from environmentalists who argue that the oil industry isn't ready to safely drill in the Arctic.
Greenpeace said that the delay was a victory for environmentalists opposing Arctic drilling. "As one of the world's biggest oil companies, Shell was set to lead the pack and spark the Arctic oil rush. But a few hours ago they admitted defeat for 2012," Greenpeace said on its website.
Some of Shell's supporters said Monday the company this time around is simply the victim of uncontrollable circumstances, and not U.S. regulators.
"We're not blaming the administration," said Robert Dillon, spokesman for Sen. Lisa Murkowski (R., Alaska), Shell's most vocal supporter on Capitol Hill. "Certainly there were delays in the past...but what we've got right now is an issue of the clock. Nobody's pointing a finger here."
BP PLC in July shelved drilling plans for the Beaufort Sea after deciding it couldn't meet the strict standards it pledged to follow in the wake on the 2010 Deepwater Horizon spill in the U.S. Gulf of Mexico. In the Russian Arctic, the giant Shtokman natural-gas exploration project has been delayed indefinitely amid doubts over its economic viability.
Tennille Tracy contributed to this article.
Write to Ben Winkley at
Credit: By Ángel González And Ben Winkley
Subject: Petroleum industry; Drilling; Natural gas
Location: Arctic region Alaska Beaufort Sea Chukchi Sea
Company / organization: Name: BP PLC; NAICS: 447110, 324110, 211111; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 17, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1039874758
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1039874758?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Looks Ready to Part Ways With Stock Market
Author: Gross, Jenny
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Sep 2012: n/a.
ProQuest document link
Abstract:
[...]prices have tended to move in the same direction during periods where risks are significantly rising or falling, such as during the 2008 financial crisis.
Full text: Global stock and oil markets may soon be going their separate ways after a one-month period of moving in lockstep, as slowing demand for oil contrasts with equity-market excitement about the U.S. Federal Reserve's stimulus program.
After the Fed on Thursday announced fresh measures to help the U.S. economy, both the Standard & Poor's 500-stock index and oil markets jumped more than 1%. Those moves went according to recent trends. There has been a 92.4% correlation rate between the S&P 500 and U.S. crude since late August, according to CQG data.
But oil-market enthusiasm could soon fade because of a negative outlook on global demand and high inventory levels. And if it doesn't, persistently high oil prices would likely eat into company profits and be detrimental to global stocks, analysts and investors said.
In order for oil prices to keep up with the momentum in equities, economic indicators are going to have to signal an improved demand picture, said Anthony Beryl, president of Beryl Investment Group in Palm Beach Gardens, Fla.
"Words are great, stimulus is great, but traders want to see the results," Mr. Beryl said. "If you start to get industrial production moving up, then the underlying demand for crude will go up along with that. If you don't get that increase of growth from the Western countries, you're going to see crude go sideways or down."
Crude-oil prices on the New York Mercantile Exchange are up 8.7% from Aug. 1, settling at $96.62 a barrel Monday, while Brent crude is up 7.7% over that period to $113.79 a barrel. Both dropped more than 2% Monday.
Meanwhile, the S&P 500 was up 6% from Aug. 1 as of Monday afternoon New York trading.
The relationship between crude oil and stocks hasn't been consistent over the years.
Before 2007, oil prices only fleetingly moved in sync with shares. From 2008 to 2010, the two markets moved in the same direction during certain time periods.
One theory is that as economic conditions either improve or worsen, earnings for companies increase or decrease and demand for oil rises or falls accordingly. Therefore, prices have tended to move in the same direction during periods where risks are significantly rising or falling, such as during the 2008 financial crisis.
But on the flip side, higher oil prices can cause global stock prices to decline because it raises costs for companies, hurting profits.
If U.S. crude prices approach $105 to $110 a barrel and Brent approaches $125, stocks would have trouble moving higher, said Michael Lewis, head of commodities research at Deutsche Bank.
"The dangers of the correlation flipping increase with oil moving higher," Mr. Lewis said, because high energy prices can start stifling global growth.
Mr. Lewis said, however, that the close correlation could stay intact in the coming months if oil doesn't hit those levels.
Ole Hansen, head of commodity strategy at Denmark-based Saxo Bank, said the dynamics in the oil market don't support the high trading range and that when the excitement from the stimulus measures fades, the focus in the markets could easily shift toward the weak demand picture amid few major supply disruptions.
The U.S. Department of Energy reported Wednesday that domestic crude-oil inventories rose in the previous week by two million barrels to 359.1 million barrels, far surpassing earlier estimates by the American Petroleum Institute.
OPEC, in its August report, said a difficult economic environment could significantly dent expectations for oil demand growth next year.
John Kilduff, a founding partner of Again Capital, said that while equities have more room to climb after the Fed's stimulus announcement, oil prices could struggle, especially with signs of slowing global growth. Traders should be wary of looking too closely to the S&P 500 for cues on oil direction.
"With the various economies mostly contracting, particularly in Europe, and production for oil continuing to rise, [crude] has a more difficult landscape ahead, not only to go higher as the stock market looks like it will, but even to maintain these levels," Mr. Kilduff said.
Credit: By Jenny Gross
Subject: Supply & demand; Petroleum industry; Stocks; Economic indicators; Crude oil prices
Location: United States--US
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210; Name: Standard & Poors Corp; NAICS: 541519, 511120, 523999, 561450
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 17, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1040709416
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1040709416?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Brazil Agency Fines Chevron $17.3 Million for Oil Spill
Author: Fick, Jeff
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Sep 2012: n/a.
ProQuest document link
Abstract:
RIO DE JANEIRO--Brazil's National Petroleum Agency, or ANP, issued Chevron Corp. a 35.1 million Brazilian reais ($17.3 million) fine for its role in an offshore oil spill last year, ANP Director Magda Chambriard said Monday.
Full text: RIO DE JANEIRO--Brazil's National Petroleum Agency, or ANP, issued Chevron Corp. a 35.1 million Brazilian reais ($17.3 million) fine for its role in an offshore oil spill last year, ANP Director Magda Chambriard said Monday.
The fine, which covers 24 of the 25 sanctions the ANP issued Chevron earlier this year, was handed down last week, Ms. Chambriard said on the sidelines of the Rio Oil & Gas 2012 conference.
The fine could be increased by up to an additional two million reais when a decision is made on the remaining infraction, Ms. Chambriard said. The remaining infraction covers abandonment of a well and should be decided in two months, she said.
A drilling accident last November at the Chevron-operated Frade offshore oil field caused an estimated 3,700 barrels of crude to seep into the Atlantic Ocean from cracks in the seabed. Chevron and drilling company Transocean Ltd., which was absolved of any wrongdoing by the ANP, also face civil and criminal lawsuits related to the spill.
In addition, the two companies are appealing an operating ban imposed by a Brazilian court in late July. The ANP has also appealed the ban, claiming that it would cause safety issues and economic harm as well as usurp the regulator's jurisdiction over the local oil industry. Brazil's Supreme Court last week denied the ANP's appeal, but Ms. Chambriard said that the agency would appeal the ruling.
Chevron halted operations at Frade in March, when a second series of oil seeps was discovered. Despite troubles at Frade, the ANP has said that it would discuss restarting output at the field with Chevron.
Credit: By Jeff Fick
Subject: Oil spills; Petroleum industry
Location: Brazil Atlantic Ocean
Company / organization: Name: Transocean Ltd; NAICS: 213111, 213112
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 17, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1040709436
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1040709436?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Crude Oil's Quick Fall Leaves Trail of Queries
Author: DiColo, Jerry A; Cui, Carolyn
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Sep 2012: n/a.
ProQuest document link
Abstract:
Commodity Futures Trading Commission member Bart Chilton said the CFTC is seeking more information.
Full text: A plunge in crude-oil prices rippled through financial markets, leaving traders confused and regulators seeking answers.
Oil prices dropped more than $3 in less than a minute late in the trading day on Monday, just as trading volume spiked. The move also dragged down prices of gold, copper and even the euro.
"Traders were looking like deer in the headlights," said Peter Donovan, a floor trader at Vantage Trading on the New York Mercantile Exchange. "I called four different desks, and they all said, 'we don't know.' "
The move came at about 1:54 p.m. EDT. West Texas Intermediate crude for October delivery plummeted to $94.83 a barrel on the Nymex, from more than $98. Some 12,500 contracts changed hands in a minute, compared with less than 500 a minute previously.
The move sparked talk of an erroneous trade--called a "fat-finger" error in industry parlance--or a computer algorithm gone awry. Traders and regulators have been on alert in recent months after a series of technology glitches roiled financial markets. Commodity Futures Trading Commission member Bart Chilton said the CFTC is seeking more information. "Superfast price moves, like we saw in oil, put us on high alert," Mr. Chilton said in an email.
Still, the slide didn't have the usual hallmarks of a fat-finger error, said Eric Hunsader of Nanex, which studies market data. For one, while the steepest part of the slide occurred over one minute, the overall decline was longer.
Nymex owner CME Group Inc. said it saw no technical trading issues.
West Texas Intermediate, or WTI, prices pared some losses to settle down $2.38, or 2.4%, at $96.62 a barrel. Brent crude also slumped, settling down $2.87, or 2.5%, to $113.79.
Some analysts blamed the price plunge on trading around the expiration of the October WTI option contracts on Monday. Traders often use options to hedge, or offset, their risks in the market.
As of Friday, about 11,000 contracts of call options with a strike price of $100 remained outstanding, "a big exposure" for the last day, said Stephen Schork, editor of the Schork Report, an energy newsletter. A call is the right, but not the obligation, to buy a contract.
Prices got close to $100 earlier in the day but lost steam. As the October options expired, some traders may have closed positions to keep their books in balance. Volume was low because of the Jewish holidays, he said. "It created a vacuum and it just sucked prices down," Mr. Schork said.
Dan Strumpf contributed to this article.
Write to Jerry A. DiColo at and Carolyn Cui at
Credit: By Jerry A. DiColo and Carolyn Cui
Subject: Prices; Investment policy
Company / organization: Name: CME Group; NAICS: 523210; Name: Commodity Futures Trading Commission; NAICS: 926140, 926150; Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 18, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1040729166
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1040729166?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Crude Oil's Quick Fall Leaves Trail Of Queries
Author: DiColo, Jerry A; Cui, Carolyn
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]18 Sep 2012: C.4. [Duplicate]
ProQuest document link
Abstract:
Commodity Futures Trading Commission member Bart Chilton said the CFTC is seeking more information.
Full text: A plunge in crude-oil prices rippled through financial markets, leaving traders confused and regulators seeking answers.
Oil prices dropped more than $3 in less than a minute late in the trading day on Monday, just as trading volume spiked. The move dragged down prices of gold, copper and even the euro.
"Traders were looking like deer in the headlights," said Peter Donovan, a floor trader at Vantage Trading on the New York Mercantile Exchange. "I called four different desks, and they all said, 'we don't know.'"
The move came at about 1:54 p.m. EDT. West Texas Intermediate crude for October delivery plummeted to $94.83 a barrel on the Nymex, from more than $98. Some 12,500 contracts changed hands in a minute, compared with less than 500 a minute previously.
The move sparked talk of an erroneous trade -- called a "fat-finger" error in industry parlance -- or a computer algorithm gone awry. Traders and regulators have been on alert in recent months after a series of technology glitches roiled financial markets. Commodity Futures Trading Commission member Bart Chilton said the CFTC is seeking more information. "Superfast price moves, like we saw in oil, put us on high alert," Mr. Chilton said in an email.
Still, the slide didn't have the usual hallmarks of a fat-finger error, said Eric Hunsader of Nanex, which studies market data. For one, while the steepest part of the slide occurred over one minute, the overall decline was longer. Nymex owner CME Group Inc. said it saw no technical issues. West Texas Intermediate, or WTI, pared some losses to settle down $2.38, or 2.4%, at $96.62 a barrel.
Some analysts blamed the price plunge on trading around the expiration of the October WTI option contracts on Monday. Traders often use options to hedge, or offset, their risks in the market. As of Friday, about 11,000 contracts of call options with a strike price of $100 remained outstanding, "a big exposure" for the last day, said Stephen Schork, editor of the Schork Report, an energy newsletter. A call is the right, but not the obligation, to buy a contract.
Prices got close to $100 earlier in the day but lost steam. As the October options expired, some traders may have closed positions to keep their books in balance. Volume was low because of the Jewish holidays, he said. "It created a vacuum and it just sucked prices down," Mr. Schork said.
---
Dan Strumpf contributed to this article.
Subscribe to WSJ:
Credit: By Jerry A. DiColo and Carolyn Cui
Subject: Commodity prices; Crude oil
Classification: 3400: Investment analysis & personal finance; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Sep 18, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspape rs
Language of publication: English
Document type: News
ProQuest document ID: 1040772618
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1040772618?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Shell Delays Arctic Quest --- Safety-Gear Damage Will Keep Firm From Possible Oil Strikes Off Alaska in 2012
Author: Gonzalez, Angel; Winkley, Ben
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]18 Sep 2012: B.2.
ProQuest document link
Abstract:
Shell was expecting to receive a permit from U.S. authorities to drill wells all the way to oil-bearing depths once its Arctic Containment System, a newly designed set of safety equipment designed to contain oil spills, was successfully tested.
Full text: Royal Dutch Shell PLC said Monday it would push back to next year its plans to find oil in Alaska's Arctic offshore after a key oil-containment system was damaged during a test.
The delay is a major setback for the Anglo-Dutch oil giant, which has spent six years and $4.5 billion in a bid to open up one of the world's last great oil frontiers.
Shell's effort had been hampered by delays due to regulatory issues, mishaps and persistent sea ice, but it had expected to drill wells to depths where they might strike oil before harsh weather set in between late September and late October.
Now, it will have to focus solely on drilling the initial stages of the exploration wells, known as "top holes," reaching a limited depth. Shell said it would concentrate on drilling as many of these as possible before winter ice takes hold.
Analysts with Tudor, Pickering, Holt & Co. said the delay is "disappointing news," as the drilling campaign "was a landmark event and major potential catalyst for the stock this year." Shell's American depositary shares rose nine cents to $72.65 Monday in New York Stock Exchange composite trading.
Marvin Odum, the head of Shell's exploration and production operations in the Americas, said in an interview "it's a disappointment that we won't be drilling into hydrocarbons this year." He added the company has been successful at building the basis of a multiyear exploration program and expectations for its outcome haven't changed.
Shell was expecting to receive a permit from U.S. authorities to drill wells all the way to oil-bearing depths once its Arctic Containment System, a newly designed set of safety equipment designed to contain oil spills, was successfully tested. But during a final test, a containment dome on the Arctic Challenger barge, designed to be put on top of a leaking well, was damaged, it said. "It is clear that some days will be required to repair and fully assess dome readiness," Shell said in a statement. "We are disappointed that the dome has not yet met our stringent acceptance standards."
Mr. Odum said Shell would seek to make sure the containment system works as soon as possible, even if it isn't intended for use this year.
Shell had begun drilling the top hole of a Chukchi Sea well Sept. 9 but the following day had to suspend operations to move its drilling vessel away from encroaching sea ice. The company said it expects to resume drilling the top hole there in the coming days.
Another drill ship in the Beaufort Sea is expected to begin drilling a top hole after local inhabitants finish the fall whale hunt and the company receives a permit from U.S. regulators.
Shell, which has assembled a fleet of more than 20 vessels for its Arctic campaign, says the wells it plans to drill off Alaska don't present major technical complexities, since they are in shallow water and have normal pressures. The harsh environment, the danger of sea ice and the remoteness of the area present logistical challenges, however. There has also been fierce resistance from environmentalists who argue that the oil industry isn't ready to safely drill in the Arctic.
Some of Shell's supporters said Monday the company this time around is simply the victim of uncontrollable circumstances, and not U.S. regulators.
"We're not blaming the administration," said Robert Dillon, spokesman for Sen. Lisa Murkowski (R., Alaska), a vocal Shell supporter on Capitol Hill.
BP PLC in July shelved drilling plans for the Beaufort Sea after deciding it couldn't meet the strict standards it pledged to follow in the wake on the 2010 Deepwater Horizon spill in the U.S. Gulf of Mexico. In the Russian Arctic, the giant Shtokman natural-gas exploration project has been delayed indefinitely amid doubts over its economic viability.
---
Tennille Tracy contributed to this article.
Subscribe to WSJ:
Credit: By Angel Gonzalez and Ben Winkley
Subject: Petroleum industry; Drilling
Location: Arctic region Alaska United States--US
Company / organization: Name: New York Stock Exchange--NYSE; NAICS: 523210; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210
Classification: 9190: United States; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.2
Publication year: 2012
Publication date: Sep 18, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1040772623
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1040772623?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Tumbles 3.5% to Below $92 a Barrel
Author: Bird, David
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]20 Sep 2012: C.4.
ProQuest document link
Abstract:
Wednesday, oil prices slid further on signs U.S. output, refineries and import facilities have fully recovered from disruptions caused by Hurricane Isaac in late August, but demand for petroleum products remains weak.
Full text: Crude-oil prices fell 3.5% on a sharp rise in oil inventories and signs of continued sluggish demand.
Light, sweet crude oil for October delivery on the New York Mercantile Exchange, ahead of the contract's expiration Thursday, slid $3.31, to settle at $91.98 a barrel. The drop was the biggest in a single day since July 23 and put prices at their lowest level since Aug. 3.
Brent crude for November delivery on the ICE Futures U.S. exchange fell $3.84, or 3.4%, to $108.19 a barrel, its lowest settlement since Aug. 2.
Nymex crude futures have fallen 7.1% in the past three days on doubts about the pace of the global economic recovery and prospects for oil-demand growth. The selloff started after prices moved above $100 a barrel intraday Friday for the first time since early May.
"It's not the time to get in front of the freight train," said Tony Rosado, a broker at Dorado Energy Services.
Crude prices have fallen in recent days as Saudi Arabia, the world's biggest oil exporter, said it wants to see lower prices and pledged to keep output high to meet demand. Wednesday, oil prices slid further on signs U.S. output, refineries and import facilities have fully recovered from disruptions caused by Hurricane Isaac in late August, but demand for petroleum products remains weak.
The Energy Information Administration said Wednesday that the amount of crude oil in storage in the U.S. rose last week by 8.5 million barrels, while analysts had expected an increase of 500,000 barrels. Part of the gain was from imports, which jumped by 1.28 million barrels a day in the week ended Sept. 14 to more than 9.8 million barrels a day.
At the same time, U.S. oil demand has slipped. In the past four weeks, demand averaged 18.3 million barrels a day, its lowest level since the four weeks ended June 1. Lower oil demand reflects the weaker economy and high retail-fuel prices.
In other commodity markets, the U.S. Department of Agriculture said that starting in January it would release its monthly crop reports at noon Eastern time, 3 1/2 hours later than usual. The time change is in response to recently expanded futures trading hours.
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Credit: By David Bird
Subject: Petroleum industry; Crude oil prices; Futures; Commodity prices; Crude oil
Location: United States--US
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210; Name: Department of Agriculture; NAICS: 926140
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Sep 20, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1041131090
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1041131090?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon to Buy Denbury's Bakken Acreage for $1.6 Billion
Author: González, Ángel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Sep 2012: n/a.
ProQuest document link
Abstract:
Exxon Mobil Corp. agreed to acquire Denbury Resources Inc.'s Bakken assets in North Dakota and Montana for $1.6 billion in cash, a move that increases its production acreage in the prolific oil shale region by nearly 50%.
Full text: HOUSTON--In a bid for more U.S. oil production, Exxon Mobil Corp. agreed to buy Denbury Resources Inc.'s assets in the Bakken Shale for $1.6 billion in cash and interests in two oil fields.
The deal gives Exxon 50% more acreage in the Bakken Shale, an emerging oil field that this year helped make North Dakota the second-largest oil-producing state in the country, after Texas.
It also gives Exxon, the country's largest natural-gas producer, the opportunity to place more chips on unconventional oil; the company has been criticized for betting too much on natural gas, which is much less profitable than oil amid the natural-gas market glut unleashed by hydraulic fracturing.
"It is no surprise" that Exxon, the world's largest publicly traded oil company, continues to "attempt to scale up its presence in tight oil and liquids rich unconventional plays," said analysts with Simmons & Co. in a research note. The analysts added that after the purchase the Bakken will become Irving, Texas-based Exxon's largest unconventional-oil-rich play after Canada's oil sands.
The agreement comes amid increased interest by international oil companies, which for years have struggled to grow, in so-called tight oil, which can be freed from shale rock formations with hydraulic fracturing, or "fracking," technology. Production in these tight oil fields can be boosted quickly when enough capital is invested--a perfect fit for big oil companies with deep pockets and a mandate to extract more oil. Last week Royal Dutch Shell PLC bought unconventional oil assets from Chesapeake Energy Corp. for $1.94 billion.
Exxon is buying 196,000 net acres of land in North Dakota and Montana, the entirety of Denbury's assets in the Bakken, and is giving Denbury in return its interests in the Hartzog Draw field in Wyoming and the Webster field in Texas, plus the cash.
The assets Exxon is acquiring from Denbury are expected to produce 15,000 barrels of oil equivalent per day in the second half of 2012. The net production from the interests Exxon is transferring to Denbury amounts to 3,600 barrels of oil equivalent per day.
Denbury said it also agreed in principle to either purchase an interest in the carbon-dioxide reserves in Exxon Mobil's LaBarge Field in southwestern Wyoming or to purchase incremental carbon dioxide from that field. Carbon dioxide is often used by oil companies to increase the amount of oil they can get from aging fields, a technique known as enhanced oil recovery.
The amount of cash Denbury receives will be reduced with the purchase of an interest in carbon-dioxide reserves. The deal is expected to close in the fourth quarter. For Denbury, the Bakken was "not a core focus," said Jason Wangler, an analyst with Wunderlich Securities, Inc. Now it can focus on its specialty, which is enhanced oil recovery, Mr. Wangler added.
Denbury plans to use the cash proceeds to purchase additional oil fields in the Gulf Coast or Rocky Mountain regions, for capital expenditures and to repay debt.
Denbury also plans to resume its stock-repurchase program, under which about $305 million of the $500 million authorized in October 2011 remains.
Melodie Warner contributed to this article.
Write to Melodie Warner at
Credit: By Ángel González
Subject: Petroleum industry; Natural gas utilities; Carbon dioxide; Oil exploration; Statistical data
Location: Montana Texas North Dakota
Company / organization: Name: Denbury Resources Inc; NAICS: 211111; Name: Exxon Mobil Corp; NAICS: 447110, 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 20, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1041224014
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1041224014?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Denbury Doesn't Go With the Oil Flow
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Sep 2012: n/a.
ProQuest document link
Abstract:
According to FactSet data, the oil-and-gas sector is set to spend on average 160% of cash flow on capital expenditure this year and 128% in 2013.
Full text: Denbury Resources goes its own way.
As rival exploration-and-production firms rush into hot areas like the Bakken shale, Denbury said Thursday it would sell its assets there to Exxon Mobil. While rivals focus on hydraulic fracturing of newly exploited shale resources, Denbury is more interested in old oil fields.
Perhaps this explains why the stock is relatively cheap. Even after the 3% jump on the back of the Exxon deal, Denbury's stock trades at just 12.8 times 2013 earnings, compared with a median of 15.5 times for the E&P sector.
Rivals with more natural-gas exposure saw their multiples jump over the summer as investors rediscovered their taste for risk. Denbury's rose less so, in part because gas accounts for less than 10% of its output, compared with roughly two-thirds for the sector.
If you are betting on a gas rebound in 2013, Denbury isn't for you. But its valuation and different profile make it a good bet for energy investors less certain of 2013's prospects.
Denbury's oil weighting shields it from the gas-price slump. In addition, 60% of its oil was sold at prices based wholly or partly on the Louisiana Light Sweet, or LLS, benchmark due to the proximity of many of its fields to the Gulf of Mexico Coast.
This year, LLS has traded at an average premium of $16 a barrel to the more widely known West Texas Intermediate, or WTI, benchmark. This gap will likely narrow next year. But it still represents a competitive advantage, especially against many peers forced to sell their barrels from fields further inland at a discount to WTI. According to Sterne Agee & Leach, Denbury made the highest operating margin per barrel of oil equivalent in its peer group in the second quarter.
Roughly half of Denbury's output comes from pumping carbon dioxide into mature fields to force more oil out. Unlike, say, a shale field, much of the investment is made upfront in CO2 supplies and pipelines.
The benefit is that once this initial spending is done, Denbury is on less of a spending treadmill to maintain output. "You invest when the pricing is good and financing is good" is how Andrew Coleman, analyst at Raymond James characterizes it. It also means that the more old fields you can attach to the original CO2 infrastructure, the more barrels you spread those costs over; hence Denbury is taking some old fields off Exxon as part payment in the Bakken deal.
If oil prices moderate next year and gas prices remain weak, Denbury should be less susceptible than many of its peers to big cuts in production targets.
Sound finances help in this respect, too. According to FactSet data, the oil-and-gas sector is set to spend on average 160% of cash flow on capital expenditure this year and 128% in 2013. Capex at Denbury, meanwhile, is forecast to be equal to cash flow. Living within its means really does set this company apart.
Write to Liam Denning at
Credit: By Liam Denning
Subject: Petroleum industry; Prices; Energy economics; Investments; Capital expenditures; Carbon dioxide; Natural gas
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 20, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1041242360
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1041242360?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
After Spill, Gulf Oil Drilling Rebounds; Production Dipped After Deepwater Horizon Disaster; New Finds Will Lift Output 28% in a Decade
Author: Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Sep 2012: n/a.
ProQuest document link
Abstract:
"Bottom-line, the Gulf of Mexico is in considerably better shape than even the most ardent optimists envisioned following Macondo," said Bill Herbert, a managing director with investment bank Simmons & Co. Some major energy companies are increasing their commitments to the Gulf, including Royal Dutch Shell, which earlier this year spent more than $403 million to lease several new areas there.
Full text: After a steep drop in oil production in the wake of the Deepwater Horizon disaster, the U.S. Gulf of Mexico is set for an energy boom.
Gulf oil flows will increase by nearly 28% by 2022 to 1.8 million barrels per day, according to consulting firm Bentek Energy. Output will be boosted by huge projects like Exxon Mobil Corp.'s Hadrian field 250 miles off the coast of Louisiana and Chevron Corp.'s nearby Jack and St. Malo projects.
The Gulf accounted for nearly a third of U.S. oil production as recently as 2009. But onshore oil production has surged as oil companies use new extraction techniques to tap dense shale formations in places likelike the Eagle Ford shale Texas and the Bakken shale North Dakota. The Gulf now accounts for just 20% of U.S. output, and that number is predicted to decline to 15% by 2022 despite the expected surge in Gulf production.
Oil found offshore generally sells for more than onshore crude. That is partly because Gulf oil is easier to transport to Europe and trades at the higher prices crude fetches there. The result is that oil companies are eager to gear up offshore production, despite the growing challenges of drilling in new areas and deeper water.
The resurgence in the Gulf belies warnings from the energy industry that tougher regulations would curtail exploration there following the 2010 explosion at BP PLC's Macondo well. The blast killed 11 people on the Deepwater Horizon drilling rig and led to the worst offshore oil spill in U.S. history.
Today the industry says it is learning to live with stricter safety oversight and slower permit reviews. The tougher regulatory environment is palatable because of high global oil prices, which have remained above $90 a barrel for nearly two years.
"Bottom-line, the Gulf of Mexico is in considerably better shape than even the most ardent optimists envisioned following Macondo," said Bill Herbert, a managing director with investment bank Simmons & Co.
Some major energy companies are increasing their commitments to the Gulf, including Royal Dutch Shell, which earlier this year spent more than $403 million to lease several new areas there. "The importance of the Gulf continues to grow for Shell, with significant discoveries and major projects in the pipeline," says Marvin Odom, president of Shell Oil Co.
BP, which is the area's largest oil producer and is expected to remain so, agreed recently to sell $5.5 billion of assets to Plains Exploration & Production Co., while Brazilian oil giant Petroleo Brasileiro SA said this week that it may sell some of its Gulf projects.
But those moves reflect company-specific challenges rather than concerns over the Gulf, analysts say. Petrobras needs to focus on many projects back in Brazil.
BP, which will invest about $4 billion a year in the Gulf over the next decade, needs money to pay for the aftermath of the 2010 spill. It has six deep-water rigs at work in the Gulf and plans to add two more by year-end, a record for the company.
The Gulf benefits from the extensive infrastructure in place there, which makes development easier. It is the most developed offshore oil-and-gas region in the world, according to Tyler Priest, a University of Iowa history professor who focuses on the energy industry.
Beginning with just a handful of wells off the beaches and marshes of Texas and Louisiana in the 1950s, the Gulf now has more than 4,000 platforms pumping oil and gas from 35,000 wells through nearly 30,000 miles of pipelines.
Including natural gas as well as oil, production in federal waters reached a peak of almost 1.8 million barrels per day in 2009. But the 2010 Deepwater Horizon spill led to a six-month drilling moratorium as the government drafted new safety rules.
Oil and gas flows in 2010 were off just slightly from the 2009 peak, but dropped 18% in 2011 to 1.4 million barrels of oil equivalent. They are expected to bottom out this year at 1.3 million barrels.
Worst-case predictions for environmental damage didn't materialize following the spill, though a number of continuing studies indicate there may be long-term impacts on the Gulf's ecosystem. On Thursday, the National Oceanic and Atmospheric Administration reported that in 2011 the Gulf's commercial seafood industry saw its highest volume of catches since 1999.
New regulations imposed after the oil spill spelled out specific standards for well design and construction, added new requirements for safety equipment and inspections, while requiring that drillers have quick access to a containment system similar to the one that ultimately stopped the Deepwater Horizon spill.
The new regulations also have slowed the pace at which energy companies receive federal permits. Exploration and development plans now take about 150 days compared with 54 days in the past, according to investment bank Tudor Pickering & Holt. Permits to drill specific wells now take about twice as long as before the disaster.
But the number of permits has risen sharply so far this year, to 105 as of August, versus 79 in all of 2011. "Today we see cooler heads and more pragmatic leadership with the regulators in Washington, and things are now working more smoothly in the Gulf, " says James Noe, general counsel for drilling firm Hercules Offshore Inc.
The pipeline for future projects in the Gulf continues to grow. In June, 56 companies bid $1.7 billion for the rights to explore more than 2.4 million acres of the Gulf controlled by the federal government.
Success in these new areaswon't come easily, according to Tudor Pickering. Much of the drilling will tap into a region called the Lower Tertiary, where completed projects so far have produced about one-third the daily rate of earlier deep-water fields and taken about 30% longer to drill.
Many energy experts predicted only the biggest companies could meet new regulatory and financial requirements to drill in the Gulf, but that hasn't proved to be the case.
Houston Energy LP, a small independent firm, won five deep-water blocks in the most recent federal lease sale. "We went to the North Sea and other offshore areas to look into exploring, but when we came back we chose to dive right into the Gulf of Mexico," said Ron Neal, Houston Energy's CEO.
Write to Tom Fowler at
Credit: By Tom Fowler
Subject: Petroleum industry; Petroleum production; Oil reserves; Natural gas; Oil spills
Location: Texas United States--US
Company / organization: Name: Plains Exploration & Production Co; NAICS: 213112; Name: BP PLC; NAICS: 447110, 324110, 211111; Name: Exxon Mobil Corp; NAICS: 447110, 211111; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 20, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1041256747
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1041256747?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Shell Delays Quest to Strike Arctic Oil
Author: González, Ángel; Winkley, Ben
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Sep 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Royal Dutch Shell PLC said Monday it would push back to next year its plans to find oil in Alaska's Arctic offshore after a key oil-containment system was damaged during a test.
The delay is a major setback for the Anglo-Dutch oil giant, which has spent six years and $4.5 billion in a bid to open up one of the world's last great oil frontiers, which geologists say contains vast amounts of oil and gas.
Shell's effort had been hampered by delays due to regulatory issues, mishaps and persistent sea ice, but it had expected to drill wells to depths where they might strike oil before harsh weather set in between late September and late October. Now, it will have to focus solely on drilling the initial stages of the exploration wells, known as "top holes," reaching a limited depth. Shell said it would concentrate on drilling as many of these as possible before winter ice takes hold.
Analysts with Tudor, Pickering, Holt & Co. said the delay is "disappointing news," as the drilling campaign "was a landmark event and major potential catalyst for the stock this year." Shell's American depositary shares were up 0.4% at $72.83 late afternoon Monday in New York.
Marvin Odum, the head of Shell's exploration and production operations in the Americas, said in an interview that "it's a disappointment that we won't be drilling into hydrocarbons this year." He added, however, the company has been successful at building the basis of a multiyear exploration program and expectations for its outcome haven't changed.
Shell was expecting to receive a permit from U.S. authorities to drill wells all the way to oil-bearing depths once its Arctic Containment System, a newly designed set of safety equipment designed to contain oil spills, was successfully tested. But during a final test, a containment dome, designed to be put on top of a leaking well, was damaged, it said. "It is clear that some days will be required to repair and fully assess dome readiness," Shell said in a statement. "We are disappointed that the dome has not yet met our stringent acceptance standards."
Mr. Odum said Shell would seek to make sure the containment system works as soon as possible, even if it isn't intended for use this year.
Shell had begun drilling the top hole of a Chukchi Sea well Sept. 9 but the following day had to suspend operations to move its drilling vessel away from encroaching sea ice. The company said it expects to resume drilling the top hole there in the coming days. Another drill ship in the Beaufort Sea is expected to begin drilling a top hole after local inhabitants finish the fall whale hunt and the company receives a permit from U.S. regulators.
Shell, which has assembled a fleet of more than 20 vessels for its Arctic campaign, says that the wells it plans to drill off Alaska don't present major technical complexities, since they are in shallow water and have normal pressures. The harsh environment, the danger of sea ice and the remoteness of the area present major logistical challenges, however. There has also been fierce resistance from environmentalists who argue that the oil industry isn't ready to safely drill in the Arctic.
Greenpeace said that the delay was a victory for environmentalists opposing Arctic drilling. "As one of the world's biggest oil companies, Shell was set to lead the pack and spark the Arctic oil rush. But a few hours ago they admitted defeat for 2012," Greenpeace said on its website.
Some of Shell's supporters said Monday the company this time around is simply the victim of uncontrollable circumstances, and not U.S. regulators.
"We're not blaming the administration," said Robert Dillon, spokesman for Sen. Lisa Murkowski (R., Alaska), Shell's most vocal supporter on Capitol Hill. "Certainly there were delays in the past...but what we've got right now is an issue of the clock. Nobody's pointing a finger here."
BP PLC in July shelved drilling plans for the Beaufort Sea after deciding it couldn't meet the strict standards it pledged to follow in the wake on the 2010 Deepwater Horizon spill in the U.S. Gulf of Mexico. In the Russian Arctic, the giant Shtokman natural-gas exploration project has been delayed indefinitely amid doubts over its economic viability.
Tennille Tracy contributed to this article.
Write to Ben Winkley at
Credit: By Ángel González And Ben Winkley
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 20, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1041257293
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1041257293?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Exxon Will Buy Shale Assets for $1.6 Billion
Author: Gonzalez, Angel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]21 Sep 2012: B.4.
ProQuest document link
Abstract:
In a bid for more U.S. oil production, Exxon Mobil Corp. agreed to buy Denbury Resources Inc.'s assets in the Bakken Shale for $1.6 billion in cash and interests in two oil fields.
Full text: HOUSTON -- In a bid for more U.S. oil production, Exxon Mobil Corp. agreed to buy Denbury Resources Inc.'s assets in the Bakken Shale for $1.6 billion in cash and interests in two oil fields.
The deal gives Exxon 50% more acreage in the Bakken Shale, an emerging oil field that this year helped make North Dakota the second-largest oil-producing state in the country, after Texas.
It also gives Exxon, the country's largest natural-gas producer, the opportunity to place more chips on unconventional oil; the company has been criticized for betting too much on natural gas, which is much less profitable than oil amid the natural-gas market glut unleashed by hydraulic fracturing.
"It is no surprise" that Exxon, the world's largest publicly traded oil company, continues to "attempt to scale up its presence in tight oil and liquids rich unconventional plays," said analysts with Simmons & Co. in a research note. The analysts added that after the purchase the Bakken will become Irving, Texas-based Exxon's largest unconventional-oil-rich play after Canada's oil sands.
The agreement comes amid increased interest by international oil companies, which for years have struggled to grow, in so-called tight oil, which can be freed from shale rock formations with hydraulic fracturing, or "fracking," technology. Production in these tight oil fields can be boosted quickly when enough capital is invested -- a perfect fit for big oil companies with deep pockets and a mandate to extract more oil. Last week Royal Dutch Shell PLC bought unconventional oil assets from Chesapeake Energy Corp. for $1.94 billion.
Exxon is buying 196,000 net acres of land in North Dakota and Montana, the entirety of Denbury's assets in the Bakken, and is giving Denbury in return its interests in the Hartzog Draw field in Wyoming and the Webster field in Texas, plus the cash.
The assets Exxon is acquiring from Denbury are expected to produce 15,000 barrels of oil equivalent per day in the second half of 2012. The net production from the interests Exxon is transferring to Denbury amounts to 3,600 barrels of oil equivalent per day.
Denbury said it also agreed in principle to either purchase an interest in the carbon-dioxide reserves in Exxon Mobil's LaBarge Field in southwestern Wyoming or to purchase incremental carbon dioxide from that field. Carbon dioxide is often used by oil companies to increase the amount of oil they can get from aging fields, a technique known as enhanced oil recovery.
The amount of cash Denbury receives will be reduced with the purchase of an interest in carbon-dioxide reserves. The deal is expected to close in the fourth quarter. For Denbury, the Bakken was "not a core focus," said Jason Wangler, an analyst with Wunderlich Securities Inc. Now it can focus on its specialty, which is enhanced oil recovery, Mr. Wangler added.
Denbury plans to use the cash proceeds to purchase additional oil fields in the Gulf Coast or Rocky Mountain regions, for capital expenditures and to repay debt.
Denbury also plans to resume its stock-repurchase program, under which about $305 million of the $500 million authorized in October 2011 remains.
---
Melodie Warner contributed to this article.
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Credit: By Angel Gonzalez
Subject: Oil fields; Hydraulic fracturing; Petroleum industry; Oil reserves; Petroleum production; Capital expenditures; Natural gas; Asset acquisitions
Location: United States--US Texas North Dakota
Company / organization: Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Chesapeake Energy Corp; NAICS: 211111; Name: Denbury Resources Inc; NAICS: 211111; Name: Exxon Mobil Corp; NAICS: 447110, 211111
Classification: 2330: Acquisitions & mergers; 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.4
Publication year: 2012
Publication date: Sep 21, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1041315031
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1041315031?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Overheard: Exxon's Bakken Tell
Author: Anonymous
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]21 Sep 2012: C.10.
ProQuest document link
Abstract:
The Bakken is perhaps the hottest area in the North American energy business right now. Since 2006, oil output from the Bakken in North Dakota has increased 100-fold, from a mere 6,000 barrels a day to more than 600,000 barrels a day, making it a poster boy for hydraulic fracturing.
Full text: [Financial Analysis and Commentary]
Is Exxon Mobil's "Perspectives" blog the latest leading indicator for mergers and acquisitions? Thursday morning, the biggest of Big Oil announced a deal to swap some old oil fields and pay $1.6 billion to Denbury Resources for the exploration-and-production company's assets in the Bakken shale, much of which is under North Dakota.
The Bakken is perhaps the hottest area in the North American energy business right now. Since 2006, oil output from the Bakken in North Dakota has increased 100-fold, from a mere 6,000 barrels a day to more than 600,000 barrels a day, making it a poster boy for hydraulic fracturing.
How do we know this? Well, helpfully, Ken Cohen, Exxon's vice president of public and government relations, published a blog-post on Perspectives entitled "A hundredfold increase in oil production" on Wednesday -- the day before the deal was announced. Advance marketing for the acquisition? Perhaps. Either way, anyone with an interest in Exxon's next move could do worse than read its website.
---
overheard@wsj.com
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Subject: Oil fields; Petroleum production; Petroleum industry
Location: North Dakota
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.10
Publication year: 2012
Publication date: Sep 21, 2012
column: Heard on the Street
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1041316067
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1041316067?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
After Spill, Gulf Oil Drilling Rebounds --- Production Dipped After Deepwater Horizon Disaster; New Finds Will Lift Output 28% in a Decade
Author: Fowler, Tom
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]21 Sep 2012: B.1.
ProQuest document link
Abstract:
"Bottom-line, the Gulf of Mexico is in considerably better shape than even the most ardent optimists envisioned following Macondo," said Bill Herbert, a managing director with investment bank Simmons & Co. Some major energy companies are increasing their commitments to the Gulf, including Royal Dutch Shell, which earlier this year spent more than $403 million to lease several new areas there.
Full text: After a steep drop in oil production in the wake of the Deepwater Horizon disaster, the U.S. Gulf of Mexico is set for an energy boom.
Gulf oil flows will increase by nearly 28% by 2022 to 1.8 million barrels per day, according to consulting firm Bentek Energy. Output will be boosted by huge projects like Exxon Mobil Corp.'s Hadrian field 250 miles off the coast of Louisiana and Chevron Corp.'s nearby Jack and St. Malo projects.
The Gulf accounted for nearly a third of U.S. oil production as recently as 2009. But onshore oil production has surged as oil companies use new extraction techniques to tap dense shale formations in places like Texas and North Dakota. The Gulf now accounts for just 20% of U.S. output, and that number is predicted to decline to 15% by 2022 despite the expected surge in Gulf production.
Oil found offshore generally sells for more than onshore crude. That is partly because Gulf oil is easier to transport to Europe and trades at the higher prices crude fetches there. The result is that oil companies are eager to gear up offshore production, despite the growing challenges of drilling in new areas and deeper water.
The resurgence in the Gulf belies warnings from the energy industry that tougher regulations would curtail exploration there following the 2010 explosion at BP PLC's Macondo well. The blast killed 11 people on the Deepwater Horizon drilling rig and led to the worst offshore oil spill in U.S. history.
Today the industry says it is learning to live with stricter safety oversight and slower permit reviews. The tougher regulatory environment is palatable because of high global oil prices, which have remained above $90 a barrel for nearly two years.
"Bottom-line, the Gulf of Mexico is in considerably better shape than even the most ardent optimists envisioned following Macondo," said Bill Herbert, a managing director with investment bank Simmons & Co.
Some major energy companies are increasing their commitments to the Gulf, including Royal Dutch Shell, which earlier this year spent more than $403 million to lease several new areas there. "The importance of the Gulf continues to grow for Shell, with significant discoveries and major projects in the pipeline," says Marvin Odom, president of Shell Oil Co.
BP, which is the area's largest oil producer and is expected to remain so, agreed recently to sell $5.5 billion of assets to Plains Exploration & Production Co., while Brazilian oil giant Petroleo Brasileiro SA said this week that it may sell some of its Gulf projects.
But those moves reflect company-specific challenges rather than concerns over the Gulf, analysts say. Petrobras needs to focus on many projects back in Brazil.
BP, which will invest about $4 billion a year in the Gulf over the next decade, needs money to pay for the aftermath of the 2010 spill. It has six deep-water rigs at work in the Gulf and plans to add two more by year-end, a record for the company.
The Gulf benefits from the extensive infrastructure in place there, which makes development easier. It is the most developed offshore oil-and-gas region in the world, according to Tyler Priest, a University of Iowa history professor who focuses on the energy industry.
Beginning with just a handful of wells off the beaches and marshes of Texas and Louisiana in the 1950s, the Gulf now has more than 4,000 platforms pumping oil and gas from 35,000 wells through nearly 30,000 miles of pipelines.
Including natural gas as well as oil, production in federal waters reached a peak of almost 1.8 million barrels per day in 2009. But the 2010 Deepwater Horizon spill led to a six-month drilling moratorium as the government drafted new safety rules.
Oil and gas flows in 2010 were off just slightly from the 2009 peak, but dropped 18% in 2011 to 1.4 million barrels of oil equivalent. They are expected to bottom out this year at 1.3 million barrels.
Worst-case predictions for environmental damage didn't materialize following the spill, though a number of continuing studies indicate there may be long-term impacts on the Gulf's ecosystem. On Thursday, the National Oceanic and Atmospheric Administration reported that in 2011 the Gulf's commercial seafood industry saw its highest volume of catches since 1999.
New regulations imposed after the oil spill spelled out specific standards for well design and construction, added new requirements for safety equipment and inspections, while requiring that drillers have quick access to a containment system similar to the one that ultimately stopped the Deepwater Horizon spill.
The new regulations also have slowed the pace at which energy companies receive federal permits. Exploration and development plans now take about 150 days compared with 54 days in the past, according to investment bank Tudor Pickering & Holt. Permits to drill specific wells now take about twice as long as before the disaster.
But the number of permits has risen sharply so far this year, to 105 as of August, versus 79 in all of 2011. "Today we see cooler heads and more pragmatic leadership with the regulators in Washington, and things are now working more smoothly in the Gulf, " says James Noe, general counsel for drilling firm Hercules Offshore Inc.
The pipeline for future projects in the Gulf continues to grow. In June, 56 companies bid $1.7 billion for the rights to explore more than 2.4 million acres of the Gulf controlled by the federal government.
Success won't come easily, according to Tudor Pickering. Much of the drilling will tap into a region called the Lower Tertiary, where completed projects so far have produced about one-third the daily rate of earlier deep-water fields and taken about 30% longer to drill.
Many energy experts predicted only the biggest companies could meet new regulatory and financial requirements to drill in the Gulf, but that hasn't proved to be the case.
Houston Energy LP, a small independent firm, won five deep-water blocks in the most recent federal lease sale. "We went to the North Sea and other offshore areas to look into exploring, but when we came back we chose to dive right into the Gulf of Mexico," said Ron Neal, Houston Energy's CEO.
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Credit: By Tom Fowler
Subject: Petroleum industry; Petroleum production; Oil reserves; Natural gas; Oil spills; Offshore drilling
Location: United States--US Texas
Company / organization: Name: Plains Exploration & Production Co; NAICS: 213112; Name: BP PLC; NAICS: 447110, 324110, 211111; Name: Exxon Mobil Corp; NAICS: 447110, 211111; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210
Classification: 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.1
Publication year: 2012
Publication date: Sep 21, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1041321910
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1041321910?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Snaps Losing Streak but Still Falls 6.2% on Week
Author: DiColo, Jerry A
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Sep 2012: n/a.
ProQuest document link
Abstract:
"Because of the precipitous price drop, maybe we were too low."
Full text: NEW YORK--U.S. crude-oil futures settled higher Friday, rebounding from four straight losing sessions as the dollar weakened against the euro and broader markets rose.
The gains came as the front-month contract switched to November futures. Light, sweet crude oil for November delivery rose 47 cents, or 0.5%, to settle at $92.89 a barrel on the New York Mercantile Exchange.
Oil gained in tandem with stock markets and other commodities such as copper and wheat, pushed by a stronger euro over the U.S. dollar. The Financial Times reported the European Commission and Spain are moving toward changes that would meet the demand of lenders.
A weaker dollar typically helps raise oil prices by making crude oil cheaper for buyers using other currencies.
"Bailouts are bullish," said Phil Flynn, an analyst at Price Futures Group in Chicago. He added the sharp fall in crude-oil prices over the past week likely prompted the rebound as well. "Because of the precipitous price drop, maybe we were too low."
Europe's debt crisis has kept oil traders' attention for months, and aided the latest rally this summer after European Central Bank President Mario Draghi pledged to do whatever it takes to save the euro.
Oil has rallied from lows under $80 a barrel in June on hopes Europe's crisis is abating. The Federal Reserve's decision to provide a new round of stimulus also buoyed crude oil's price.
More recently, as prices approached $100 a barrel, many investors became nervous futures had risen too high and were set for a decline. Futures fell 6.2% this week after the October contract settled at a one-month low Thursday.
Wednesday, a report from the U.S. Energy Information Administration said U.S. oil stockpiles rose by 8.5 million barrels last week, well above analysts' estimates. The sharp supply increase prompted many investors to close out bullish bets.
Still, supplies of products such as gasoline and diesel remain tight, keeping prices for the fuels elevated.
Front-month October reformulated gasoline blendstock, or RBOB, settled 3.85 cents higher at $2.9425 a gallon. October heating oil settled 2.32 cents higher at $3.1207 a gallon.
Write to Jerry A. DiColo at
Credit: By Jerry A. DiColo
Subject: Crude oil; Petroleum industry; Investments; Futures
Location: Europe United States--US Spain
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210; Name: European Central Bank; NAICS: 521110; Name: European Commission; NAICS: 928120; Name: Financial Times; NAICS: 511110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 21, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1043835537
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Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced w ith permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
WEEKEND INVESTOR --- Commodities Unbound! --- Corn, Oil, Gold and Other Assets Are No Longer Trading in Lock Step; Here's How to Separate the Winners From the Losers
Author: Levisohn, Ben
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]22 Sep 2012: B.7.
ProQuest document link
Abstract:
Historic droughts in the Midwest, rising tensions in the Middle East and slowing growth in China are whipsawing commodities markets around the world -- and creating opportunities for investors who play the moves smartly. Since the financial crisis, commodities have traded largely in unison, moving up and down on the basis of investors' changing expectations of central bankers' efforts to boost global economic growth.
Full text: Historic droughts in the Midwest, rising tensions in the Middle East and slowing growth in China are whipsawing commodities markets around the world -- and creating opportunities for investors who play the moves smartly.
Since the financial crisis, commodities have traded largely in unison, moving up and down on the basis of investors' changing expectations of central bankers' efforts to boost global economic growth. In late 2008, commodities plunged; in 2009, 2010 and 2011, they tended to zig and zag together.
But that is beginning to change. In the past six months, corn has jumped 15% and gold is up 7.5%, while copper is down 1.9% and oil is off nearly 12%.
The bad news? This "decoupling" is forcing investors to be more discerning when betting on individual commodities. But there are plenty of opportunities for those who can identify winners and losers -- not only among individual commodities but also the stocks of companies that produce them.
"People are getting smarter about commodities," says Rebecca Patterson, chief investment officer at Bessemer Trust in New York, who oversees about $65 billion and has about $4.5 billion in commodities and commodity-related stocks. "And equity investors can benefit from understanding what is driving them."
The Standard & Poor's GSCI Index of commodities dropped 1.3% in the 15 trading days since Aug. 31, when Federal Reserve Chairman Ben Bernanke hinted at another round of bond buying to bolster the U.S. economy.
In the past, such events have sent commodities higher. In 2010, the S&P GSCI index jumped 5.1% in the 15 days after Mr. Bernanke suggested a round of bond buying was on its way. The index also rose in late 2011, when the Fed announced it would purchase long-term bonds and the European Central Bank said it would provide financing to the European Union's weakest members.
That doesn't mean commodities have disconnected from one another entirely, or no longer will trade in near-unison if the global economy worsens.
But with expectations of a global financial meltdown fading, investors are becoming more aware of the differences among riskier assets.
For now, experts say, commodities are likely to be affected as much by factors specific to each commodity -- droughts, wars, production problems and the like -- as by central-bank policy and the strength of the global economy.
"Individual market drivers are becoming more important," says Kevin Norrish, a commodities strategist at Barclays in London. "This is the kind of thing we will have to get used to going forward."
With that in mind, here's what to watch in crops, industrial metals, precious metals and energy in the months ahead.
Agricultural Commodities
A drought in the Midwestern U.S. has sent corn prices rocketing 32% and soybeans surging 16% in the past three months.
But investors shouldn't expect prices to head much higher, says Wayne Gordon, a commodity strategist at UBS. Brazil and Argentina are set to begin their planting soon, and that could alleviate some of the pressures in the market. If U.S. farmers increase planting next year, that should keep a lid on prices, Mr. Gordon says.
Companies that stand to benefit from planting increases, according to Venice, Fla.-based Ned Davis Research, include fertilizer producers such as Mosaic, which has gained more than 16% in the past three months and trades at 11.7 times analysts' earnings forecasts for the next 12 months, compared with the Standard & Poor's 500-stock index's forward price/earnings of 13.1. Potash Corp. of Saskatchewan has returned 8.4% and has a P/E of 12.1, while CF Industries Holdings has surged 23% and has a P/E of 8.7.
Another possible beneficiary: chemical companies such as Rockwood Holdings, which makes products that help boost crop production. Rockwood has returned 6% in the past three months and has a P/E of 11.1.
Even if corn prices don't rise further, food producers and livestock companies are paying much more for corn now than they did at the beginning of the year -- and feeling the squeeze. Meat producers, for instance, have been slaughtering herds early to cut food expenses, Mr. Gordon says.
Generic food makers such as TreeHouse Foods will have to pass higher commodity costs onto consumers or watch their profit margins shrivel, says Robert Moskow, an equity analyst at Credit Suisse in New York.
"They're lower-margin, so every dollar of commodity costs hurts their earnings growth a disproportionate amount," Mr. Moskow says. "They need the branded companies to raise prices before they can." The stock is down 12% in the past three months.
Industrial Metals
After the financial crisis, investors' expectations of global economic growth drove these markets, experts say. Now, as the risk of another financial crisis recedes, China's slowing growth is the main factor, says Jurien Timmer, co-manager of the $402 million Fidelity Global Strategies Fund and head of global macro research at the firm.
"China is going through a slowdown, and it's bringing down the price of all industrial metals," says Mr. Timmer.
How much of an impact could China have? If its economy comes in for a "soft landing," with gross domestic product growing at a 7.5% clip, industrial metals as measured by the CRB Metals Sub-Index, which includes copper, lead, tin and zinc, would drop by about 5.9% through the end of 2013, predicts Ned Davis Research. If GDP growth were to slow to 5%, a so-called hard landing, base metals could fall by nearly 40%.
The risk of lower metal prices makes mining companies a high-risk bet, according to Societe Generale research.
At first glance, the valuations seem low. BHP Billiton, for instance, trades at 10.8 times expected earnings over the next year, while Rio Tinto trades at just 9.3 times, significantly lower than other commodity producers, say Societe Generale's metals and mining analysts. But those estimates are based on the assumption that commodity prices will rise during the next 12 months.
At current prices, BHP has a P/E ratio of 14.7, while Rio Tinto's is 13.6 -- about in line with other commodity-producing companies, says Societe Generale.
Energy
Brent crude, the oil benchmark, has gained nearly 12% since the end of June, while natural gas has dropped 1.3% and coal has dropped more than 10%.
Why the disparity? Oil has benefited from flaring tensions in the Middle East this year, with two rallies of more than 15% on geopolitical concerns.
Yet once those concerns are relieved, oil can fall quickly: Crude dropped 4.5% this week on speculation that the U.S. and other nations might release oil from their strategic reserves to combat high prices and that Saudi Arabia might increase production.
Despite increased production of natural gas in recent years, the world still relies on oil for much of its energy needs. That's true even in the U.S., which doesn't have the infrastructure to make gas a true alternative.
Investors who want to bet on rising oil prices can use the U.S. 12 Month Oil exchange-traded fund, which buys futures contracts from one to 12 months into the future to reduce the impact of price discrepancies in the futures market and charges an annual 0.60% fee, according to the company. Another possibility: the iPath GSCI Crude Oil Total Return exchange-traded note, which charges 0.75%.
Be warned: These products could lag behind the price of oil -- sometimes considerably -- because of quirks in the futures market.
In terms of stocks, Avy Hirshman, chief investment officer at Greenwich, Conn.-based Newgate Capital Management, which oversees about $2.5 billion, likes oil-services companies, particularly deep water drillers such as Seadrill, Noble and Transocean, because he says they should benefit as oil reserves become increasingly more difficult to reach.
Natural gas and coal are virtually untouched by the Middle East situation, as much of the developed world has ample supplies of its own.
While the price of natural gas has jumped to $2.80 per million BTUs, a 47% increase since it traded at $1.91 on April 19, it is still well below its 10-year average of just under $6.
Natural-gas ETFs typically own futures contracts, which are predicting prices of $3.37 by year-end and above $4 by the end of 2013. That makes the investments too expensive now, says Bessemer Trust's Ms. Patterson. Instead, she recommends companies that benefit from cheap gas.
Among her favorites: Mosaic, which uses natural gas to make fertilizer, and chemical company LyondellBasell Industries, which uses natural gas as an input and should see higher profits. LyondellBasell has returned nearly 28% in the past three months.
Gold and Other Precious Metals
Central banks still hold sway over one area: gold.
Unlike energy, agriculture and industrial metals, investors buy gold largely to hedge the possibility that central banks will cheapen their currencies. As central banks boost the size of their balance sheets, gold typically follows along, says Mr. Hirshman. That's because the buying weighs on currencies and nudges investors into gold for protection.
In the first round of Fed bond buying, gold gained 35% from Nov. 25, 2008, to March 30, 2010. It gained 21% following the second round from Aug. 27, 2010, to June 24, 2011, according to Ned Davis Research.
With the ECB announcing it was prepared to buy an unlimited amount of bonds issued by its weakest members and the Federal Reserve announcing on Sept. 13 that it will begin purchasing mortgage-backed securities for as long as it deems necessary, gold has been rallying again.
The metal also has been boosted by central bank purchases of gold itself. China, for instance, appears to be buying gold as an alternative to dollars, euros and other reserve currencies, according to Ned Davis Research. China imported some 67 tons of gold in June, after importing about 25 tons in June 2011, and just one ton in June 2009.
The simplest way to bet on a rise in gold prices is with an exchange-traded fund that holds physical gold, including SPDR Gold Shares and ETFS Physical Swiss Gold Shares. SPDR Gold Shares charges 0.40%, and Swiss Gold Shares charges 0.39%.
Investors should use caution with gold-mining stocks, according to a Societe Generale report. Even though the price of gold is rising, the costs of extracting it from the ground are rising faster.
At the end of June, operating costs had jumped 25% from the previous year, according to Societe Generale, more than the 14% increase in the price of gold during the same period.
Investors also should keep a close eye on platinum, experts say. Historically, platinum trades at a 20% premium to gold, but these days it is trading at an 8% discount. Platinum is used for catalytic converters in cars, and demand for cars has fallen in Europe because of its economic slowdown.
John LaForge, a commodity strategist at Ned Davis Research, expects platinum to recover once investors realize how cheap it has become. "Platinum is one of my favorite commodity trades," Mr. LaForge says.
Investors can purchase the ETFS Physical Platinum Shares ETF, which owns physical platinum and charges a 0.60% fee, to bet on the metal heading higher.
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Credit: By Ben Levisohn
Subject: Chemical industry; Investment policy; Stock exchanges; Commodities trading
Location: China Middle East
Company / organization: Name: Societe Generale; NAICS: 522110, 522120, 523110, 523120; Name: European Union; NAICS: 926110, 928120; Name: European Central Bank; NAICS: 521110; Name: Standard & Poors Corp; NAICS: 541519, 511120, 523999, 561450
Classification: 8400: Agriculture industry; 3400: Investment analysis & personal finance; 9180: International
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.7
Publication year: 2012
Publication date: Sep 22, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1048971533
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1048971533?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Greek Oil Refiners Draw IMF Rebuke
Author: Alkman Granitsas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 Sep 2012: n/a.
ProQuest document link
Abstract:
Referring to the Hellenic Competition Commission investigation in 2006 and two European Court of Justice rulings, it contends that Motor Oil Hellas Corinth Refineries SA and Hellenic Petroleum SA--which together own all of the country's refining capacity, control 70% of its wholesale market and 60% of all gas stations--have hit retailers with surcharges, failed to disclose pricing information and manipulated international benchmark indexes.
Full text: ATHENS--Lack of competition in Greece's oil-refining industry is costing consumers here more than $1 billion a year, according to a draft internal report by the International Monetary Fund, in an indication of the deep structural problems that many economists believe are hobbling Greece's chances of recovering its footing.
Despite five years of recession, soaring unemployment and repeated efforts to open up its highly regulated economy, prices in Greece remain stubbornly high--a major obstacle to restoring its lost competitiveness and growth. One reason, according to the IMF and other analysts, is a combination of dominant companies and excessive regulation that stifles competitors. Efforts to liberalize dozens of sectors, including legal services and cruise shipping, have made only modest headway.
IMF officials are part of a troika of international inspectors monitoring Athens's overhauls as part of the country's latest [euro]173 billion ($225 billion) bailout deal. The internal report, prepared by the IMF's on-the-ground team in Athens, details a thicket of bureaucratic red tape and lapses in law enforcement that it says allow big players to dominate the markets for gas, diesel and heating oil, damaging the economy.
Greece's new conservative-led coalition government, voted into office in June, says it wants to fix that and is moving to combat anticompetitive practices in the marketplace.
"A better-functioning fuels market is something we desire and we will examine every proposal on how to bring that about," said government spokesman Simos Kedikoglou. "We are already doing that by stepping up our checks because we are well aware that due to high taxes"--Greece has the highest fuel taxes in Europe--"Greeks, on account of the crisis, pay very high prices for gasoline overall."
Mr. Kedikoglou wouldn't comment on the specifics of the report, however, saying its contents hadn't been divulged to the government.
The report, reviewed by The Wall Street Journal, also levels criticism at the country's two biggest oil refiners, which it says use their market muscle to exert effective control over the heavily regulated market.
As an example, the report outlined a chain of obstacles it says effectively prevent independent gas stations from buying fuel abroad. All importers must have facilities to hold 60 days of inventory, something beyond the capability of many smaller businesses. And fuel can only be transported in large tractor-trailer tankers, though gas stations aren't permitted to own vehicles that large. "This makes it impossible for independent gas stations to transport fuel into Greece," the report says.
The IMF declined to comment on the draft, but confirmed its authenticity.
Although a draft report, and still subject to revision, many of the allegations it makes aren't new. Greece's de facto restrictions on imports--such as the rules relating to storage facilities and the impediments facing independents--have been the subject of more than two decades of complaints by European Union regulators against Greece.
Greece's own antitrust watchdog, the Hellenic Competition Commission, investigated the fuel market in late 2006 and issued four reports and two decisions ordering the government to open up the market, with little effect. The drafting of the IMF report suggests the Fund has now also taken an interest in Greece's fuel market and may press the government to open up the sector as part of the long-term overhauls Greece must make in order to receive continued aid.
Many economists and business people complain of similar problems in dozens of sectors, but the fuel market has perhaps the biggest impact on the economy.
"Uncompetitive markets cause high costs for Greek consumers," the report says. "Given how important energy is for the overall economy, competitiveness of Greece would be improved by better functioning fuel markets. This market needs reform."
"The Greek market is highly concentrated and basically controlled by the two domestic refiners," the IMF report says, adding that lower fuel prices could help push down Greece's consumer inflation rate by more than 1%. It says profit margins for fuel products in Greece are among the highest in Europe, and in the case of home heating oil, more than twice the European Union average.
The report also alleges that the two big refiners, controlled by two of the country's best known and richest tycoons, engage in manipulative and anticompetitive practices. Referring to the Hellenic Competition Commission investigation in 2006 and two European Court of Justice rulings, it contends that Motor Oil Hellas Corinth Refineries SA and Hellenic Petroleum SA--which together own all of the country's refining capacity, control 70% of its wholesale market and 60% of all gas stations--have hit retailers with surcharges, failed to disclose pricing information and manipulated international benchmark indexes.
Motor Oil Hellas, controlled by Greek oil magnate Vardis Vardinoyannis, declined to comment on the report.
Officials at Hellenic Petroleum, which is partly owned by the Greek government, said the problems in the market lie elsewhere.
"Hellenic Petroleum believes that the greatest problem of the Greek fuels market is fuel smuggling, adulteration and cheating, which lead to distortions in the market that burden the end consumers as well as the legitimate companies," said a spokesman for the company. "Hellenic Petroleum has submitted to the authorities a written 10-point proposal with their positions on how to eliminate those distortions."
Hellenic Petroleum, the larger of the two firms, is controlled by shipping and oil tycoon Spiros Latsis, who owns 41.9%. The Greek government owns a 35.5% stake.
Messrs. Vardinoyannis and Latsis have high profiles in Greece. Mr. Latsis, whose family also controls Greece's second-biggest bank and a leading property developer, is ranked as Greece's second-richest man by Forbes. His net worth of $2.6 billion puts him just a bit below American television celebrity Oprah Winfrey in the global billionaires' league table.
The report says that "consumers and producers, taxpayers, independent and franchised gas stations" would all benefit from liberalization. But it warned that "owners and employees of the two refineries and their wholesalers" as well as "customs officials" would likely resist change.
Write to Alkman Granitsas at
Credit: By Alkman Granitsas
Subject: Recessions; Coalition governments; Petroleum industry
Location: Greece
Company / organization: Name: European Union; NAICS: 926110, 928120; Name: International Monetary Fund--IMF; NAICS: 522298
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 22, 2012
Section: World News
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1054675504
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1054675504?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Greek Oil Refiners Draw IMF Rebuke
Author: Alkman Granitsas
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]24 Sep 2012: A.18.
ProQuest document link
Abstract:
Lack of competition in Greece's oil-refining industry is costing consumers here more than $1 billion a year, according to a draft internal report by the International Monetary Fund, in an indication of the deep structural problems that many economists believe are hobbling Greece's chances of recovering its footing.
Full text: ATHENS -- Lack of competition in Greece's oil-refining industry is costing consumers here more than $1 billion a year, according to a draft internal report by the International Monetary Fund, in an indication of the deep structural problems that many economists believe are hobbling Greece's chances of recovering its footing.
Despite five years of recession, soaring unemployment and repeated efforts to open up its highly regulated economy, prices in Greece remain stubbornly high -- a major obstacle to restoring its lost competitiveness and growth. One reason, according to the IMF and other analysts, is a combination of dominant companies and excessive regulation that stifles competitors. Efforts to liberalize dozens of sectors, including legal services and cruise shipping, have made only modest headway.
IMF officials are part of a troika of international inspectors monitoring Athens's overhauls as part of the country's latest 173 billion euro ($225 billion) bailout deal. The internal report, prepared by the IMF's team in Athens, details a thicket of bureaucratic red tape and lapses in law enforcement that it says allow big players to dominate the markets for gas, diesel and heating oil, damaging the economy.
Greece's new conservative-led coalition government says it wants to fix that and is moving to combat anticompetitive practices in the marketplace.
"A better-functioning fuels market is something we desire and we will examine every proposal on how to bring that about," said government spokesman Simos Kedikoglou. "We are already doing that by stepping up our checks because we are well aware that due to high taxes" -- Greece has the highest fuel taxes in Europe -- "Greeks, on account of the crisis, pay very high prices for gasoline overall."
Mr. Kedikoglou wouldn't comment on the specifics of the report, which was reviewed by The Wall Street Journal.
It also levels criticism at the country's two biggest oil refiners, Motor Oil Hellas Corinth Refineries SA and Hellenic Petroleum SA, which it says use their market muscle to exert effective control over the heavily regulated market. The IMF declined to comment on the draft, but confirmed its authenticity.
As an example, the report outlined a chain of obstacles it says effectively prevent independent gas stations from buying fuel abroad. All importers must have facilities to hold 60 days of inventory, something beyond the capability of many smaller businesses. And fuel can only be transported in large tractor-trailer tankers, though gas stations aren't permitted to own vehicles that large. "This makes it impossible for independent gas stations to transport fuel into Greece," the report says.
Motor Oil Hellas, controlled by Greek oil magnate Vardis Vardinoyannis, declined to comment on the report. Officials at Hellenic Petroleum, which is partly owned by the Greek government, said the problems in the market lie elsewhere.
"Uncompetitive markets cause high costs for Greek consumers," the report says. "Given how important energy is for the overall economy, competitiveness of Greece would be improved by better functioning fuel markets. This market needs reform."
(See related letter: "Letters to the Editor: IMF Data Wrong on Greek Refiners" -- WSJ Oct. 2, 2012)
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Credit: By Alkman Granitsas
Subject: Service stations; Recessions; Coalition governments; Petroleum industry
Location: Greece Greece
Company / organization: Name: International Monetary Fund--IMF; NAICS: 522298
Classification: 9180: International; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.18
Publication year: 2012
Publication date: Sep 24, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1069181150
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1069181150?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Russia Proposes Oil Export Tax Cuts
Author: Marson, James
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 Sep 2012: n/a.
ProQuest document link
Abstract:
The potential tax cuts could help bolster crude output in Russia--which vies with Saudi Arabia for the title of No. 1 global producer--and increase tax revenue for the budget by encouraging companies to bring new production on line.
Full text: MOSCOW--The Russian government has proposed cutting the duty on crude exports from new oil fields in some remote regions, a boost for majors such as OAO Rosneft and TNK-BP that rely on tax breaks to raise the profitability of fields set to be launched in the next five years.
The potential tax cuts could help bolster crude output in Russia--which vies with Saudi Arabia for the title of No. 1 global producer--and increase tax revenue for the budget by encouraging companies to bring new production on line.
Energy Minister Alexander Novak said Monday that the government will provide a 45% discount on export duties for certain volumes of oil from the Eastern Siberian regions of Krasnoyarsk and Irkutsk, the Republic of Yakutia and the Yamalo-Nenets and Nenets districts in the far north, Russian newswires reported.
The proposed tax breaks, which the government will consider approving at a meeting in November, would apply to large fields with reserves over 10 million metric tons and no more than 5% depletion as of Jan. 1, 2013.
Analysts said the move was positive for Rosneft, TNK-BP and OAO Gazprom Neft, which are set to launch fields in those regions in the next five years.
"For oil companies, the biggest effort is not to introduce new methods of production, but to get tax breaks," said Ildar Davletshin, an analyst at Renaissance Capital.
Mr. Davletshin said that targeted tax discounts don't solve the broader issue of high export taxes. Some oil companies are lobbying the government to move to a profit-based taxation system that they say encourages increased production of reserves that are harder to recover.
Interfax quoted Mr. Novak as saying that new output encouraged by the tax breaks would result in around $300 billion in additional revenue for the budget until 2030, or around $15 billion a year.
Write to James Marson at
Credit: By James Marson
Subject: Petroleum industry; Tariffs; Export taxes; Tax cuts
Location: Russia Saudi Arabia
Company / organization: Name: OAO Rosneft; NAICS: 324110; Name: TNK-BP; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 24, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1069248298
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1069248298?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Doubts on Saudi Capacity May Keep Oil Volatile
Author: Faucon, Benoit
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 Sep 2012: n/a.
ProQuest document link
Abstract:
According to the International Energy Agency, Saudi spare capacity--the sustainable cushion of available oil it could pump at short notice if needed--was just under two million barrels a day last month, 12% thinner than for the same period last year, when Libya's output was virtually shut down.
Full text: Oil prices are likely to remain volatile over the next year, analysts say, amid worries that Saudi Arabia has become less able to pump the global market out of any extraordinary disruptions to supply.
Saudi Arabia and some smaller Gulf oil producers have stepped in to cover recent shortfalls, but analysts are increasingly skeptical about whether these countries have the capacity to shield Western consumers against a new oil shock.
"The cushion to cope with supply shortfalls looks uncomfortably thin, especially in light of heightened geopolitical risks in the Middle East and Africa," Deutsche Bank said in a report Friday.
By the middle of this month, the Brent crude contract--the most widely used globally--rose close to $117 a barrel, up 28% from late June, after renewed tensions over Iran's nuclear program and the killing of the U.S. ambassador in Libya.
That week, Israel's prime minister, Benjamin Netanyahu, blasted the U.S. for not doing more to curb Iran's nuclear program, sparking renewed fear in oil markets that it might unilaterally bomb the Islamic Republic to destroy its atomic facilities. Since the beginning if the year, Iran has stepped up threats of responding to an attack by shutting the Persian Gulf's Strait of Hormuz, through which nearly 20% of all oil shipments are transported.
On top of Iran's nuclear program, the civil war in Syria could also destabilize the region.
This all comes amid the backdrop of a halving in Iranian oil exports, now worth some one million barrels a day, following European and U.S. sanctions against Iran.
Yet markets have also reacted positively to Saudi pledges of increasing output, helping push Brent prices back down last week. On Monday, Brent crude declined $1.61 a barrel, or 1.4%, to $109.81.
Saudi Arabia's dominant position means it is one of the few producers able to significantly boost its output at short notice. The country pumped higher volumes during the Libyan crisis in 2011 and again this year to offset lost Iranian exports, increasing volumes to levels not seen in at least three decades.
Saudi Arabia's oil minister, Ali al-Naimi, has repeatedly dismissed fears that its spare capacity wouldn't be enough to cover a major disruption.
But experts are skeptical about whether the so-called swing producer would have enough leeway to make up for a major disruption.
According to the International Energy Agency, Saudi spare capacity--the sustainable cushion of available oil it could pump at short notice if needed--was just under two million barrels a day last month, 12% thinner than for the same period last year, when Libya's output was virtually shut down.
In addition, Saudi Arabia uses more and more of its own oil. In July, the month when the European Union began enforcing a full embargo on Iranian oil, the kingdom actually cut exports of oil and condensates by 7% on a monthly basis, according to the Joint Organization Data Initiative, an oil-transparency effort that uses numbers supplied directly by governments.
Part of the drop was due to record amounts of oil used by Saudi Arabia this summer, as economic growth spurs domestic consumption.
"The Saudi spin about increasing supplies to the market is also not very credible when the supposed increase is coming after a sharp drop in exports," Swiss consultancy Petromatrix said in a research note Friday.
At the same time, there have been renewed fears of disruptions in Libya, where a civil war shut down most of the country's 1.6 million barrels a day of crude production last year. The killing of U.S. ambassador Chris Stevens in Benghazi on Sept. 11 was blamed by the U.S. on al-Qaeda. It was a stark reminder that even though production has returned to near-normal levels, the situation in the country is far from stabilized.
Many experts say the security concerns could complicate the return of foreign workers needed to further boost output.
International oil companies "were all generally starting to shift their perceptions of security in Libya from one of periodic violence to a view that Libya was going to face systemic instability," says Geoff Porter, a risk consultant who works for foreign companies in North Africa. "Ambassador Stevens's death is going to make this view more deeply entrenched. "
Summer Said contributed to this article.
Credit: By Benoit Faucon
Subject: Petroleum industry; Public officials; Exports; Muslim Americans
Location: United States--US Africa Iran Libya Saudi Arabia Middle East
People: Netanyahu, Benjamin
Company / organization: Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 24, 2012
column: Market Focus
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1069260913
Document URL: https://login.ezproxy.uta.edu/login?url=https://search.proquest.c om/docview/1069260913?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Doubts on Saudi Capacity May Keep Oil Volatile
Author: Faucon, Benoit
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 Sep 2012: n/a.
ProQuest document link
Abstract:
According to the International Energy Agency, Saudi spare capacity--the sustainable cushion of available oil it could pump at short notice if needed--was just under two million barrels a day last month, 12% thinner than for the same period last year, when Libya's output was virtually shut down.
Full text: Oil prices are likely to remain volatile over the next year, analysts say, amid worries that Saudi Arabia has become less able to pump the global market out of any extraordinary disruptions to supply.
Saudi Arabia and some smaller Gulf oil producers have stepped in to cover recent shortfalls, but analysts are increasingly skeptical about whether these countries have the capacity to shield Western consumers against a new oil shock.
"The cushion to cope with supply shortfalls looks uncomfortably thin, especially in light of heightened geopolitical risks in the Middle East and Africa," Deutsche Bank said in a report Friday.
By the middle of this month, the Brent crude contract--the most widely used globally--rose close to $117 a barrel, up 28% from late June, after renewed tensions over Iran's nuclear program and the killing of the U.S. ambassador in Libya.
That week, Israel's prime minister, Benjamin Netanyahu, blasted the U.S. for not doing more to curb Iran's nuclear program, sparking renewed fear in oil markets that it might unilaterally bomb the Islamic Republic to destroy its atomic facilities. Since the beginning if the year, Iran has stepped up threats of responding to an attack by shutting the Persian Gulf's Strait of Hormuz, through which nearly 20% of all oil shipments are transported.
On top of Iran's nuclear program, the civil war in Syria could also destabilize the region.
This all comes amid the backdrop of a halving in Iranian oil exports, now worth some one million barrels a day, following European and U.S. sanctions against Iran.
Yet markets have also reacted positively to Saudi pledges of increasing output, helping push Brent prices back down last week. On Monday, Brent crude declined $1.61 a barrel, or 1.4%, to $109.81.
Saudi Arabia's dominant position means it is one of the few producers able to significantly boost its output at short notice. The country pumped higher volumes during the Libyan crisis in 2011 and again this year to offset lost Iranian exports, increasing volumes to levels not seen in at least three decades.
Saudi Arabia's oil minister, Ali al-Naimi, has repeatedly dismissed fears that its spare capacity wouldn't be enough to cover a major disruption.
But experts are skeptical about whether the so-called swing producer would have enough leeway to make up for a major disruption.
According to the International Energy Agency, Saudi spare capacity--the sustainable cushion of available oil it could pump at short notice if needed--was just under two million barrels a day last month, 12% thinner than for the same period last year, when Libya's output was virtually shut down.
In addition, Saudi Arabia uses more and more of its own oil. In July, the month when the European Union began enforcing a full embargo on Iranian oil, the kingdom actually cut exports of oil and condensates by 7% on a monthly basis, according to the Joint Organization Data Initiative, an oil-transparency effort that uses numbers supplied directly by governments.
Part of the drop was due to record amounts of oil used by Saudi Arabia this summer, as economic growth spurs domestic consumption.
"The Saudi spin about increasing supplies to the market is also not very credible when the supposed increase is coming after a sharp drop in exports," Swiss consultancy Petromatrix said in a research note Friday.
At the same time, there have been renewed fears of disruptions in Libya, where a civil war shut down most of the country's 1.6 million barrels a day of crude production last year. The killing of U.S. ambassador Chris Stevens in Benghazi on Sept. 11 was blamed by the U.S. on al-Qaeda. It was a stark reminder that even though production has returned to near-normal levels, the situation in the country is far from stabilized.
Many experts say the security concerns could complicate the return of foreign workers needed to further boost output.
International oil companies "were all generally starting to shift their perceptions of security in Libya from one of periodic violence to a view that Libya was going to face systemic instability," says Geoff Porter, a risk consultant who works for foreign companies in North Africa. "Ambassador Stevens's death is going to make this view more deeply entrenched. "
Summer Said contributed to this article.
Credit: By Benoit Faucon
Subject: Petroleum industry; Public officials; Exports; Muslim Americans
Location: United States--US Africa Iran Libya Saudi Arabia Middle East
People: Netanyahu, Benjamin
Company / organization: Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 25, 2012
column: Market Focus
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1069355912
Document URL: https://login.ezproxy.uta.edu/login?url=https://search.proquest.c om/docview/1069355912?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The Emerging Threat to Oil Prices
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 Sep 2012: n/a.
ProQuest document link
Abstract:
[...]if Chinese economic growth moderates, and oil prices fall in response, that hurts Middle Eastern and former Soviet economies and their demand for oil falls, reinforcing the pro-cyclical dynamic.
Full text: It used to be said that when the U.S. sneezes, the world catches a cold. Decoupling supposedly changed all that and, for oil at least, it has: Despite America's economic malaise, oil prices have rebounded since 2009 on demand from China and elsewhere.
But what comes next--call it recoupling--presents a big risk of its own.
The days when drivers in America and other advanced economies set the pace for oil-demand growth are gone. In the 1970s, 56% of the increase in global oil demand came from members of the Organization for Economic Co-operation and Development. China made up 7%. In contrast, for the decade ended in 2009, OECD demand fell outright. Global oil consumption increased due only to the continued appetite of countries like China, which accounted for 42% of the increase.
China's rise fueled the marked shift upward in oil prices this past decade. But replacing the OECD with emerging markets as the barrel buyers of last resort creates problems of its own. In a recent report, Deutsche Bank analyst Paul Sankey argues this shift has made oil demand, and therefore prices, more pro-cyclical. Instead of higher oil prices acting as a brake on economic growth and therefore keeping a lid on oil prices, higher oil prices can end up coinciding with, and even fueling, more demand.
Why? The International Energy Agency expects the world to consume an extra 1.64 million barrels of oil a day in 2013 compared with 2011. This masks a drop in demand of 640,000 barrels a day in the OECD. And fully 77% of the net increase is accounted for by China, the Middle East and the former Soviet Union.
Chinese oil demand is largely a function of economic growth, which in turn is tied to global trade. But unlike in the U.S., fuel prices are controlled in China. Between 1980 and 2011, U.S. oil demand growth was clearly negatively correlated with real oil prices: In general, Americans bought less oil as it got more expensive. That relationship doesn't hold with Chinese demand.
As Mr. Sankey puts it: "The stronger the global economy, the higher the oil price, the stronger China's demand. And vice versa, the weaker, the weaker, the weaker."
Beyond China, there is the Middle East--which at 7.6 million barrels a day is 80% of the size of China's oil market--and the former Soviet Union to consider. The economies of both are heavily tied to oil. So if oil prices rise, their economies grow faster, fueling more demand for oil.
Meanwhile, if Chinese economic growth moderates, and oil prices fall in response, that hurts Middle Eastern and former Soviet economies and their demand for oil falls, reinforcing the pro-cyclical dynamic.
Dependence on emerging markets for incremental oil consumption looks set to stay. Demand in advanced economies made a comeback after the turmoil of the early 1980s. Back then, though, their prime working (and driving) age populations were still growing strongly, whereas they are close to peaking now.
Oil's recoupling to emerging markets has, therefore, made it even more dependent on China's economic miracle continuing than investors might think. It is worrying for them, therefore, that the wheels on that appear to be wobbling.
Write to Liam Denning at
Credit: By Liam Denning
Subject: Petroleum industry; Oil consumption; Emerging markets
Location: China Middle East
Company / organization: Name: Organization for Economic Cooperation & Development; NAICS: 928120; Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 25, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1073471600
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1073471600?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The Emerging Threat to Oil Prices
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 Sep 2012: n/a.
ProQuest document link
Abstract:
[...]if Chinese economic growth moderates, and oil prices fall in response, that hurts Middle Eastern and former Soviet economies and their demand for oil falls, reinforcing the pro-cyclical dynamic.
Full text: It used to be said that when the U.S. sneezes, the world catches a cold. Decoupling supposedly changed all that and, for oil at least, it has: Despite America's economic malaise, oil prices have rebounded since 2009 on demand from China and elsewhere.
But what comes next--call it recoupling--presents a big risk of its own.
The days when drivers in America and other advanced economies set the pace for oil-demand growth are gone. In the 1970s, 56% of the increase in global oil demand came from members of the Organization for Economic Co-operation and Development. China made up 7%. In contrast, for the decade ended in 2009, OECD demand fell outright. Global oil consumption increased due only to the continued appetite of countries like China, which accounted for 42% of the increase.
China's rise fueled the marked shift upward in oil prices this past decade. But replacing the OECD with emerging markets as the barrel buyers of last resort creates problems of its own. In a recent report, Deutsche Bank analyst Paul Sankey argues this shift has made oil demand, and therefore prices, more pro-cyclical. Instead of higher oil prices acting as a brake on economic growth and therefore keeping a lid on oil prices, higher oil prices can end up coinciding with, and even fueling, more demand.
Why? The International Energy Agency expects the world to consume an extra 1.64 million barrels of oil a day in 2013 compared with 2011. This masks a drop in demand of 640,000 barrels a day in the OECD. And fully 77% of the net increase is accounted for by China, the Middle East and the former Soviet Union.
Chinese oil demand is largely a function of economic growth, which in turn is tied to global trade. But unlike in the U.S., fuel prices are controlled in China. Between 1980 and 2011, U.S. oil demand growth was clearly negatively correlated with real oil prices: In general, Americans bought less oil as it got more expensive. That relationship doesn't hold with Chinese demand.
As Mr. Sankey puts it: "The stronger the global economy, the higher the oil price, the stronger China's demand. And vice versa, the weaker, the weaker, the weaker."
Beyond China, there is the Middle East--which at 7.6 million barrels a day is 80% of the size of China's oil market--and the former Soviet Union to consider. The economies of both are heavily tied to oil. So if oil prices rise, their economies grow faster, fueling more demand for oil.
Meanwhile, if Chinese economic growth moderates, and oil prices fall in response, that hurts Middle Eastern and former Soviet economies and their demand for oil falls, reinforcing the pro-cyclical dynamic.
Dependence on emerging markets for incremental oil consumption looks set to stay. Demand in advanced economies made a comeback after the turmoil of the early 1980s. Back then, though, their prime working (and driving) age populations were still growing strongly, whereas they are close to peaking now.
Oil's recoupling to emerging markets has, therefore, made it even more dependent on China's economic miracle continuing than investors might think. It is worrying for them, therefore, that the wheels on that appear to be wobbling.
Write to Liam Denning at
Credit: By Liam Denning
Subject: Petroleum industry; Oil consumption; Emerging markets
Location: China Middle East
Company / organization: Name: Organization for Economic Cooperation & Development; NAICS: 928120; Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 26, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1077512923
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1077512923?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Futures Drop, Gas Rises After Explosion
Author: DiColo, Jerry A
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 Sep 2012: n/a.
ProQuest document link
Abstract:
U.S. gasoline futures jumped 3.8% Wednesday while crude-oil prices declined, after an explosion at a major refinery in Canada focused attention on low U.S. fuel supplies.
Full text: U.S. gasoline futures jumped 3.8% Wednesday while crude-oil prices declined, after an explosion at a major refinery in Canada focused attention on low U.S. fuel supplies.
Gasoline futures surged as high as $3.0874 a gallon on the New York Mercantile Exchange midday Wednesday after a blast at Irving Oil's 300,000-barrel-a-day Saint John Refinery in New Brunswick, Canada.
The refiner said damage was minimal and operations would resume later Wednesday. But the accident highlighted the increasingly tenuous gasoline-supply situation in parts of the U.S. Fuel stockpiles in the Northeast U.S. are at their lowest level since November 1990, according to the Energy Department.
"It's a reminder that gas supplies are low for this time of year, and a reminder that you have very thin margins for error," said Phil Flynn, an energy analyst at Price Futures Group. "When that story came across, it got everyone nervous, and you buy first and ask questions later."
Stockpiles are at a nearly four-year low nationally, having dropped 14.2 million barrels in the past nine weeks, though demand also has fallen.
October reformulated gasoline blendstock, or RBOB, settled 11.4 cents higher at $3.0811 a gallon, while the more actively-traded November contract rose 5.14 cents to $2.8738 a gallon. Heating oil settled near flat, down 0.18 cent at $3.1068 a gallon.
The surge in gasoline prices wasn't enough to lift crude-oil futures, which were hit by concerns about Europe's debt crisis and data that showed weak U.S. fuel demand.
Oil fell after data released by the U.S. Energy Information Administration showed four-week demand for fuel products fell to the lowest level since April 6.
Bob Yawger, director of energy futures at Mizuho, said he was surprised that oil prices continued to fall despite the climb in gasoline. But with U.S. stockpiles of crude oil still high, traders aren't as nervous about supplies, particularly as the broader economy shows signs of weakness.
Light, sweet crude for November delivery settled $1.39, or 1.5%, lower at $89.98 a barrel on Nymex, the first close below $90 since early August.
Brent crude on the ICE futures exchange was 62 cents lower at $109.81 a barrel.
The data on U.S. fuel usage arrived with new worries about Europe. Spain roiled markets following calls for early elections in Catalonia. Meanwhile, unions in Greece began a general strike over austerity measures.
After surging toward $100 a barrel earlier this month on optimism about new stimulus measures from the U.S. Federal Reserve, oil prices have slumped over the past two weeks as investors grow uneasy about slowing global growth.
Write to Jerry A. DiColo at
Credit: By Jerry A. DiColo
Subject: Gasoline prices; Petroleum industry; Supplies; Petroleum refineries
Location: Europe New Brunswick Canada
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 26, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1080538766
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1080538766?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Futures Drop, Gas Rises After Explosion
Author: DiColo, Jerry A
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]27 Sep 2012: C.4.
ProQuest document link
Abstract:
U.S. gasoline futures jumped 3.8% Wednesday while crude-oil prices declined, after an explosion at a major refinery in Canada focused attention on low U.S. fuel supplies.
Full text: U.S. gasoline futures jumped 3.8% Wednesday while crude-oil prices declined, after an explosion at a major refinery in Canada focused attention on low U.S. fuel supplies.
Gasoline futures surged as high as $3.0874 a gallon on the New York Mercantile Exchange midday Wednesday after a blast at Irving Oil's 300,000-barrel-a-day Saint John Refinery in New Brunswick, Canada.
The refiner said damage was minimal and operations would resume later Wednesday. But the accident highlighted the increasingly tenuous gasoline-supply situation in parts of the U.S. Fuel stockpiles in the Northeast U.S. are at their lowest level since November 1990, according to the Energy Department.
"It's a reminder that gas supplies are low for this time of year, and a reminder that you have very thin margins for error," said Phil Flynn, an energy analyst at Price Futures Group. "When that story came across, it got everyone nervous, and you buy first and ask questions later."
Stockpiles are at a nearly four-year low nationally, having dropped 14.2 million barrels in the past nine weeks, though demand also has fallen.
October reformulated gasoline blendstock, or RBOB, settled 11.4 cents higher at $3.0811 a gallon, while the more actively-traded November contract rose 5.14 cents to $2.8738 a gallon. Heating oil settled near flat, down 0.18 cent at $3.1068 a gallon.
The surge in gasoline prices wasn't enough to lift crude-oil futures, which were hit by concerns about Europe's debt crisis and data that showed weak U.S. fuel demand.
Oil fell after data released by the U.S. Energy Information Administration showed four-week demand for fuel products fell to the lowest level since April 6.
Bob Yawger, director of energy futures at Mizuho, said he was surprised that oil prices continued to fall despite the climb in gasoline. But with U.S. stockpiles of crude oil still high, traders aren't as nervous about supplies, particularly as the broader economy shows signs of weakness.
Light, sweet crude for November delivery settled $1.39, or 1.5%, lower at $89.98 a barrel on Nymex, the first close below $90 since early August.
Brent crude on the ICE futures exchange was 62 cents lower at $109.81 a barrel.
The data on U.S. fuel usage arrived with new worries about Europe. Spain roiled markets following calls for early elections in Catalonia. Meanwhile, unions in Greece began a general strike over austerity measures.
After surging toward $100 a barrel earlier this month on optimism about new stimulus measures from the U.S. Federal Reserve, oil prices have slumped over the past two weeks as investors grow uneasy about slowing global growth.
Subscribe to WSJ:
Credit: By Jerry A. DiColo
Subject: Gasoline prices; Petroleum industry; Supplies; Petroleum refineries
Location: Europe New Brunswick Canada
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 201 2
Publication date: Sep 27, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1080640177
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1080640177?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Sudans Sign Deals to Resume Oil Exports
Author: Bariyo, Nicholas; Gross, Jenny
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 Sep 2012: n/a.
ProQuest document link
Abstract:
The full resumption of Sudanese exports would help ease global oil supplies, as Saudi Arabia and others in the Organization of the Petroleum Exporting Countries have stepped up production to meet rising global demand.
Full text: The presidents of Sudan and South Sudan on Thursday signed several agreements paving the way for resuming vital oil exports and creating a demilitarized zone along their contested, oil-rich border, officials from both countries said.
The pacts mark a partial resolution of issues that have raised the threat of armed conflict between the two states, which created a little over a year ago when the South seceded from Sudan. The deals will allow for the gradual return of about 350,000 barrels a day of South Sudanese crude oil to world markets, where prices remain high.
Uncertainties remain. The countries have yet to resolve at-times lethal disputes over five border areas, including the oil-rich Abyei region. The status of these border areas was left unclear in last year's breakup of Sudan after decades of armed conflict, including two civil wars believed to have left more than 2 million people dead.
President Omar al-Bashir of Sudan and President Salva Kiir of South Sudan signed eight deals Thursday in Addis Ababa, Ethopia, including those creating a demilitarized zone of 10 kilometers, or about six miles, along their border and allowing the resumption of oil exports.
"The presidents have just signed the agreements. This is a big step forward regarding our relations with South Sudan," said Rabie Abdelaty, the Sudanese government spokesman. A South Sudanese spokesman confirmed deals had been reached on oil exports and a demilitarized zone.
Sudan and South Sudan are setting dates for resuming talks on Abyei and working out the other unresolved issues, said Mr. Abdelaty. He said Sudan is demanding the South cut ties with and disarm rebels of the Sudan People's Liberation Movement North, who continue to battle Sudanese military in the oil-rich border states of Blue Nile and Southern Kordofan.
The White House welcomed what it called groundbreaking deals that make substantial progress in creating two viable, peaceful neighbors and said the U.S. is committed to helping to implement the deals and resolve outstanding issues.
"The leaders of Sudan and South Sudan have chosen to take another important step on the path away from conflict toward a future in which their citizens can live in dignity, security and prosperity," President Barack Obama said said Thursday. "We are hopeful that today's deal can help spur broader progress on resolving the conflict in Southern Kordofan and Blue Nile, securing unfettered international humanitarian access in those areas, and bringing peace to Darfur."
The deals are encouraging and enormously beneficial to both countries, but challenges remain, said Paul Jenkins, the International Monetary Fund's representative in Sudan.
"We can only hope that the political and security difficulties do not unwind what is actually a very important and critical agreement," Mr. Jenkins said.
South Sudan gained formal independence from Sudan in July 2011 after a two-decade civil war. Landlocked South Sudan retained at least 75% of the former nation's oil fields. But the pipelines, refineries and ports it needs to get its crude to market lie in the north.
Initial optimism over the split soon dissipated as Sudan halted South Sudan's oil exports in January over a dispute about how much the South should pay to access an export port on the Red Sea. South Sudan refused to pay the high transit fees Khartoum was demanding. It accused the north of stealing its oil, a charge Sudan denied.
The two countries came close to war in April after South Sudanese troops captured and occupied the Sudanese oil town of Heglig. Days of deadly clashes destroyed oil facilities, including a refinery and a processing plant. Both nations' economies have suffered because of the halt to oil shipments, which provided crucial foreign-exchange revenue.
Under terms of Thursday's three-year oil-transit deal, South Sudan will pay $8.40 a barrel for using the pipeline operated by Greater Nile Petroleum Operating Co. and $6.50 a barrel for using the pipeline operated by a Chinese-led pipeline consortium known as Petrodar.
The agreement is a positive step, said Luke Patey, a researcher on Sudan for the Danish Institute of International Studies, adding that continuing fighting in Southern Kordofan and Blue Nile is a big cause for concern.
"This keeps the ball rolling, but there are a lot of thorny issues still out there," Mr. Patey said. "There are a lot of disturbances out there to disrupt oil should it come on stream in the next couple of months."
The full resumption of Sudanese exports would help ease global oil supplies, as Saudi Arabia and others in the Organization of the Petroleum Exporting Countries have stepped up production to meet rising global demand.
About 1.5 million barrels a day of oil production from countries not in OPEC have been shut over the last several months because of a combination of technical and security issues, according to the International Energy Agency. The supply disruption from Sudan and South Sudan accounts for roughly one-fifth of that.
Ole Hansen, head of commodity strategy at Saxo Bank, said the new agreement will "alleviate some supply worries in the [oil] market," but added that it is unlikely to prompt anything more than a limited slide in oil prices because of nagging fears of a conflict between Israel and Iran.
By mid-afternoon, international oil benchmark Brent crude was trading $1.55 higher than Wednesday's close at $110.24 a barrel.
South Sudanese officials said it may take at least three months to resume shipments. Others predicted a slower return. Consultancy JBC Energy said a full resumption of oil exports from South Sudan could take six to 12 months. Michael Poulsen, an oil analyst at Global Risk Management, said that important oil-production equipment could have been damaged during recent fighting in the border zone and would take time to repair.
The deals signed Thursday were the product of weeks of negotiations. They also include an understanding on the parameters to follow in demarcating the border, an economic-cooperation agreement and a deal on the protection of each other's citizens, Mr. Abdelaty said. Both sides have previously agreed to a referendum over the future of the dispute border region of Abyei, but the terms of the vote haven't been settled.
Write to Nicholas Bariyo at and Jenny Gross at
Credit: Nicholas Bariyo; Jenny Gross
Subject: Pipelines; Petroleum industry
Location: Sudan South Sudan
People: Obama, Barack Bashir, Omar Hassan Ahmed
Company / organization: Name: Greater Nile Petroleum Operating Co; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 27, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1080747304
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1080747304?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Oil, Gas Prices Jump
Author: Bird, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]27 Sep 2012: n/a.
ProQuest document link
Abstract:
Andy Lebow, senior vice president for energy futures at Jefferies Bache, said the strength in gasoline spilled over into crude oil futures despite relatively high crude oil inventories in the U.S. He said that refiners returning from shutdowns will need to boost crude processing to boost inventories of refined products.
Full text: NEW YORK---Crude oil futures prices rebounded Thursday after hitting two-month lows a day earlier, pulled up by rising gasoline prices.
Traders aggressively snapped up contracts for October-delivery reformulated gasoline blendstock for a third straight day ahead of the contract's expiration on Friday.
October gasoline jumped intraday to a five-month high of $3.21 a gallon, a level that, if sustained, would translate to a nationwide average of above $3.90 a gallon for regular gasoline at the pump. At that level prices would be the highest since April and about eight cents above prices at the start of this week.
Gasoline futures prices have surged 22.7 cents, or 7.8%, in the last three days, including a 2.1% gain on Thursday, as data from the Energy Information Administration show nationwide inventories at their lowest level since October 2008, while stocks in the Northeast U.S. are at their lowest level since EIA began keeping records in November 1990. EIA said that while outright levels are low, supply isn't as tight as it appears, since demand has declined.
Andy Lebow, senior vice president for energy futures at Jefferies Bache, said the strength in gasoline spilled over into crude oil futures despite relatively high crude oil inventories in the U.S. He said that refiners returning from shutdowns will need to boost crude processing to boost inventories of refined products.
"The products are very strong," Mr. Lebow said. "If you are looking for supply tightness, it's not on the crude oil side."
Light, sweet crude oil for November delivery on the New York Mercantile Exchange climbed $1.87 a barrel, or 2.1%, at $91.85 a barrel, its biggest one-day gain since Aug. 3. November Brent on the InterContinental Exchange gained $1.97, or 1.8%, to $112.01 a barrel.
Crude shook off a mixed bag of U.S. economic data. U.S. August durable-goods orders fell 13.2%, the largest decline since January 2009, the Commerce Department said. Economists had expected a drop of 5.6%. At the same time, Commerce also announced U.S. second-quarter gross domestic product growth was revised down to 1.3%, while economists expected a reading of 1.7% growth.
That data overshadowed a stronger U.S. weekly jobless claims report. New claims fell last week to the lowest level since July, to 359,000, the Labor Department said. Economists had expected 375,000 new claims for jobless benefits.
"We had the good, the bad and the ugly," said Matt Smith, analyst at Summit Energy. "This shows the economy is still weak and the best we can hope for is that QE-infinity will spur a bit of growth," he said, referring to the Federal Reserve's market stimulus plan.
Nymex October RBOB settled up 6.32 cents at $3.1443 a gallon, a one-month high.
October heating oil settled 5.05 cents higher, at $3.1573 a gallon.
Write to David Bird at
Credit: By David Bird
Subject: Crude oil; Petroleum industry; Futures; Gasoline prices; Economic indicators
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 27, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1080796690
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1080796690?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Sudans Sign Deals To Resume Oil Exports
Author: Bariyo, Nicholas; Gross, Jenny
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]28 Sep 2012: A.12.
ProQuest document link
Abstract:
The White House welcomed what it called groundbreaking deals that make substantial progress in creating two viable, peaceful neighbors and said the U.S. is committed to helping to implement the deals and resolve outstanding issues.
Full text: The presidents of Sudan and South Sudan on Thursday signed several agreements paving the way for resuming vital oil exports and creating a demilitarized zone along their contested, oil-rich border, officials from both countries said.
The pacts mark a partial resolution of issues that have raised the threat of armed conflict between the two states, which created a little over a year ago when the South seceded from Sudan. The deals will allow for the gradual return of about 350,000 barrels a day of South Sudanese crude oil to world markets.
Uncertainties remain. The countries have yet to resolve at-times lethal disputes over five border areas, including the oil-rich Abyei region. The status of these border areas was left unclear in last year's breakup of Sudan after decades of conflict.
President Omar al-Bashir of Sudan and President Salva Kiir of South Sudan signed eight deals Thursday in Addis Ababa, Ethopia, including those creating a demilitarized zone of 10 kilometers, or about six miles, along their border and allowing the resumption of oil exports.
"This is a big step forward regarding our relations with South Sudan," said Rabie Abdelaty, the Sudanese government spokesman. A South Sudanese spokesman confirmed deals had been reached on oil exports and a demilitarized zone.
Sudan and South Sudan are setting dates for resuming talks on Abyei and working out the other unresolved issues, said Mr. Abdelaty. He said Sudan is demanding the South cut ties with and disarm rebels of the Sudan People's Liberation Movement North, who continue to battle Sudanese military in the oil-rich border states of Blue Nile and Southern Kordofan.
The White House welcomed what it called groundbreaking deals that make substantial progress in creating two viable, peaceful neighbors and said the U.S. is committed to helping to implement the deals and resolve outstanding issues.
"The leaders of Sudan and South Sudan have chosen to take another important step on the path away from conflict toward a future in which their citizens can live in dignity, security and prosperity," President Barack Obama said. "We are hopeful that today's deal can help spur broader progress on resolving the conflict in Southern Kordofan and Blue Nile, securing unfettered international humanitarian access in those areas, and bringing peace to Darfur."
The deals are encouraging and enormously beneficial to both countries, but challenges remain, said Paul Jenkins, the International Monetary Fund's representative in Sudan.
"We can only hope that the political and security difficulties do not unwind what is actually a very important and critical agreement," Mr. Jenkins said.
South Sudan gained formal independence from Sudan in July 2011 after a two-decade civil war. Landlocked South Sudan retained at least 75% of the former nation's oil fields. But the pipelines, refineries and ports it needs to get its crude to market lie in the north.
Initial optimism over the split soon dissipated as Sudan halted South Sudan's oil exports in January over a dispute about how much the South should pay to access an export port on the Red Sea. South Sudan refused to pay the high transit fees Khartoum was demanding.
The two countries came close to war in April after South Sudanese troops captured and occupied the Sudanese oil town of Heglig. Days of deadly clashes destroyed oil facilities, including a refinery and a processing plant. Both nations' economies have suffered because of the halt to oil shipments.
Under terms of Thursday's three-year oil-transit deal, South Sudan will pay $8.40 a barrel for using the pipeline operated by Greater Nile Petroleum Operating Co. and $6.50 a barrel for using the pipeline operated by a Chinese-led pipeline consortium known as Petrodar.
Subscribe to WSJ:
Credit: Nicholas Bariyo; Jenny Gross
Subject: Petroleum industry; Agreements; Exports; Territorial issues
Location: Sudan South Sudan
People: Kiir Mayardit, Salva Bashir, Omar Hassan Ahmed
Classification: 9177: Africa; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.12
Publication year: 2012
Publication date: Sep 28, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1080900347
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1080900347?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Nigeria's Jonathan Says Oil Industry Needs Overhaul
Author: Baskin, Brian
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 Sep 2012: n/a.
ProQuest document link
Abstract:
Royal Dutch Shell PLC and Exxon Mobil Corp., two of the biggest producers in Nigeria, have spoken out against the bill, saying it will make further investment uneconomical.
Full text: Oil companies' objections to Nigeria's proposed overhaul of its petroleum sector are expected, but the reforms are necessary, President Goodluck Jonathan said in an interview Thursday.
The Nigerian government is proposing sweeping changes to the country's energy industry, including a boost in the state's share of oil sales.
Royal Dutch Shell PLC and Exxon Mobil Corp., two of the biggest producers in Nigeria, have spoken out against the bill, saying it will make further investment uneconomical.
"The laws were enacted in the 1950s. It's now 2012," President Jonathan said in an interview with The Wall Street Journal and Dow Jones Newswires.
Nigeria is Africa's biggest oil producer, with output of more than 2 million barrels a day of mostly high-quality oil. However, the state-owned Nigerian National Petroleum Corp. is widely seen as corrupt and inefficient.
Oil Minister Diezani Alison-Madueke said the reforms, which will also split Nigeria's state oil company into several new companies and take steps to fight endemic corruption, are long overdue.
The Nigerian government's portion of oil revenue is one of the lowest in the world and cannot be increased substantially under existing contracts with international oil companies, Ms. Alison-Madueke said.
"Nigeria has the lowest government take, which we felt was extremely punitive," she said.
The bill, which was introduced in parliament in July, would lead to a halt in new investments if passed in its current form because of onerous fiscal terms, the head of Exxon's Nigeria operations said Thursday in Lagos, according to Agence France-Presse.
Mark Ward, who also leads a grouping of major oil companies operating in Africa's top producer, said industry players shared the view that the current bill jeopardizes Nigeria's bid to boost new investment and output.
If the bill passes without significant changes, "the government's aspirations to grow the business and the industry will not be met," he said. "Quite frankly, the extremely large investments that are needed are seriously at risk under the proposed PIB [Petroleum Industry Bill] terms," he told a forum on the bill.
Credit: By Brian Baskin
Subject: Petroleum industry
Location: Africa Nigeria
People: Jonathan, Goodluck
Company / organization: Name: Nigerian National Petroleum Corp; NAICS: 211111; Name: Agence France-Presse; NAICS: 519110; Name: Dow Jones Newswires; NAICS: 519110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 28, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1080904412
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1080904412?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Total Sees Uganda Oil Output Delayed by a Year
Author: Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 Sep 2012: n/a.
ProQuest document link
Abstract:
First commercial oil is likely to arrive 36 months after the approval of the development plan, Tullow has said.
Full text: KAMPALA, Uganda--Total SA expects to pump crude from its Ugandan oil fields in 2017, a year later than previous estimates had suggested, as the foreign firms charged with developing the country's nascent energy sector try to overcome a host of issues that have delayed the start of operations.
Total entered Uganda earlier this year after the long-delayed approval of $2.9 billion deal by British wildcatter Tullow Oil PLC to sell two-thirds of its exploration assets in the country to the French oil producer and China's CNOOC Ltd. The East African nation has since withheld approval of the companies' development plan until several issues are resolved, chief of which is Uganda's desire for them to partly fund a large refinery.
"We are working closely with our partners and the Ugandan government to get the necessary approvals to enable us to deliver first oil by late 2017," Loic Laurandel, Total E&P Uganda's general manager, told reporters Friday.
That is a year later than previously expected. When the partners completed the deal in February, Tullow Oil Exploration Director Angus McCoss said the first oil should be produced by 2016.
Attempts to turn Uganda into Africa's next major oil-producing nation have been beset by political complications since commercial quantities of crude were discovered in 2006. Two tax disputes--both involving Tullow--were the initial stumbling blocks, but now the main area of contention has been whittled down to wrangling between the Ugandan government and the partners over how the crude should be used.
Total, Tullow and Cnooc want to sell crude on the open market and are considering $5 billion of investment in pipelines to the East African coast. Uganda insists that most of the oil be refined locally into fuel products, initially for domestic consumption and then for regional export.
The three companies had agreed to help fund a small 20,000 barrel-a-day refinery at an estimated cost of around $1.5 billion, and Uganda now wants them to build a refinery with an output of around 150,000 barrels a day.
The partners can only begin operations in earnest once the government approves its development plan. First commercial oil is likely to arrive 36 months after the approval of the development plan, Tullow has said.
Despite these teething problems, Mr. Laurandel said the company was "committed" to Uganda and intended to widen its investment in the country by participating in a fresh auction for exploration licenses later this year.
"We are committed to extend our stay in Uganda as much as we can. We shall definitely seek more licenses" Mr. Laurandel added.
Uganda has six unlicensed oil blocks and at least 10,000 square kilometers of relinquished acreage in the Lake Albertine Rift basin which will be auctioned during the next licensing round.
The next licensing round will begin after the enactment of three oil bills that are now before Parliament.
For the moment, Total expects initial output of around 20,000 barrels a day from its block on the northern tip of Lake Albert. This will gradually rise before reaching 200,000 to 230,000 barrels a day by 2020, said Mr. Laurandel.
The company plans to invest about $650 million in exploration and appraisal drilling in Uganda by the end of next year.
Write to Nicholas Bariyo at
Credit: By Nicholas Bariyo
Subject: Petroleum refineries; Petroleum industry
Location: China Uganda
Company / organization: Name: Total SA; NAICS: 447190, 324110, 211111; Name: Tullow Oil PLC; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Sep 28, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1080941540
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1080941540?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iraq Oil Exports to Rise in September
Author: Hassan Hafidh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]01 Oct 2012: n/a.
ProQuest document link
Abstract:
Iraq's crude oil exports in September are expected to exceed 2.6 million barrels a day, the first time exports have reached this level in over two decades, the Iraqi oil minister said Sunday.
Full text: Iraq's crude oil exports in September are expected to exceed 2.6 million barrels a day, the first time exports have reached this level in over two decades, the Iraqi oil minister said Sunday.
Abdul Kareem Luaiby told reporters in Baghdad that the country's total oil output in September is expected to hit some 3.3 million barrels a day.
Iraq exported an average of 2.565 million barrels a day in August and 2.515 million barrels a day in July.
The increase in Iraq's September exports is mainly from resumption of oil exports from the semiautonomous region of Kurdistan in northern Iraq. The Kurdish region has resumed exports of nearly 120,000 barrels a day during the first three weeks of August. Exports from the region went up to 140,000 barrels a day in September.
The Kurdistan Regional Government, or KRG, suspended exports in April this year, protesting the delay of payment by the central government to contracting companies in the northern region. Last week, Baghdad agreed to pay some 1 trillion Iraqi dinars ($850 million) to oil-producing foreign companies in Kurdistan.
Write to Hassan Hafidh at
Credit: By Hassan Hafidh
Subject: Petroleum industry; Petroleum production; Exports
Location: Baghdad Iraq Iraq Kurdistan
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 1, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1081403706
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1081403706?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Physical-Oil Oversight Won't Change
Author: Kent, Sarah; Cui, Carolyn; Trindle, Jamila
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 Oct 2012: n/a.
ProQuest document link
Abstract:
A U.S. Commodity and Futures Trading Commission internal memo about the IOSCO report, seen by The Wall Street Journal, said oil companies, the International Energy Agency and the Organization of Petroleum Exporting Countries disagree on whether greater price disclosure by traders is needed or even desirable.
Full text: A two-year investigation into whether the unregulated physical oil market is vulnerable to manipulation and needs tighter supervision looks set to end this week with a report that effectively endorses the current system, according to documents seen by The Wall Street Journal.
Responding to price volatility after the financial crisis that saw Brent crude climb to $144 a barrel in July 2008 and plunge a few months later to $35, the Group of 20 economically most developed nations in 2010 asked the International Organization of Securities Commissions to look at whether the physical oil market was at risk of manipulation and needed tighter regulation.
In a draft of its final report to governments of the G-20, the IOSCO backpedals from most of its earlier suggestions for tougher industry oversight, even as average retail gasoline prices in the U.S. hover close to the record level of just over $4 a gallon reached four years ago.
A U.S. Commodity and Futures Trading Commission internal memo about the IOSCO report, seen by The Wall Street Journal, said oil companies, the International Energy Agency and the Organization of Petroleum Exporting Countries disagree on whether greater price disclosure by traders is needed or even desirable.
The IOSCO planned to discuss the draft during a board meeting Wednesday and Thursday, and may publish a final report as early as Friday, an IOSCO spokeswoman said in a statement.
Trade in oil futures, such as international crude benchmarks Brent and West Texas Intermediate, is visible for the world to see on public exchanges such as the New York Mercantile Exchange. The market in physical cargo--that is, real oil delivered from producing nations to buyers around the word--is far less transparent.
Many trades are executed between two parties, and never made public.
Independent price-reporting companies, including Platts, owned by McGraw Hill Co., and privately-held Argus Media, poll oil traders every day and use a complex methodology, combining reported bids and offers and other data, to determine price benchmarks.
Platts and Argus compete in oil-market reporting with Dow Jones Newswires, which has the same parent company as The Wall Street Journal.
The benchmarks, as reported by these companies and published to subscribers, are used around the world to determine a wide of range of prices.
For instance, the Brent oil benchmark is used to price as much as 70% of the world's oil, everything from Russia's Urals grade, which usually trades at a discount to Brent, to crude from Nigeria, Africa's biggest producer of the commodity.
In addition, these benchmarks also affect the more actively traded futures and derivatives markets.
As output in the North Sea falls, reducing production for the oil grades used to set the price of physical Brent, the market has become less liquid. That has raised concern that a single participant could affect the benchmark with a large purchase.
In an initial report in March, the IOSCO said it was concerned about possible manipulation if traders submit false prices or volumes. The organization said it was considering establishing an industry regulator as well as requiring mandatory reporting of trades.
However, the group of regulatory agencies dropped the idea of direct oversight in an interim report published in June and is now abandoning its push for greater transparency in reporting trading activity.
"Had we insisted on these measures the [international organizations like the IEA and OPEC] made it clear that they would reject the report and send their own message of alarm to the G-20," the CFTC memo said. The commission is an IOSCO member and helped to formulate the international group's recommendations.
The latest retrenchment leaves IOSCO's overhaul proposal looking similar to a voluntary code proposed in April by Platts, Argus and ICIS, part of Reed Business Information.
The set of proposals in IOSCO's June interim report "mirrors lots of the things we've already started to do," Argus said at the time. Platts and Argus declined to comment on the latest draft from IOSCO.
The IOSCO's final draft focuses on a series of technical principles that lay out a code of best practice for oil-pricing companies, calling on players to maintain the integrity and quality of their methodology and employees, and recommending external auditing and the establishment of a system for complaints.
However, there is no system to directly enforce the principles the IOSCO has established.
The CFTC memo said that some regulators may still be able to indirectly enforce recommendations, by refusing the admission to exchanges and central clearing houses of any derivative contract that is based on a price reported by a company that doesn't adhere to IOSCO's principles. This could be a "strong incentive," for compliance, it said.
"The current system lends itself to misuse or abuse," said Democratic CFTC Commissioner Bart Chilton. It is critically important that regulators ensure all benchmarks are "good numbers," he said Tuesday.
Write to Sarah Kent at , Carolyn Cui at and Jamila Trindle at
Credit: By Sarah Kent, Carolyn Cui and Jamila Trindle
Subject: Petroleum industry; Reporting requirements; Benchmarks; Futures; International organizations; Journals
Company / organization: Name: Platts; NAICS: 511140, 541613; Name: Commodity Futures Trading Commission; NAICS: 926140, 926150; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: Group of Twenty; NAICS: 926110; Name: International Energy Agency; NAICS: 928120; Name: New York Mercantile Exchange; NAICS: 523210; Name: Dow Jones Newswires; NAICS: 519110; Name: International Organization of Securities Commissions; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 3, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1081986971
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1081986971?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Tumbles on Fears About China
Author: DiColo, Jerry A
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 Oct 2012: n/a.
ProQuest document link
Abstract:
Wednesday's drop came as weekly data from the U.S. Department of Energy showed that domestic oil production rose to 6.52 million barrels a day, the highest level since December 1996, and 12.4% higher than the output last year.
Full text: NEW YORK--Crude-oil futures tumbled 4.1% Wednesday, its biggest one-day drop since mid-December, as data on China showed slowing economic growth and added a new worry to investors' concerns about global fuel demand.
Light, sweet crude for November delivery settled $3.75 lower at $88.14 a barrel on the New York Mercantile Exchange, a two-month low. Europe's benchmark Brent crude fell $3.40, or 3%, to $108.17 a barrel.
Prices fell throughout the session, sparked by a reading of China's service sector that showed less expansion in September than in August, while consumer sentiment in the country fell for the third straight month. China is expected to represent 10.6% of global crude-oil demand this year, and any further weakness in the country's economy could quickly translate to lower global fuel usage.
"People are realizing that China is in a worse condition than they thought it was six months ago," said Mike Guido, head of energy hedge fund sales at Macquarie Group. "Today's move is a very big cash-out...the market now is very vulnerable."
Signs of slowing growth in China, coupled with economic weakness in Europe and falling fuel usage in the U.S., has some investors expecting that there is plently of oil supply to meet global demand this year.
Wednesday's drop came as weekly data from the U.S. Department of Energy showed that domestic oil production rose to 6.52 million barrels a day, the highest level since December 1996, and 12.4% higher than the output last year. U.S. gasoline demand fell 3.6% from last year to a 10-year low for this time of year.
Oil prices have fallen 11% from a four-month high of $99 a barrel hit on Sept. 14. Less than a month ago, the announcement of a new round of stimulus from the Federal Reserve buoyed crude, stocks and other commodities markets. But in recent days, crude-oil futures began to slump even as stock markets continued to move higher.
"Lately, they have not been well correlated," said Andy Lebow, an energy broker at Jefferies Bache in New York. "Oil is more focused on supply and demand. Demand is not growing and supplies are."
Meanwhile, concerns have begun to fade about possible military conflict between Israel and Iran, with fewer traders willing to bet that a supply disruption in the Middle East will send prices soaring.
"The only thing that has kept crude up has been the situation with Iran and Israel," said Tariq Zahir, managing member of Tyche Capital Advisors. Now, he said, "people are looking back to the fundamentals."
Front-month November reformulated gasoline blendstock, or RBOB, settled 6.97 cents, or 2.4%, lower at $2.7995 a gallon. November heating oil settled 5.91 cents lower $3.0664 a gallon.
Write to Jerry A. DiColo at
Credit: By Jerry A. DiColo
Subject: Supply & demand; Petroleum industry; Investments
Location: Europe United States--US China
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210; Name: Macquarie Group; NAICS: 523110; Name: Department of Energy; NAICS: 926130
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 3, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1082027720
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1082027720?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Tumbles On Fears About China
Author: DiColo, Jerry A
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]04 Oct 2012: C.4.
ProQuest document link
Abstract:
Wednesday's drop came as weekly data from the U.S. Department of Energy showed domestic oil production rose to 6.52 million barrels a day, the highest level since December 1996, and 12.4% higher than last year.
Full text: Crude-oil futures tumbled 4.1% Wednesday, its biggest one-day drop since mid-December, as data on China showed slowing economic growth and added a new worry to investors' concerns about global fuel demand.
Light, sweet crude for November delivery settled $3.75 lower at $88.14 a barrel on the New York Mercantile Exchange, a two-month low. Europe's benchmark Brent crude fell $3.40, or 3%, to $108.17 a barrel.
Prices fell throughout the session, sparked by a reading of China's service sector that showed less expansion in September than in August, while consumer sentiment in the country fell for the third month in a row. China is expected to represent 10.6% of global crude-oil demand this year, and any further weakness in the country's economy could quickly translate to lower global fuel usage.
"People are realizing that China is in a worse condition than they thought it was six months ago," said Mike Guido, head of energy hedge-fund sales at Macquarie Group.
Signs of slowing growth in China, coupled with economic weakness in Europe and falling fuel usage in the U.S., has some investors expecting that there is plenty of oil supply to meet global demand this year.
Wednesday's drop came as weekly data from the U.S. Department of Energy showed domestic oil production rose to 6.52 million barrels a day, the highest level since December 1996, and 12.4% higher than last year. U.S. gasoline demand fell 3.6% from last year to a 10-year low for this time of year.
Oil prices have fallen 11% from a four-month high of $99 a barrel hit on Sept. 14. Less than a month ago, the announcement of a new round of stimulus from the Federal Reserve buoyed crude, stocks and other commodities markets. But in recent days, crude-oil futures began to slump even as stock markets continued to move higher.
Meanwhile, concerns are fading about possible military conflict between Israel and Iran, with fewer traders willing to bet that a supply disruption in the Middle East will boost prices.
"The only thing that has kept crude up has been the situation with Iran and Israel," said Tariq Zahir, managing member of Tyche Capital Advisors. Now, he said, "people are looking back to the fundamentals."
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Credit: By Jerry A. DiColo
Subject: Petroleum industry; Crude oil; Investments; Commodity prices
Location: Europe United States--US China
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210; Name: Macquarie Group; NAICS: 523110; Name: Department of Energy; NAICS: 926130
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Oct 4, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1082125185
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1082125185?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Global Finance: Physical-Oil Oversight Won't Change
Author: Kent, Sarah; Cui, Carolyn; Trindle, Jamila
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]04 Oct 2012: C.3.
ProQuest document link
Abstract:
Responding to price volatility after the financial crisis that saw Brent crude climb to $144 a barrel in July 2008 and plunge a few months later to $35, the Group of 20 economically most-developed nations in 2010 asked the International Organization of Securities Commissions to look at whether the physical-oil market was at risk of manipulation and needed tighter regulation.
Full text: A two-year investigation into whether the unregulated physical-oil market is vulnerable to manipulation and needs tighter supervision looks set to end this week with a report that effectively endorses the current system, according to documents seen by The Wall Street Journal.
Responding to price volatility after the financial crisis that saw Brent crude climb to $144 a barrel in July 2008 and plunge a few months later to $35, the Group of 20 economically most-developed nations in 2010 asked the International Organization of Securities Commissions to look at whether the physical-oil market was at risk of manipulation and needed tighter regulation.
In a draft of its final report to governments of the G-20, Iosco backpedals from most of its earlier suggestions for tougher industry oversight, even as average retail gasoline prices in the U.S. hover close to the record level of just over $4 a gallon reached four years ago.
A U.S. Commodity Futures Trading Commission internal memo about the Iosco report, seen by the Journal, said oil companies, the International Energy Agency and the Organization of Petroleum Exporting Countries disagree on whether greater price disclosure by traders is needed or even desirable.
Iosco planned to discuss the draft during a board meeting Wednesday and Thursday, and may publish a final report as early as Friday, an Iosco spokeswoman said in a statement.
Trade in oil futures, such as international crude benchmarks Brent and West Texas Intermediate, is visible for the world to see on public exchanges such as the New York Mercantile Exchange.
The market in physical cargo -- that is, real oil delivered from producing nations to buyers around the word -- is far less transparent.
Many trades are executed between two parties and never made public.
Independent price-reporting companies, including Platts, owned by McGraw Hill Co., and privately held Argus Media, poll oil traders every day and use a complex methodology, combining reported bids and offers and other data, to determine price benchmarks.
Platts and Argus compete in oil-market reporting with Dow Jones Newswires, which has the same parent company as The Wall Street Journal.
The benchmarks, as reported by these companies and published to subscribers, are used around the world to determine a wide of range of prices.
For instance, the Brent oil benchmark is used to price as much as 70% of the world's oil, everything from Russia's Urals grade, which usually trades at a discount to Brent, to crude from Nigeria, Africa's biggest producer of the commodity.
In addition, these benchmarks also affect the more actively traded futures and derivatives markets.
As output in the North Sea falls, reducing production for the oil grades used to set the price of physical Brent, the market has become less liquid.
That has raised concern that a single participant could affect the benchmark with a large purchase.
In an initial report in March, Iosco said it was concerned about possible manipulation if traders submit false prices or volumes.
The organization said it was considering establishing an industry regulator as well as requiring mandatory reporting of trades.
However, the group of regulatory agencies dropped the idea of direct oversight in an interim report published in June and is now abandoning its push for greater transparency in reporting trading activity.
"Had we insisted on these measures the [international organizations like the IEA and OPEC] made it clear that they would reject the report and send their own message of alarm to the G-20," the CFTC memo said. The commission is an Iosco member and helped to formulate the international group's recommendations.
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Credit: By Sarah Kent, Carolyn Cui and Jamila Trindle
Subject: International; Reporting requirements; Benchmarks; Futures; International organizations; Petroleum industry
Company / organization: Name: Platts; NAICS: 511140, 541613; Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: Group of Twenty; NAICS: 926110; Name: International Energy Agency; NAICS: 928120; Name: New York Mercantile Exchange; NAICS: 523210; Name: Dow Jones Newswires; NAICS: 519110; Name: International Organization of Securities Commissions; NAICS: 813910
Classification: 9180: International; 8510: P etroleum industry; 4310: Regulation
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.3
Publication year: 2012
Publication date: Oct 4, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1082129856
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1082129856?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
India Oil Firms Buy Stake in Carrizo's Colorado Asset
Author: Sharma, Rakesh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]04 Oct 2012: n/a.
ProQuest document link
Abstract:
Indian companies are scrambling to buy oil and gas assets overseas to meet energy demand in Asia's third-largest economy, which relies on imports for about four-fifths of its crude oil and about a quarter of its gas needs.
Full text: NEW DELHI--State-run explorer Oil India Ltd. and refiner Indian Oil Corp. said Thursday they will acquire a 30% stake in Carrizo Oil & Gas Inc.'s Niobrara shale-oil acreage in Colorado for $82.5 million, gaining entry to America's booming shale industry.
Indian companies are scrambling to buy oil and gas assets overseas to meet energy demand in Asia's third-largest economy, which relies on imports for about four-fifths of its crude oil and about a quarter of its gas needs.
Shale gas finds in the U.S. have led to a supply glut and depressed prices, prompting companies like BHP Billiton, BP PLC and Encana Corp. to write down the value of their assets. Several explorers have looked for joint ventures or asset sales to salvage their weak balance sheets, making valuations attractive and igniting the interest of energy hungry countries like India.
India's state-run companies are eyeing assets in politically stable nations like the U.S. after suffering setbacks in countries such as Libya, Sudan and Syria, where production has been hit by unrest.
Indian Oil and Oil India will invest another $230 million over the next three or four years to develop the Niobrara shale-oil acreage, Oil India's director of finance, T.K. Ananth Kumar, said at a news conference Thursday.
Oil India, which has cash reserves of 130 billion rupees ($2.5 billion), will raise $100 million in debt overseas for the acquisition, as the cost of raising funds abroad is cheap, Mr. Kumar said.
Oil India and Indian Oil already hold stakes in oil and gas blocks overseas, including in Gabon, Iran, Libya, Nigeria, Yemen, Timor Leste and Venezuela. Oil India, which has a majority of its producing fields in northeast India, accounted for 10% of the country's oil and about 6% of its natural-gas output in the financial year through March.
Indian Oil is the country's largest refiner by capacity, owning 10 of the country's 22 refineries. It has been scouting for oil assets overseas to meet rising demand.
Carrizo's Niobrara shale acreage is producing about 2,000 barrels of oil equivalent a day and output is expected to touch 6,000 barrels a day in the next few years, Mr. Kumar said.
Carrizo, which is based in Houston, last year sold a 20% stake in its Eagle ford acreage in South Texas to state-run GAIL (India) Ltd. and in 2010 sold a 20% stake to privately held Reliance Industries Ltd. in its Marcellus shale acreage in Appalachia.
Credit: By Rakesh Sharma
Subject: Offshore oil wells; Petroleum industry; Equity stake; Natural gas
Location: Asia United States--US India Libya Colorado
Company / organization: Name: Reliance Industries Ltd; NAICS: 324110; Name: Carrizo Oil & Gas Inc; NAICS: 211111; Name: BP PLC; NAICS: 447110, 324110, 211111; Name: BHP Billiton; NAICS: 211111, 212231, 212234
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 4, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1082266194
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1082266194?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Few Home Comforts for Europe's Oil Majors
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]04 Oct 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Face it: Sometimes your relatives are just plain embarrassing.
Europe's oil companies certainly are feeling the strain of family ties. Speaking with The Wall Street Journal this week, Patrick de La Chevardière, chief financial officer of French oil company Total, complained that his company is penalized for being seen as a euro-denominated share.
He has a point. Like other oil companies, Total sells globally traded commodities largely priced in U.S. dollars. Its operations are spread across the globe; Credit Suisse says the company operates fields in more countries than any of its peers. Yet at 7.1 times forward earnings, its stock is the lowest rated of the sector, even below BP, which suffers from the legacy of its 2010 oil spill and problems in Russia.
Indeed, it is clear that since the financial crisis, a large and persistent valuation gap has opened up between U.S. oil companies and their euro-zone counterparts. Since the start of 2009, Total and Italian rival Eni have traded at an average discount of 17% to the average price/earnings multiple of Exxon Mobil, Chevron and ConocoPhillips. Right now, the gap is 26%.
Before the financial crisis, the gap was much narrower. The euro zone as well as U.K. companies BP and Royal Dutch Shell traded at premium multiples on average for much of 2005 and 2006.
In certain respects, the U.S. firms deserve some sort of premium. On average, they have lower leverage, longer-lived reserves and make more money on each barrel of oil equivalent that they produce. They also had less exposure to the disruptive effects of the Arab Spring.
Yet the gap looks less clear-cut in other respects. The U.S. oil companies' annual return on average capital employed was 12.3% on average from 2002 to 2011, according to data from Deutsche Bank. The euro-zone companies and Royal Dutch Shell--BP's results are severely dented by the 2010 disaster--clocked in at 12%.
Moreover, relative leverage levels haven't changed much over the past decade. In certain respects, the European companies also have an advantage: Total's huge exploration portfolio, for example, or the group's lower exposure to depressed U.S. natural-gas prices.
The euro-zone firms, in particular, have clearly suffered as their stocks have tracked the crisis-heavy French and Italian markets. Meanwhile, the U.S. companies enjoy a haven status: From August 2008 to January 2009, the European companies plummeted from a 6% premium to a 38% discount.
Even as the U.S. firms saw their price/earnings multiples undergo two expansions starting in late 2010 and late 2011, their euro-zone rivals have been weighed down. This corresponds with widening discounts at which French and Italian stocks in general trade against the Standard & Poor's 500-stock index as the region's economic crisis has unfolded.
In one sense, this offers a hopeful sign for Total and Eni. Oswald Clint of Sanford C. Bernstein points out that if mean reversion holds, their multiples should converge toward those of their U.S. rivals as the acute phase of the European crisis fades into the past.
The one fly in that particular ointment: Europe's long-standing ability to keep repeating history.
Write to Liam Denning at
Credit: By Liam Denning
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 4, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1082324020
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1082324020?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Study Calls for More Clarity on Oil Cargoes
Author: Kent, Sarah
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 Oct 2012: n/a.
ProQuest document link
Abstract:
The report, published by the International Organization of Securities Commissions on behalf of the Group of 20 largest economies, laid out a set of principles it said could prevent price manipulation in the oil market, but did little to go beyond voluntary practices already established by the main agencies that report oil prices.
Full text: LONDON--A two-year investigation into how to supervise the largely opaque and unregulated trade in oil cargoes ended Friday with a report that offered recommendations to improve transparency, but no enforceable rules.
The report, published by the International Organization of Securities Commissions on behalf of the Group of 20 largest economies, laid out a set of principles it said could prevent price manipulation in the oil market, but did little to go beyond voluntary practices already established by the main agencies that report oil prices.
Iosco said its recommendations will make the reporting of oil prices more reliable, but the report looks set to please oil companies that resisted the group's initial suggestions for direct regulatory oversight of the market, according to documents submitted to Iosco that were also published Friday.
Unlike the oil futures market--where trades are visible for the world to see on public exchanges--the market for actual cargoes of crude and refined oil is far less transparent.
Many trades are never made public and benchmark prices are based on assessments by independent price reporting agencies, including Platts, owned by McGraw Hill Cos, and privately held Argus Media.
These agencies poll oil traders every day and use complex and varied methodologies to determine price benchmarks. These reported prices are used around the world to determine the value of a wide range of oil cargoes, and underpin more actively traded futures and derivatives markets.
Platts and Argus compete in oil-market reporting with Dow Jones Newswires, which has the same parent company as The Wall Street Journal.
Iosco's report establishes a series of technical principles of best practice for oil-pricing agencies. Its focus is on ensuring pricing agencies have a robust methodology and well-trained staff in order to prevent inaccuracies and price manipulation.
Although the principles are voluntary, Iosco left open one method of indirect enforcement. If a price-reporting agency failed to adhere to its recommendations, market authorities could prevent the admission to exchanges and central clearing houses any derivative contract that is based on its prices, Iosco said.
The Iosco recommendations mark "a significant step forward to strengthen the robustness and reliability of [price] assessments referenced by oil derivatives contracts," said Masamichi Kono, the chairman of the group's board, in a statement. He called on price-reporting agencies to adopt the principles.
The group highlighted continuing concerns about whether transaction data submitted to price-reporting agencies gives a complete picture, because such submissions are voluntary.
The largest price-reporting agency, Platts, said it already adheres to the recommendations.
"Based on our initial review, it appears that many of the principles set forth in the IOSCO report are well aligned with Platts' current practices and provisions outlined in our draft code of conduct for Independent Price Reporting Organizations," Platts said in a written statement.
Letters from several large oil companies to Iosco, also published Friday, show strong resistance to full regulation of oil-price reporting. Saudi Aramco, the world's largest oil producer, said that Iosco had failed to produce sufficient evidence to justify the need for greater oversight of the pricing agencies.
U.K.-based oil giant BP PLC said in its submission to Iosco that, "we do not believe it is correct or appropriate to characterise the activities of price reporting agencies as posing systemic risks or moral hazard to the financial system." It also rejected the need for stricter oversight.
Iosco called for a follow-up evaluation of price-reporting agencies in 18 months to evaluate how its proposals have been implemented. It said that if the current recommendations prove ineffective it could consider direct regulation.
Write to Sarah Kent at
Credit: By Sarah Kent
Subject: Credit reports; Regulation of financial institutions; Petroleum industry
People: Kono, Masamichi
Company / organization: Name: Group of Twenty; NAICS: 926110; Name: Dow Jones Newswires; NAICS: 519110; Name: International Organization of Securities Commissions; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 5, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1084559085
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1084559085?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Drops 2% on Demand Concerns
Author: DiColo, Jerry A; Lefebvre, Ben
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 Oct 2012: n/a.
ProQuest document link
Abstract:
Exxon Mobil Corp. has begun rationing the fuel it supplies to some customers on the West Coast after a power outage Monday at the company's 149,500-barrel-a-day refinery in Torrance, Calif., though it expects the refinery to return to normal operations soon.
Full text: Crude-oil prices fell 2%, ending a week of big price swings, as the threat of gasoline-supply problems and refinery shutdowns raised concerns about oil demand.
The U.S. refining sector typically lowers fuel production at this time of year to perform maintenance, but unplanned outages, particularly on the West Coast, have cut the number of refineries turning oil into gasoline, diesel and other fuels. Two of the country's largest refiners have begun rationing gasoline on the West Coast. And on Thursday, a fire at the 584,000-barrel-a-day Baytown refinery in Texas renewed concerns about low fuel supplies and the impact of lower refining output on crude-oil demand.
"We do have a number of refiners in maintenance along with unplanned outages in the U.S. and Europe, and that is impacting crude demand," said Andy Lipow, president of Lipow Oil Associates, an energy-consulting firm in Houston. "Crude oil remains under pressure."
Light, sweet crude for November delivery fell $1.83, to $89.88 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures U.S. exchange closed down 56 cents, or 0.5%, at $112.02 a barrel.
Problems in the gasoline market this week created big swings in oil and gasoline futures. Meanwhile, concerns about supply problems in the Middle East and North Africa have begun to wane, and rhetoric between Iran and Israel has cooled.
Oil prices are down 9.2% from a high of $99 a barrel in mid-September, and some market watchers said further drops could be ahead.
"The prevailing attitude is this market probably should be a little lower," said Peter Donovan, an oil broker at Vantage Trading in New York.
The market for fuel products has added to the volatility in crude prices. Gasoline futures on Friday rose 0.96 cent, or 0.3%, to settle at $2.9525 a gallon, up 5.5% from a two-month low of $2.7995 a gallon Wednesday.
Refinery operator Valero Energy Corp. on Thursday said that it would stop selling fuel in the spot market due to worries about product availability. Exxon Mobil Corp. has begun rationing the fuel it supplies to some customers on the West Coast after a power outage Monday at the company's 149,500-barrel-a-day refinery in Torrance, Calif., though it expects the refinery to return to normal operations soon.
In Los Angeles, wholesale gasoline prices are up 16% over the past two weeks, and analysts said Friday that high prices likely would continue for weeks.
West Coast gasoline stocks stood at 26.6 million barrels during the last week of September, the lowest level for that time of year since 2008, according to the Energy Information Administration.
The focus on refinery issues and the gasoline market trumped a bullish report on the U.S. jobs market. After swings of nearly $4 in oil prices in each of the last two sessions, traders remained on edge and were reluctant to jump back into the market, said Carl Larry, head of trading adviser Oil Outlooks and Opinions.
"We're not seeing a lot of follow-through," he said. "The economic numbers are pointing up, but this week the oil market has been falling."
November heating oil lost 3.25 cents, or 1%, to settle at $3.1559 a gallon.
Write to Jerry A. DiColo at and Ben Lefebvre at
Credit: By Jerry A. DiColo and Ben Lefebvre
Subject: Petroleum refineries; Petroleum industry; Gasoline prices; Futures
Location: United States--US Texas
Company / organization: Name: Exxon Mobil Corp; NAICS: 447110, 211111; Name: New York Mercantile Exchange; NAICS: 523210; Name: Valero Energy Corp; NAICS: 486210, 324110, 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 5, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1086325602
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1086325602?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Uruguay Signs $1.65 Billion in Offshore Oil-Exploration Deals
Author: Turner, Taos
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 Oct 2012: n/a.
ProQuest document link
Abstract:
The companies include the U.K.'s BP PLC and BG Group PLC, France's Total SA, and Ireland's Tullow Oil PLC. They will join Uruguay's state-owned energy company, Ancap, to explore in eight offshore blocks, according to a statement on the Uruguay president's website.
Full text: BUENOS AIRES--Uruguay's government on Friday signed offshore exploration deals with four oil and gas companies that have committed to invest $1.65 billion over the next three years.
The companies include the U.K.'s BP PLC and BG Group PLC, France's Total SA, and Ireland's Tullow Oil PLC. They will join Uruguay's state-owned energy company, Ancap, to explore in eight offshore blocks, according to a statement on the Uruguay president's website.
The blocks are located in waters that range from 500 meters to 2,500 meters deep. BP and BG will each explore three blocks, while Total will explore one and Tullow another.
"This is the most significant event in the search for energy resources in recent years," Industry, Energy and Mining Minister Roberto Kreimerman said in the statement.
Mr. Kreimerman said the projects aim to diversify Uruguay's energy matrix.
"We have the chance for a country that is not an oil producer to have new wealth through this exploratory work, which will be done over the next three years, as well as the exploitation that follows," he said.
Mr. Kreimerman expects the drilling work to begin in mid-2013. He also said that by 2015 half of Uruguay's energy matrix will come from renewable energy.
Write to Taos Turner at
Credit: By Taos Turner
Subject: Petroleum industry; Natural gas utilities; Oil exploration
Location: Ireland France Uruguay United Kingdom--UK
Company / organization: Name: Tullow Oil PLC; NAICS: 211111; Name: BP PLC; NAICS: 447110, 324110, 211111; Name: Total SA; NAICS: 447190, 324110, 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 6, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1086333378
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1086333378?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Drops 2% on Demand Concerns
Author: DiColo, Jerry A; Lefebvre, Ben
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]06 Oct 2012: B.4.
ProQuest document link
Abstract:
Exxon Mobil Corp. has begun rationing the fuel it supplies to some customers on the West Coast after a power outage Monday at the company's 149,500-barrel-a-day refinery in Torrance, Calif., though it expects the refinery to return to normal operations soon.
Full text: Crude-oil prices fell 2%, ending a week of big price swings, as the threat of gasoline-supply problems and refinery shutdowns raised concerns about oil demand.
The U.S. refining sector typically lowers fuel production at this time of year to perform maintenance, but unplanned outages, particularly on the West Coast, have cut the number of refineries turning oil into gasoline, diesel and other fuels. Two of the country's largest refiners have begun rationing gasoline on the West Coast. And on Thursday, a fire at the 584,000-barrel-a-day Baytown refinery in Texas renewed concerns about low fuel supplies and the impact of lower refining output on crude-oil demand.
"We do have a number of refiners in maintenance along with unplanned outages in the U.S. and Europe, and that is impacting crude demand," said Andy Lipow, president of Lipow Oil Associates, an energy-consulting firm in Houston. "Crude oil remains under pressure."
Light, sweet crude for November delivery fell $1.83, to $89.88 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures U.S. exchange closed down 56 cents, or 0.5%, at $112.02 a barrel.
Problems in the gasoline market this week caused big swings in oil and gasoline futures. Meanwhile, concerns about supply problems in the Middle East and North Africa have begun to wane, and rhetoric between Iran and Israel has cooled.
Oil prices are down 9.2% from a high of $99 a barrel in mid-September, and some market watchers said further drops could be ahead.
"The prevailing attitude is this market probably should be a little lower," said Peter Donovan, an oil broker at Vantage Trading in New York.
The market for fuel products has added to the volatility in crude prices. Gasoline futures on Friday rose 0.96 cent, or 0.3%, to settle at $2.9525 a gallon, up 5.5% from a two-month low of $2.7995 a gallon Wednesday.
Refinery operator Valero Energy Corp. on Thursday said that it would stop selling fuel in the spot market due to worries about product availability. Exxon Mobil Corp. has begun rationing the fuel it supplies to some customers on the West Coast after a power outage Monday at the company's 149,500-barrel-a-day refinery in Torrance, Calif., though it expects the refinery to return to normal operations soon.
In Los Angeles, wholesale gasoline prices are up 16% over the past two weeks, and analysts said Friday that high prices likely would continue for weeks.
West Coast gasoline stocks stood at 26.6 million barrels during the last week of September, the lowest level for that time of year since 2008, according to the Energy Information Administration.
The focus on refinery issues and the gasoline market trumped a bullish report on the U.S. jobs market. After swings of nearly $4 in oil prices in each of the last two sessions, traders remained on edge and were reluctant to jump back into the market, said Carl Larry, head of trading adviser Oil Outlooks and Opinions.
"We're not seeing a lot of follow-through," he said. "The economic numbers are pointing up, but this week the oil market has been falling."
November heating oil lost 3.25 cents, or 1%, to settle at $3.1559 a gallon.
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Credit: By Jerry A. DiColo and Ben Lefebvre
Subject: Commodity prices; Crude oil
Location: United States--US
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.4
Publication year: 2012
Publication date: Oct 6, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1086481035
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1086481035?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The Qing Emperor's Legacy; A Sotheby's auction showcases some of China's oldest oil paintings.
Author: Sala, Ilaria Maria
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Oct 2012: n/a.
ProQuest document link
Abstract:
The scroll paintings, nearly life-size vertical scrolls, were hung in the Ziguangge hall, a war memorial hall housed in the Forbidden City (today part of the Zhongnanhai complex where most Chinese government leaders reside).
Full text: Hong Kong
The 17 men stare straight ahead, their mien martial and imposing, accentuated by full military uniforms and decorations, yet with a measure of puzzlement. Painted in oil in 1771 in Beijing and at the summer resort of Jehol (today called Chengde) in northern China, most likely by the German Jesuit Ignaz Sichelbarth with others, the bust portraits show eight imperial banner men and nine Turgut Mongol tribesmen.
The 17 oil paintings are among the first produced in China, on Korean paper, as Jesuits then favored, for lack of more standard alternatives. The remarkable collection "Portraits of Valour," which belongs to an unnamed German scholar, is now being sold by Sotheby's at its ongoing fall auction in Hong Kong. Each portrait is expected to fetch $80,000 to $600,000.
Part of the allure is the rough, weather-beaten faces, painted in realistic detail. A turquoise background makes them stand out even more, like improbable passport photos of 18th century militiamen. Their crooked noses, hairy moles and pock-marks are attentively recorded, as are the pale blue eyes of some of the Mongol tribesmen, together with their dashing pearl earring and peacock-feathered hats.
There's also the history. "It was the first time these men stood for portraits," explains Edie Hu, deputy director at Sotheby's. "And most likely they had no idea what they looked like, or why they were told to sit still in front of a painter," she says.
The sitters, like the painter himself, had no say in the matter, though. The portraits were ordered by the Qianlong Emperor, the fifth emperor of the Qing dynasty (1636-1912), one of his many stunning enterprises.
The Qianlong Emperor is arguably the greatest who ever ruled over the Middle Kingdom. His reign, spanning more than six decades (1736-1796), saw the country undergo a profound change: the economy and the population boomed; agriculture, technology, culture and the arts made spectacular advancements; China was admired by royal courts as far away as Europe; and thanks to military conquest, the boundaries of the empire grew to their greatest extent ever.
The troublesome Western frontiers, both in the North and in the South, were finally "pacified," a euphemism for gruesome conquests. Qianlong brought Mongolia into the fold, along with Taiwan. Tibet was firmly under Beijing's sphere of influence, although it retained its own government; the Tibetan high lamas were the only dignitaries allowed to sit at the same height as the Emperor during court visits.
By the late 1750s, Qianlong was starting to feel quite content with himself and his rule, and he turned his attention to leaving a tangible legacy of his accomplishments. "These portraits are part of the larger self-aggrandizing project Qianlong had: He wanted everyone to know how great he was, and that he had won the wars, so he personally commissioned Sichelbarth to take these sketches of the militiamen in order to insert highly accurate portraits of the generals that had fought and won for him in the scroll paintings that would later be made of his successful battles," says Ms. Hu of Sotheby's.
The scroll paintings, nearly life-size vertical scrolls, were hung in the Ziguangge hall, a war memorial hall housed in the Forbidden City (today part of the Zhongnanhai complex where most Chinese government leaders reside). The bust portraits Sotheby's has acquired are sketches that Siechelbarth had to hastily put together (with about one or two hours only for each painting) as visual documents in preparation of the larger full-frame scrolls for Qianlong to display.
Yeewan Koon, professor of art history at Hong Kong University, is more generous toward Qianlong's intentions. "Compared to his grandfather, and to many other emperors, [Qianlong] had relatively few children who survived into adulthood, which made him even more worried about the future. So he undertook this major project of leaving behind many material objects that would cement his legacy. Part of this was a documentary approach that made him decide to produce pseudo anthropological images of those who were populating his empire," she explains.
She adds that they would often be "a strange mix of performance and realism," where very life-like facial features would then be added on bodies caught in peculiar movements--hunting, crouching, standing or turning sideways, for added effect.
The portraits of the Turguts Mongols are a reflection of the "anthropological concern" Qianlong felt, but they also commemorate one of the greatest diplomatic coups of his reign. The Turguts, whose homeland had been brought under Chinese control in the early XVII century, had decided to run over the border to Tsarist Russia. But after a century of difficult relations with the Tsar, they elected to return to their ancestral land and swear allegiance to the Emperor of China.
Qianlong welcomed them, covering them with honors. He cherished the opportunity to be seen as the benefactor and benign ruler to whom Mongolian warriors would flock to, adding credit to his claim of running a multi-ethnic empire and being a universal sovereign.
But half-suspicious of their motives, he also decided to have them sketched realistically. The portraits were essentially "mug shots" of the suspects, should anything go awry.
Records show that in all about 40 of these bust-paintings were made in 1771. Most of them made their way to Europe towards the end of the 19th century, a few are lost, while a handful ended up in museums in St. Petersburg, Moscow and Germany. A German scholar kept this astounding lot in a box until earlier this year, and it is now being shown and sold to the public for the first time.
Ms. Sala is Hong Kong-based writer.
Credit: By Ilaria Maria Sala
Subject: Alliances
Location: Beijing China China Hong Kong
Company / organization: Name: Society of Jesus--Jesuits; NAICS: 813110; Name: Sothebys; NAICS: 453998
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 7, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1089164299
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1089164299?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Venezuela Votes; Venezuelan President Hugo Chávez soared to a bigger-than-expected victory over challenger Henrique Capriles on Sunday, surviving the biggest test of his 14 years in power and handing him another six-year mandate in the oil-rich nation.
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Oct 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Venezuelan President Hugo Chávez celebrated from a balcony at Miraflores Palace in Caracas, Venezuela. 'I extend from here my recognition of all who voted against us--recognition of their democratic weight,' he told thousands of cheering supporters below.
Mr. Chávez waved to supporters after voting in Caracas on Sunday. The former army paratroop commander won 54.4% of the vote compared with 45% for Henrique Capriles--who posed the strongest challenge to Mr. Chávez yet--with more than 90% of the vote counted.
Opposition candidate Mr. Capriles conceded defeat. 'I will continue working to build one country,' said the 40-year-old grandson of Holocaust survivors. He said in his concession speech that he rejects the idea of two Venezuelas divided by ideology and class.
Mr. Chávez gestured to supporters after he voted. When asked last week whether he would retire from politics if he lost, he responded: 'Lose? We don't lose. It's not in our destiny.' He won the last presidential election in 2006 with 63% of the vote.
A man and woman rode a motorcycle decorated with a Venezuelan flag near a polling station in Caracas.
Mr. Capriles, a state governor supported by a host of opposition parties, waved to supporters after he voted in Caracas. He had said he would be more welcoming to private oil companies and would try to depoliticize Petróleos de Venezuela SA, the state oil company.
Residents crowded outside a polling station.
People lined up at a polling station in Caracas's Petare area.
People lined up to vote in Caracas. Turnout was a surprising 81%, according to election officials.
Election workers assisted voters in a polling station decorated with a mural of independence hero Simón Bolívar in the Petare neighborhood.
An elderly woman wearing a militia uniform had her identification checked by an election worker. A loss for Mr. Chávez would have sent shock waves throughout Latin America. During the past decade, the leftist has become the leading voice against the U.S. in the region.
A woman celebrated after she cast her vote.
Members of the Bolivarian Armed Forces of Venezuela stood outside a polling station. Some polls gave Mr. Chávez a double-digit lead, but others showed the challenger with a narrow lead.
Venezuelans living in Mexico celebrated after they voted at the Venezuelan Embassy in Mexico City.
Mailyn Yoria, 19 years old, and her mother, Yelby Yoria, of Miami, smiled as they held a Venezuelan flag while they waited in line to vote at the New Orleans Ernest N. Morial Convention Center. Hundreds of Venezuelans living in the U.S. streamed into New Orleans to vote.
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 7, 2012
Section: World
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1090663413
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1090663413?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Cuba's Stake in the Chávez Presidency; Deepening privation is making Cubans restless. That privation will get worse if Venezuela stops supplying oil.
Author: O'Grady, Mary Anastasia
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Oct 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: All eyes were on the Venezuelan presidential election Sunday on the chance that incumbent Hugo Chávez might be forced to accept defeat. But few could have been watching more intently than the elite of the Cuban military dictatorship, who in recent years have become heavily dependent on virtually free Venezuelan oil, courtesy of Mr. Chávez, for its survival.
The day went relatively smoothly Sunday despite a heavy turnout that the Chávez-controlled National Electoral Council seemed ill-prepared to handle. Some voters claimed to have waited six hours in line. But Venezuelans were patient and there was no reported violence. As we went to press a winner had not been declared in the face-off between Mr. Chávez and Henrique Capriles Radonski, the governor of the state of Miranda. But in Cuba, the regime has been preparing for a Chávez thrashing, and the possible loss of oil flows, for many months.
On Thursday, state security detained internationally acclaimed journalist Yoani Sánchez and her husband, Reinaldo Escobar, as they traveled to the city of Bayamo. Ms. Sánchez was assigned to cover the trial of Spanish democracy advocate Angel Carromero there for the Spanish daily El Pais.
Mr. Carromero--who was at the wheel when Cuban human-rights defenders Oswaldo Payá and Harold Cepero were killed in a car wreck in July on the eastern end of the island--stands accused of vehicular manslaughter. Payá was a popular and charismatic leader of Cuba's growing dissident movement, and after the crash rumors were flying that the Spaniard's rental car had been forced off the road. If found to be true, the news would likely bring international condemnation of the Castro brothers and damage their recent efforts to reclaim some minimal legitimacy on the world stage.
The Payá family has called for an independent investigation. The government has ignored their request. Foreign journalists were allowed to sit in an adjacent room at the courthouse and watch the Friday "trial" on closed-circuit television. But secret police kept the Payá family away from the premises. No verdict has been handed down. Ms. Sánchez and her husband were released late Friday.
Silencing critics, making examples of meddling foreigners and running closed, summary trials are nothing new. But Cuba watchers say that as the dissidents have grown in number and have increasingly learned how to organize, the regime has been ratcheting up the repression.
The same day Ms. Sánchez was detained the regime also arrested 22 "pro-democracy activists who sought to attend a peaceful gathering in the town of Santa Clara to discuss a petition titled, 'Citizens' Demand for Another Cuba,' " according to the website Capitol Hill Cubans. Those taken into custody, the website notes, included the "2010 Sakharov Prize winner Guillermo Fariñas and former political prisoner Librado Linares." The arrests are part of a wider assault on government critics, among them the Ladies in White, who won the European Parliament's Sakharov Prize in 2005.
Deepening economic privation is making Cubans restless. And that privation is likely to get worse if Venezuela stops supplying oil to Cuba. According to Jorge Piñon, an energy expert at the University of Miami, Mr. Chávez has been sending almost 100,000 barrels of oil a day to the island. In exchange, Cuba ships doctors and social workers to Venezuela to serve the poor.
But it is highly doubtful that Venezuela is getting its money's worth. Mr. Capriles said last week that the 40,000 Cubans that Venezuela receives have a value of some $800 million per year while the oil sent to Cuba annually is worth $4 billion. He warned that if elected he would change the policy. "If we need Cuban doctors, we will pay for them," he announced. But "we cannot give away" the oil.
Even a re-elected Mr. Chávez would be under heavy economic pressure to revise the terms of the oil-for-doctors exchange, because the gap between Venezuelan spending and revenues will undoubtedly grow in the coming year. Roads and bridges are rapidly deteriorating, hospitals are in disrepair, and public security is almost nonexistent. Analysts expect a large devaluation of the Venezuelan bolivar next year.
Cuba also has to contend with the growing tendency of its doctors to flee once they get to Venezuela. Last week the Venezuelan daily El Universal reported that "as many as 80 Cuban physicians have left [Venezuela] on a monthly basis over the last 90 days." The paper also said that this year "the exodus may exceed the figure recorded in 2011--500 doctors." Yumar Gómez, who now lives in Miami, is one of them. "Let me tell you this," Mr. Gómez told El Universal, "many do not want to return to Cuba."
In a 2010 paper for the Cato Institute, Ms. Sánchez wrote: "Now that the state is out of money and there are no more rights to exchange for benefits, the demand for freedom is on the rise." No one understands that better than Raúl Castro, which is why the dictator was rooting hard for the Venezuelan incumbent Sunday.
Write to O'Grady@wsj.com
Credit: By Mary Anastasia O'Grady
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 7, 2012
column: The Americas
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1090663751
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1090663751?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Cuba's Stake in the Chávez Presidency; Deepening privation is making Cubans restless. Oil from Venezuela is essential to the regime's hold on power.
Author: O'Grady, Mary Anastasia
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 Oct 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: All eyes were on the Venezuelan presidential election Sunday on the off chance that incumbent Hugo Chávez might be forced to accept defeat. But few could have been watching more intently than the elite of the Cuban military dictatorship, who in recent years have become heavily dependent on virtually free Venezuelan oil, courtesy of Mr. Chávez, for its survival.
The day went relatively smoothly despite a heavy turnout that the Chávez-controlled National Electoral Council seemed ill-prepared to handle. Some voters claimed to have waited six hours in line but there was no violence.
It was after 10 p.m. when the CNE emerged to announce that Mr. Chávez had beaten Henrique Capriles Radonski, the governor of the state of Miranda. It was hardly surprising given how the cards were stacked against the challenger, as I explained in this space last week. Yet despite the Chávez "victory," Cuba still has plenty of reason to worry about the loss of oil flows. It has been preparing for the possibility for months.
On Thursday, state security detained journalist Yoani Sánchez as she traveled to the city of Bayamo. Ms. Sánchez was assigned to cover the trial of Spanish democracy advocate Angel Carromero there for the Spanish daily El Pais.
Mr. Carromero--who was at the wheel when Cuban human-rights defenders Oswaldo Payá and Harold Cepero were killed in a car wreck in July on the eastern end of the island--stands accused of vehicular manslaughter. Payá was a popular and charismatic leader of Cuba's growing dissident movement, and after the crash rumors were flying that the Spaniard's rental car had been forced off the road. If found to be true, it would badly damage the Castro brothers' attempts to gain legitimacy on the international stage.
The Payá family has called for an independent investigation. The government has ignored their request. Foreign journalists were allowed to sit in an adjacent room at the courthouse and watch the Friday "trial" on closed-circuit television. But secret police kept the Payá family away from the premises. No verdict has been handed down. Ms. Sánchez and her husband were released late Friday.
Silencing critics, making examples of meddling foreigners and running closed, summary trials are nothing new. But Cuba watchers say that as the dissidents have grown in number and have increasingly learned how to organize, the regime has been ratcheting up the repression.
The same day Ms. Sánchez was detained the regime also arrested 22 "pro-democracy activists who sought to attend a peaceful gathering in the town of Santa Clara to discuss a petition titled, 'Citizens' Demand for Another Cuba,' " according to the website Capitol Hill Cubans. The arrests are part of a wider assault on government critics, among them the Ladies in White, who won the European Parliament's Sakharov Prize in 2005.
Deepening economic privation is making Cubans restless. And that privation is likely to get worse if Venezuela stops supplying oil to Cuba. According to Jorge Piñon, an energy expert at the University of Miami, Mr. Chávez has been sending almost 100,000 barrels of oil a day to the island. In exchange, Cuba ships doctors and social workers to Venezuela to serve the poor.
But it is highly doubtful that Venezuela is getting its money's worth. Mr. Capriles said last week that the 40,000 Cubans that Venezuela receives have a value of some $800 million per year while the oil sent to Cuba annually is worth $4 billion. He warned that if elected he would change the policy. "If we need Cuban doctors, we will pay for them," he announced. But "we cannot give away" the oil.
Even the "re-elected" Mr. Chávez will be under heavy economic pressure to revise the terms of the oil-for-doctors exchange, because the gap between Venezuelan spending and revenues will undoubtedly grow in the coming year. Roads and bridges are rapidly deteriorating, hospitals are in disrepair, and public security is almost nonexistent. Analysts expect a large devaluation of the Venezuelan bolivar next year.
Last week the Venezuelan daily El Universal reported that "as many as 80 Cuban physicians have left [Venezuela] on a monthly basis over the last 90 days." The paper also said that this year "the exodus may exceed the figure recorded in 2011--500 doctors." Yumar Gómez, who now lives in Miami, is one of them. "Let me tell you this," Mr. Gómez told El Universal, "many do not want to return to Cuba."
In a 2010 paper for the Cato Institute, Ms. Sánchez wrote: "Now that the state is out of money and there are no more rights to exchange for benefits, the demand for freedom is on the rise." No one understands that better than Raúl Castro, which is why the dictator and his friends were celebrating the news from Venezuela Sunday night.
Write to
Credit: By Mary Anastasia O'Grady
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 8, 2012
column: The Americas
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1090664928
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1090664928?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iraq's Oil Output to More Than Double
Author: Kent, Sarah; Hassan Hafidh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 Oct 2012: n/a.
ProQuest document link
Abstract:
LONDON--Iraq's oil output is on track to more than double in the next decade, supplying almost half the growth in world oil output and making the country a key driver of future crude prices, the International Energy Agency said Tuesday.
Full text: LONDON--Iraq's oil output is on track to more than double in the next decade, supplying almost half the growth in world oil output and making the country a key driver of future crude prices, the International Energy Agency said Tuesday.
Iraq's oil production could hit 6.1 million barrels a day by 2020 and 8.3 million barrels a day by 2035, compared with just over 3 million barrels a day now, the IEA forecast in a special report on the country. The expansion will make Iraq "by far the largest contributor to global supply growth" over the next 20 years, taking the place of Russia as the world's second-largest oil exporter, it said.
The report shows how Iraq's large reserves could make it a major oil market power in the future, but also highlights political impediments and shortcomings in the country's infrastructure that continue tol stand in the way of this goal.
Failure to fulfill this potential "will hinder Iraq's recovery and put global energy markets on course for troubled waters," said the Paris-based agency, which represents the interests of major energy-consuming rich countries. Oil prices could rise to $140 a barrel by 2035, nearly $15 a barrel higher than the IEA's current central assumption, if there are significant delays in the development of Iraq's reserves.
Delay could also cost $3 trillion in lost national wealth for Iraq, the IEA said.
The IEA's projections look cautious compared with Iraq's forecasts. Based on several huge projects that the country began in collaboration with international oil companies in 2009 and 2010, Iraqi oil officials initially estimated oil production would rise to 12 million barrels a day in 2017, almost double the IEA's estimate.
More recently, the emergence of infrastructure bottlenecks prompted officials to reduce their 2017 output forecast to 8 million barrels a day. This figure is still unrealistic, according to many independent oil analysts, who have similar estimates to the IEA.
Iraq needs substantial investment in its infrastructure to ensure production meets its potential, said the IEA, including increased capacity in oil storage and transportation. As much as 8 million barrels a day of water will need to be brought inland and pumped underground to increase resource recovery from aging fields in southern Iraq, it said.
Iraq needs an average investment of $25 billion a year in the next decade to produce more than 6 million barrels a day by 2020, the IEA said, up from the $9 billion invested in 2011.
Further billions will also be needed to fix Iraq's dysfunctional electricity network if the country wants to fulfill its potential as an oil exporter, the IEA said. Iraq needs to increase its power generation capacity by 70% in order to fully meet demand. It must also shift away from its current dependence on oil-fired power plants and burn more natural gas if it wants to reap the full potential of its export earnings, the IEA said in its report.
"Without this transition, Iraq would forego around $520 billion in oil export revenues and domestic oil demand would be more than 1 million barrels a day higher in 2035," it said.
The IEA also said Iraq's lack of progress in modernizing its legal framework and institutions remain an obstacle to attracting the needed investment in the country's energy infrastructure.
Write to Sarah Kent at and Hassan Hafidh at
Credit: By Sarah Kent And Hassan Hafidh
Subject: Petroleum production; Petroleum industry; Energy policy; Infrastructure; Resource recovery
Location: Russia Iraq
Company / organization: Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 9, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1095244846
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1095244846?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wal l Street Journal
Oil Jumps 3.4% on Mideast Worry
Author: Biers, John M
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 Oct 2012: n/a.
ProQuest document link
Abstract:
Oil companies have delayed some loadings and pushed back maintenance on some North Sea fields that are influential in setting Brent crude prices, said analyst Stephen Schork.
Full text: NEW YORK--Crude-oil prices rose Tuesday as traders overlooked forecasts of economic weakness and focused on burgeoning tensions in the Middle East.
Light, sweet crude for November delivery on the New York Mercantile Exchange jumped $3.06, or 3.4%, to settle at $92.39 a barrel.
Anxiety about the Middle East centered on several possible scenarios, fueling talk that oil prices could soar above $100 a barrel if tensions continue to worsen.
Rising tension between Syria and Turkey has generated speculation that 400,000 barrels a day of oil shipped to Turkey from Iraq's northern Kurdistan region could be at risk in a border skirmish. Also on the market's mind: the possibility that Iran could support Syria against Turkey in such a dispute, market participants said.
Pressure on Iran to back off its nuclear program is also spooking markets. A call by Israeli Prime Minister Benjamin Nethanyahu to set up early elections in Israeli has been seen as "a referendum on war" between Israel and Iran, Mr. Flynn said.
"Iranian rumors of growing tensions are spooking this market," said Carl Larry, head of trading adviser Oil Outlooks and Opinions.
Rising concerns about the Middle East overwhelmed some other headlines that would normally embolden oil bears. A new report from the International Monetary Fund warned that the chance of a global economic slowdown is "alarmingly high." The IMF on Tuesday cut its global growth forecast for this year to 3.3% and to 3.6% in 2013. That is down from its July expectations of 3.5% growth in 2012 and 3.9% next year.
On Tuesday, Saudi oil minister Ali al-Naimi reiterated his support for more moderate oil prices.
Saudi Arabia is likely to continue to pump around 10 million barrels a day of crude this month, if customer demand requires, Mr. Naimi said, repeating calls for moderating prices to near $100 a barrel for Brent crude oil. "We would like to see the price moderating...we would like to see it lower toward $100," Mr. Naimi told reporters in Riyadh.
Yet oil markets instead focused on Middle Eastern tensions, and the pallid supply picture in some key markets. Oil companies have delayed some loadings and pushed back maintenance on some North Sea fields that are influential in setting Brent crude prices, said analyst Stephen Schork. Traders are aware as well that gasoline supplies in the U.S. are tight.
"With the combination of what we're seeing, I think we could make a run back up to the mid-90s. And if you break out there, we're back up to $100," said Mr. Schork.
But not everyone is convinced Tuesday's rally will last for long. Tariq Zahir, managing member of Tyche Capital Advisors, predicted the strength in prices would be "short-lived" unless there is an actual event that backs up the anxiety about the Middle East. Mr. Zahir sees the strengthening dollar as a drag on oil prices.
There is "a little bit of fear, but it won't be sustained," Mr. Zahir said.
Iman Dawoud and David Bird contributed to this article.
Credit: By John M. Biers
Subject: Petroleum industry; Crude oil; Crude oil prices; Economic conditions
Location: Iran Turkey Syria Iraq Middle East
Company / organization: Name: International Monetary Fund--IMF; NAICS: 522298; Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 9, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1095336219
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1095336219?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iraq Oil Output Seen to Double
Author: Kent, Sarah; Hassan Hafidh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 Oct 2012: n/a. [Duplicate]
ProQuest document link
Abstract:
LONDON--Iraq's oil output is on track to more than double in the next decade, supplying almost half the growth in world oil supply and making the country a driver of future crude prices, the International Energy Agency said Tuesday.
Full text: LONDON--Iraq's oil output is on track to more than double in the next decade, supplying almost half the growth in world oil supply and making the country a driver of future crude prices, the International Energy Agency said Tuesday.
Iraq's oil production could hit 6.1 million barrels a day by 2020 and 8.3 million barrels a day by 2035, compared with just over 3 million barrels a day now, the IEA forecast in a special report on the country. The expansion will make Iraq "by far the largest contributor to global supply growth" over the next 20 years, taking the place of Russia as the world's second-largest oil exporter, it said.
The report shows how Iraq's large reserves could make it a major oil market power in the future and significantly aid its economic recovery.
"Production growth in oil and even in natural gas will provide the chance to transform Iraq's economy," said Fatih Birol, chief economist at the IEA. "Oil revenues can provide solid foundations for a prosperous country."
However, the report highlights political impediments and shortcomings in the country's infrastructure that stand in the way of this goal.
Failure to fulfill this potential "will hinder Iraq's recovery and put global energy markets on course for troubled waters," said the Paris-based agency, which represents the interests of energy-consuming rich countries. Oil prices could rise to $140 a barrel by 2035, nearly $15 a barrel higher than the IEA's current central assumption, if there are significant delays in the development of Iraq's reserves.
Delay could also cost $3 trillion in lost national wealth for Iraq, the IEA said.
The IEA's projections look cautious compared with Iraq's forecasts. Based on several huge projects that the country began in collaboration with international oil companies in 2009 and 2010, Iraqi oil officials initially estimated oil production would rise to 12 million barrels a day in 2017, almost double the IEA's estimate.
More recently, the emergence of infrastructure bottlenecks prompted officials to reduce their 2017 output forecast to 8 million barrels a day. This figure is still unrealistic, according to many independent oil analysts, who have similar estimates to the IEA.
The IEA said it worked closely with Iraqi officials to produce its report and its most optimistic scenario matches the Iraqi government's projections.
"We agree that we have different views," said Mr. Birol of the Iraqi response to the report. "We are much more careful, especially regarding the challenges lying ahead," he said, adding that immediate action would be necessary to remove impediments to production growth if the Iraqi government's targets are to be met.
Iraq needs substantial investment in its infrastructure to ensure production meets its potential, said the IEA, including increased capacity in oil storage and transportation. As much as 8 million barrels a day of water will need to be brought inland and pumped underground to increase resource recovery from aging fields in southern Iraq, it said.
Iraq needs an average investment of $25 billion a year in the next decade to produce more than 6 million barrels a day by 2020, the IEA said, up from the $9 billion invested in 2011.
Further billions will also be needed to fix Iraq's dysfunctional electricity network if the country wants to fulfill its potential as an oil exporter, the IEA said. Iraq needs to increase its power generation capacity by 70% in order to fully meet demand, but the IEA added this could be possible by 2015 if planned new capacity is delivered on time.
The country must also shift away from its current dependence on oil-fired power plants and burn more natural gas if it wants to reap the full potential of its export earnings, the IEA said in its report.
"Without this transition, Iraq would forego around $520 billion in oil export revenues and domestic oil demand would be more than 1 million barrels a day higher in 2035," it said.
A long-running dispute between Iraq's central government in Baghdad and the Kurdistan Regional Government in Erbil over who has the right to grant oil exploration licenses could also be an obstacle to full development of Iraq's oil reserves. Encouraging signs between Baghdad and Erbil in recent weeks make the IEA think the dispute won't stop Iraq hitting its production targets, said Mr. Birol.
The IEA anticipates that much of the extra Iraqi oil production will head to Asia, meaning around 80% of the country's exports will be heading east by 2020. Currently, Iraq's exports are split fairly evenly between supply to Asia and other regions. Chinese companies are expected to be important players in helping Iraq develop its oil reserves, participating in around 30% of the production increase.
Write to Sarah Kent at and Hassan Hafidh at
Credit: By Sarah Kent And Hassan Hafidh
Subject: Iraq War-2003; Petroleum industry; Petroleum production; Infrastructure; Resource recovery
Location: Russia Iraq
Company / organization: Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 9, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1095339683
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1095339683?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Stree t Journal
New Sanctions to Further Challenge Iranian Oil Sales
Author: Faucon, Benoit
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 Oct 2012: n/a.
ProQuest document link
Abstract:
Pressure is also increasingly directed at Iran's ability to ship its crude. Because the EU sanctions impose insurance restrictions on tankers, many oil buyers are forced to rely on Tehran's ships to carry its oil.
Full text: Iran's oil-export decline may have bottomed out for now, but the trouble isn't over for the country's crude sales.
Recently enacted sanctions and further proposed restrictions are set to tighten the noose at both ends, by hindering the Islamic republic's ability to ship the commodity and to be paid for it.
Mohammad-Reza Bahonar, Iran's deputy speaker of parliament, recently said that oil exports stood at one million barrels a day in September, a slight rebound from 800,000 barrels in the summer.
The numbers are confirmed by independent shipping trackers and are set to further stabilize this month after South Korea resumed importing Iranian crude oil after a three-month interruption.
But this is little relief for Iran, whose currency slumped 25% last week before recovering, but only after the government imposed fixed-currency rates. This came after an escalation of sanctions from a European Union embargo on its crude that were put in place July 1. Separately, the U.S. introduced restrictions in June on dealings with the Central Bank of Iran that sharply hit oil revenue.
Yet, with no end in sight in the deadlock over Iran's nuclear program, the EU and the U.S. are preparing new measures that could dent its oil sales again. The West suspects Tehran is attempting to build an atomic bomb, which it denies.
Two weeks ago, the U.S. Treasury Department said it had concluded that National Iranian Oil Co.--the state owned company tasked with marketing its oil--was linked to the country's Revolutionary Guards.
That assertion could force all foreign financial institutions to sever their dealings with National Iranian Oil or risk cutting off their access to the U.S. banking system. Until now, only U.S. institutions were banned from transactions with the Iranian company, which denies any military link.
The move "will increase pressure on NIOC to rely on nontraditional payment methods," such as bartering or using private brokers and banks not dependent on the U.S. market, says Michael Burton, a Washington-based sanctions lawyer at Arent Fox. Such methods generally come with a price. Intermediaries and institutions outside the mainstream of global finance charge between 5% and 20%, instead of 2% normally, to conduct transactions for Iranian entities, traders in Tehran say.
The U.S. and the EU are also considering separate, tighter legislation that could block transactions with Iran's Central Bank, making it even more difficult to collect foreign currency from its oil sales.
Pressure is also increasingly directed at Iran's ability to ship its crude.
Because the EU sanctions impose insurance restrictions on tankers, many oil buyers are forced to rely on Tehran's ships to carry its oil. But because of U.S. pressure, Iran's main oil-vessels operator, the National Iranian Tanker Co., is struggling to find new flags under which to operate or get independent companies to inspect its ships for safety. Without those requirements, its ships may not be allowed to dock at international ports.
Iran tankers have been forced to repeatedly change the countries they used for their flags, most lately after Washington asked Tuvalu and Tanzania to drop newly registered ships from the Islamic Republic. The constant changes can make the cost of transporting Iranian oil higher.
There could be more challenges in the offing for Iran's oil shipping--its only avenue to bring its crude to buyers in the absence of export pipelines.
The U.S. is still examining whether National Iranian Tanker should also be designated as an agent of Iran's Revolutionary Guard, which would ban foreign banks from dealing with it.
Already, U.S. institutions are no longer authorized to work with the company after it was designated as an Iranian government entity in July. The tanker operator denies any military connection and says it was privatized 12 years ago.
But even if it isn't targeted by new specific sanctions, it could become subject to a blanket ban on dealing with Iran oil.
Also, legislation proposed in the U.S. House of Representatives would effectively blacklist Iran's entire energy sector as a "zone of primary proliferation concern," and prohibit most energy-related trade with Iran.
Mark Dubowitz, an executive director at the Foundation for Defense of Democracies, which campaigns for sanctions against Iran's nuclear program, estimates that sanctions on National Iranian Tanker would lead to a new reduction of 20% to 25%, or 100,000 to 150,000 barrels, per day. That is because Japan, South Korea and India would further cut their imports from Iran, he said.
But Trevor Houser, a director at New York research firm Rhodium Group, said such move could hit Iran's trades with its largest remaining customer, China.
Also, if the tanker company was "designated as an entity supporting terrorism or proliferation, that would put Chinese companies buying Iranian oil at significant risk" of sanctions because of their U.S. investments, said Trevor Houser, a director at New York research firm Rhodium Group.
China could use its own tankers "but they would still need to find a way through the shipping insurance problems created by EU sanctions," Mr Houser added.
Min-Jeong Lee in Seoul contributed to this article.
Write to Benoit Faucon at
Credit: By Benoit Faucon
Subject: Sanctions; Petroleum industry; Central banks
Location: United States--US Iran South Korea
Company / organization: Name: European Union; NAICS: 926110, 928120; Name: Department of the Treasury; NAICS: 921130; Name: Central Bank-Iran; NAICS: 521110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 9, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1095370589
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1095370589?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Find Offers Hope for Ireland
Author: Williams, Selina; Herron, James
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 Oct 2012: n/a.
ProQuest document link
Abstract:
The oil price hovered between $10 and $15 a barrel for most of the 1970s, when Barryroe was first drilled by Esso, now part of Exxon Mobil Corp. "That was a different time when the technology wasn't there, the fiscal regime was different, the price was low and there wasn't any infrastructure.
Full text: LONDON--An oil field in the Celtic Sea may prove to be a game changer for Ireland, possibly producing enough to make the country self-sufficient in crude or even turning it into an exporter of the commodity, Irish oil company Providence Resources PLC said on Wednesday.
Development of the Barryroe field could yield as much as 280 million recoverable barrels of oil, Providence said. This is just a fraction of the size of the largest recent discoveries in the Norwegian sector of Europe's main oil-producing area, the North Sea, but could help create badly-needed jobs and boost revenue.
"It's a calling card to the industry at large to say, hey guys look at Ireland--it's in your backyard," said Providence Chief Executive Tony O'Reilly. "It's massively underexplored and here's a demonstration there are active hydrocarbon systems in Ireland of scale."
Ireland is struggling to recover from a collapse in its property market that caused a banking crisis and forced the government to seek an international bailout. The country has undergone five years of economic austerity while unemployment has soared to 14.8%, more than three times as high in 2007, when the boom turned to bust.
Production at Barryroe may reach a peak level of 100,000 barrels a day for each platform installed on the field, and it would be possible to build several platforms, depending on the level of investment, the company said.
Ireland consumed 142,000 barrels of oil a day in 2011, but produced none, according to the BP Statistical Review of World Energy.
Barryroe was last estimated to contain as much as 1.7 billion barrels, but there was no projection of how much of that could be recovered. The recovery rate announced Wednesday is better than many analysts had forecast.
The estimate of recoverable reserves from Barryroe was probably fairly accurate and Providence should be able to develop the field using well-established industry techniques, said Stuart Joyner, an analyst at Investec.
"It's not really challenging," Mr. Joyner said. "It's well within the industry envelope of knowledge."
Providence, a Dublin-listed company with a market capitalization of [euro]564 million euros ($727 million), said it is seeking partners to help fund development costs estimated at around $15-$20 a barrel, or $4.2 billion-$5.6 billion for the entire field, according to a spokeswoman for the company.
Mr. O'Reilly said he was aiming to get other partners in the first quarter of next year through a sale of part of the company's stake of 80%. Lansdowne Oil and Gas PLC is a current partner.
"There have already been a few people who've expressed an interest but it's early days," he said.
Providence was founded in 1997 and has been led since 2005 by Mr. O'Reilly, previously a senior executive at mining company Arcon International Resources PLC, and the son of Anthony O'Reilly, a rugby player who became an Irish national hero. Mr. O'Reilly Snr. created a business empire that included Independent News & Media PLC, an operator of national newspapers in Ireland and the U.K. Financial problems led Mr. O'Reilly to the sell the U.K. newspapers to Russian tycoon Alexander Lebedev in 2010.
Barryroe is one of several Providence oil fields that were first discovered decades ago, but abandoned because a combination of lower oil prices and high offshore production costs made them uneconomical. The oil price hovered between $10 and $15 a barrel for most of the 1970s, when Barryroe was first drilled by Esso, now part of Exxon Mobil Corp.
"That was a different time when the technology wasn't there, the fiscal regime was different, the price was low and there wasn't any infrastructure. You move on 30 years and all of that has changed," Mr. O'Reilly said
Providence has been doggedly pursuing the development of these neglected Irish oil discoveries for several years. The company says that advances in technology and infrastructure, along with higher commodity prices make these fields commercially viable today.
For example, one development plan for Barryroe envisages use of 41 horizontal production and 22 horizontal water-injection wells, to be drilled over 25 years. Horizontal wells are harder to drill than vertical ones, but have become standard industry practice in recent years and allow for greater oil productivity from a smaller number of boreholes.
The final development plan will depend on, "further evaluation of technical, environmental and financial matters," Providence said.
Providence made its first modest oil discovery in the Celtic Sea in 2007. Limited resources and the high cost of offshore exploration have slowed progress.
The company and its partners finally started a two-year, $500 million drilling program in six basins off Ireland in 2011. This is the largest probe of oil reserves ever carried out in the country's waters and is aimed at both proving the commercial viability of existing resources and discovering new ones.
Write to Selina Williams at
Credit: By Selina Williams And James Herron
Subject: Petroleum industry; Oil reserves; Technological change
Location: Ireland Celtic Sea
Company / organization: Name: Providence Resources PLC; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 10, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1095482884
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1095482884?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Retreats as Traders Turn Focus to Ample Supply
Author: DiColo, Jerry A
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 Oct 2012: n/a.
ProQuest document link
Abstract:
Additionally, the U.S. Energy Information Administration said the fourth quarter will see a recovery in oil production from non-OPEC countries as fuel consumption declines.
Full text: NEW YORK--U.S. crude-oil futures fell Wednesday after a surge in the previous session, as traders looked to reports on the global oil market that suggest plentiful supplies and slumping demand growth.
Light, sweet crude oil for November delivery fell $1.14, or 1.2%, to settle at $91.25 a barrel on the New York Mercantile Exchange, after bouncing between gains and losses throughout the session. Brent crude oil on the ICE futures exchange fell 17 cents to settle at $114.33 a barrel.
Oil prices fell after data from the U.S. Energy Department and the Organization of Petroleum Exporting Countries suggested that oil-demand growth is slowing in the fourth quarter and into next year.
OPEC said early Wednesday that oil supplies will remain comfortable in the coming year and cut its forecast for 2012 oil-demand growth by 100,000 barrels a day to 800,000 barrels a day. The group warned that next year's demand faces "considerable uncertainties" that could lower its 2013 growth estimate by as much as 20%.
Additionally, the U.S. Energy Information Administration said the fourth quarter will see a recovery in oil production from non-OPEC countries as fuel consumption declines.
"The demand side looks ugly, and I think it only gets uglier," said Richard Soultanian, co-president of NUS Consulting, which manages companies' energy hedging. "Whoever is on the upside on the trade is the eternal optimist, but the fundamentals are becoming harder to ignore."
The gloomy outlooks followed a report from the International Monetary Fund earlier this week suggesting that the risk of a global recession has risen. Meanwhile, stock markets fell on Wednesday, dragging oil lower as traders look to equities as a gauge of the broader economy.
Oil prices have seen big swings in recent days, but have still remained close to the level of $90 a barrel since falling from near $100 a barrel in mid-September. Traders and analysts say that the supply and demand outlook points to lower prices, but few are willing to bet on big declines while conflicts simmer in the Middle East.
"Right now the market is undecided on the next move," said Phil Flynn, an energy analyst at Price Futures Group. "Weaker demand should mean lower prices, but in a world hell-bent on keeping the economy afloat with stimulus, and the rising geopolitical risk, supply and demand won't matter."
On Tuesday, prices rose more than $3 a barrel as Israeli Prime Minister Benjamin Netanyahu called parliamentary elections for early 2013, a move seen by some as a way to shore up his political base ahead of possible military action against Iran.
Concerns about Turkey and Syria continued to mount after Turkey's top military commander warned that the country would take tougher action if Syrian shells continued to land on Turkish territory. While Turkey and Syria aren't major oil producers, the possibility of expanded military activity highlights the threat that Syria's civil war could devolve into a regional conflict.
Turkey is also an important oil-transportation route, and fears have grown that the 400,000 barrels a day of Iraqi oil piped to the Turkish port of Ceyhan could become a target.
On Thursday, the EIA will release data on weekly U.S. oil stockpiles, delayed a day by the Columbus Day holiday on Monday. Analysts expect oil inventories will rise by 600,000 barrels.
Front-month November reformulated gasoline blendstock, or RBOB, settled 0.06 cent higher at $2.9593 a gallon. November heating oil settled 0.99 cent, or 0.3%, higher at $3.2131 a gallon.
Write to Jerry A. DiColo at
Credit: By Jerry A. DiColo
Subject: Crude oil prices; Petroleum industry; Supply & demand; Petroleum production; Crude oil; Futures
Location: Turkey United States--US
People: Netanyahu, Benjamin
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: New York Mercantile Exchange; NAICS: 523210; Name: International Monetary Fund--IMF; NAICS: 522298
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 10, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1095523196
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1095523196?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Oil Industry Sues to Block Rule on Payments Abroad
Author: Holzer, Jessica
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]10 Oct 2012: n/a.
ProQuest document link
Abstract:
The American Petroleum Institute, the U.S. Chamber of Commerce and two other business groups argued in papers filed in federal court in Washington, D.C., Wednesday that the SEC exceeded its authority when it adopted the final rule in August and that it ignored companies' suggestions for limiting the rule's cost.
Full text: WASHINGTON--The oil industry sued to overturn a U.S. rule requiring companies to report their payments to foreign governments to develop oil and gas fields, arguing the information would provide valuable secrets to competitors.
The Securities and Exchange Commission regulation, mandated by the 2010 Dodd-Frank financial law, aims to help people in oil-rich countries hold their government officials to account for the money the governments receive for oil and mineral rights.
The American Petroleum Institute, the U.S. Chamber of Commerce and two other business groups argued in papers filed in federal court in Washington, D.C., Wednesday that the SEC exceeded its authority when it adopted the final rule in August and that it ignored companies' suggestions for limiting the rule's cost.
The SEC is required by federal law to weigh the costs of its regulations.
"It was a well-intentioned provision in the Dodd-Frank law, but the SEC just overstepped and went well beyond what was necessary to support transparency," said American Petroleum Institute President Jack Gerard. He called the SEC's approach "arbitrary and capricious."
SEC spokesman John Nester said, "While we are still reviewing the suit, we believe our legal interpretation and economic analysis are sound, and we look forward to defending the rule that Congress directed us to write."
Eugene Scalia of the law firm Gibson, Dunn & Crutcher LLP, who has racked up multiple victories against the SEC, will argue the oil industry's case.
This represents the third time the business community has turned to Mr. Scalia, a son of Supreme Court Justice Antonin Scalia, for help challenging rules stemming from the Dodd-Frank law. Last month, he won a case overturning new limits on commodity trading that futures regulators said were required by the law.
The Dodd-Frank law requires all U.S.-listed oil and gas companies to disclose each year their royalties, fees and other payments to the U.S. and foreign governments for extracting oil, gas and minerals. A bipartisan group of senators attached the provision to the law, citing concerns about the persistent poverty found in some oil-rich countries, where corrupt officials prevent oil wealth from reaching average citizens.
Under the law, companies must report total amounts paid to a foreign government by payment type and project and attach electronic tags to the information.
All the major U.S.-listed oil companies already participate in a voluntary project called the Extractive Industry Transparency Initiative that publicizes the industry's payments to 36 countries. But the industry argues that the SEC's rule goes too far.
The companies say it will force them to disclose sensitive information--such as their expected rate of return on a given project--and hand their foreign competitors a tactical advantage the next time they vie for oil rights. Sixteen of the biggest oil companies, including large state-owned competitors outside the U.S., wouldn't have to comply with the law because they aren't listed on U.S. stock exchanges, the American Petroleum Institute said.
"All your competitors will know what your standards are," Mr. Gerard said. "They will know what to do to beat you."
The industry wanted the SEC to require disclosure only at the country or province level, rather than the level of specific projects. It also asked for an exemption from the reporting requirement when foreign governments prohibit such disclosure.
"Nobody intended for each company to divulge its basic playbook country by country, project by project, year by year," said Karen Harbert, president of the U.S. Chamber's Energy Institute.
The SEC rejected both demands, saying they weren't permitted under the Dodd-Frank law. The regulator didn't define the term "project" in its final regulation but said it believed the law requires companies to go deeper than country-level reporting.
"What the oil companies asked for was a violation of the statute," said Corinna Gilfillan, head of the U.S. office for Global Witness, a human-rights group.
The SEC estimated that complying with the rule would cost companies roughly $1 billion up front and between $200 million and $400 million each year. The estimates don't include the costs that companies could incur if they are forced to pull their operations from countries that forbid the disclosures. The SEC said that could add billions to companies' costs.
Write to Jessica Holzer at
Credit: By Jessica Holzer
Subject: Petroleum industry; Reporting requirements; Natural gas utilities; Disclosure
Location: United States--US
Company / organization: Name: Congress; NAICS: 921120; Name: Gibson Dunn & Crutcher LLP; NAICS: 541110; Name: American Petroleum Institute; NAICS: 813910, 541820; Name: US Chamber of Commerce; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 10, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1095538073
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1095538073?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Industry Sues to Block Rule on Payments Abroad
Author: Holzer, Jessica
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]11 Oct 2012: n/a.
ProQuest document link
Abstract:
The American Petroleum Institute, the U.S. Chamber of Commerce and two other business groups argued in papers filed in federal court in Washington, D.C., Wednesday that the SEC exceeded its authority when it adopted the final rule in August and that it ignored companies' suggestions for limiting the rule's cost.
Full text: WASHINGTON--The oil industry sued to overturn a U.S. rule requiring companies to report their payments to foreign governments to develop oil and gas fields, arguing the information would provide valuable secrets to competitors.
The Securities and Exchange Commission regulation, mandated by the 2010 Dodd-Frank financial law, aims to help people in oil-rich countries hold their government officials to account for the money the governments receive for oil and mineral rights.
The American Petroleum Institute, the U.S. Chamber of Commerce and two other business groups argued in papers filed in federal court in Washington, D.C., Wednesday that the SEC exceeded its authority when it adopted the final rule in August and that it ignored companies' suggestions for limiting the rule's cost.
The SEC is required by federal law to weigh the costs of its regulations.
"It was a well-intentioned provision in the Dodd-Frank law, but the SEC just overstepped and went well beyond what was necessary to support transparency," said American Petroleum Institute President Jack Gerard. He called the SEC's approach "arbitrary and capricious."
SEC spokesman John Nester said, "While we are still reviewing the suit, we believe our legal interpretation and economic analysis are sound, and we look forward to defending the rule that Congress directed us to write."
Eugene Scalia of the law firm Gibson, Dunn & Crutcher LLP, who has racked up multiple victories against the SEC, will argue the oil industry's case.
This represents the third time the business community has turned to Mr. Scalia, a son of Supreme Court Justice Antonin Scalia, for help challenging rules stemming from the Dodd-Frank law. Last month, he won a case overturning new limits on commodity trading that futures regulators said were required by the law.
The Dodd-Frank law requires all U.S.-listed oil and gas companies to disclose each year their royalties, fees and other payments to the U.S. and foreign governments for extracting oil, gas and minerals. A bipartisan group of senators attached the provision to the law, citing concerns about the persistent poverty found in some oil-rich countries, where corrupt officials prevent oil wealth from reaching average citizens.
Under the law, companies must report total amounts paid to a foreign government by payment type and project and attach electronic tags to the information.
All the major U.S.-listed oil companies already participate in a voluntary project called the Extractive Industry Transparency Initiative that publicizes the industry's payments to 36 countries. But the industry argues that the SEC's rule goes too far.
The companies say it will force them to disclose sensitive information--such as their expected rate of return on a given project--and hand their foreign competitors a tactical advantage the next time they vie for oil rights. Sixteen of the biggest oil companies, including large state-owned competitors outside the U.S., wouldn't have to comply with the law because they aren't listed on U.S. stock exchanges, the American Petroleum Institute said.
"All your competitors will know what your standards are," Mr. Gerard said. "They will know what to do to beat you."
The industry wanted the SEC to require disclosure only at the country or province level, rather than the level of specific projects. It also asked for an exemption from the reporting requirement when foreign governments prohibit such disclosure.
"Nobody intended for each company to divulge its basic playbook country by country, project by project, year by year," said Karen Harbert, president of the U.S. Chamber's Energy Institute.
The SEC rejected both demands, saying they weren't permitted under the Dodd-Frank law. The regulator didn't define the term "project" in its final regulation but said it believed the law requires companies to go deeper than country-level reporting.
"What the oil companies asked for was a violation of the statute," said Corinna Gilfillan, head of the U.S. office for Global Witness, a human-rights group.
The SEC estimated that complying with the rule would cost companies roughly $1 billion up front and between $200 million and $400 million each year. The estimates don't include the costs that companies could incur if they are forced to pull their operations from countries that forbid the disclosures. The SEC said that could add billions to companies' costs.
Write to Jessica Holzer at
Credit: By Jessica Holzer
Subject: Petroleum industry; Reporting requirements; Natural gas utilities; Disclosure
Location: United States--US
Company / organization: Name: Congress; NAICS: 921120; Name: Gibson Dunn & Crutcher LLP; NAICS: 541110; Name: American Petroleum Institute; NAICS: 813910, 541820; Name: US Chamber of Commerce; NAICS: 813910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 11, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1095605351
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1095605351?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Oil Firms Sue the U.S. --- Industry Seeks to Block Rule on Disclosing Payments Abroad
Author: Holzer, Jessica
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]11 Oct 2012: B.2.
ProQuest document link
Abstract:
The American Petroleum Institute, the U.S. Chamber of Commerce and two other business groups argued in papers filed in federal court in Washington, D.C., Wednesday that the SEC exceeded its authority when it adopted the final rule.
Full text: WASHINGTON -- The oil industry sued to overturn a U.S. rule requiring firms to report payments to foreign governments to develop oil and gas fields, arguing the information would provide secrets to competitors.
The Securities and Exchange Commission rule, mandated by the 2010 Dodd-Frank law, aims to help people in oil-rich countries hold officials to account for money governments receive for oil and mineral rights.
The American Petroleum Institute, the U.S. Chamber of Commerce and two other business groups argued in papers filed in federal court in Washington, D.C., Wednesday that the SEC exceeded its authority when it adopted the final rule.
The SEC is required by law to weigh its regulations' costs.
"It was a well-intentioned provision in the Dodd-Frank law, but the SEC just overstepped and went well beyond what was necessary to support transparency," said American Petroleum Institute President Jack Gerard.
SEC spokesman John Nester said, "While we are still reviewing the suit, we believe our legal interpretation and economic analysis are sound, and we look forward to defending the rule that Congress directed us to write."
Eugene Scalia of the law firm Gibson, Dunn & Crutcher LLP will argue the oil industry's case. This is the third time the business community has turned to Mr. Scalia, a son of Supreme Court Justice Antonin Scalia, for help challenging rules stemming from Dodd-Frank.
The law requires all U.S.-listed oil and gas companies to disclose each year their royalties, fees and other payments to the U.S. and foreign governments for extracting oil, gas and minerals. A bipartisan group of senators cited concerns about the persistent poverty found in some oil-rich countries, where corrupt officials prevent oil wealth from reaching citizens.
Under the law, companies must report total amounts paid to a foreign government by payment type and project and attach electronic tags to the data.
The companies say the law will force them to disclose sensitive information -- such as their expected rate of return on a given project -- and hand their foreign competitors a tactical advantage the next time they vie for oil rights. Sixteen of the biggest oil companies wouldn't have to comply with the law because they aren't listed on U.S. stock exchanges, the API said.
The industry wanted the SEC to require disclosure only at the country or province level, rather than the level of specific projects. It also asked for an exemption from the reporting requirement if foreign governments prohibit disclosure.
Subscribe to WSJ:
Credit: By Jessica Holzer
Subject: Royalties; Reporting requirements; Federal legislation; Disclosure; Petroleum production; Mineral rights
Location: United States--US
Company / organization: Name: American Petroleum Institute; NAICS: 813910, 541820; Name: US Chamber of Commerce; NAICS: 813910; Name: Securities & Exchange Commission; NAICS: 926150
Classification: 8510: Petroleum industry; 9180: International
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.2
Publication year: 2012
Publication date: Oct 11, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1095625895
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1095625895?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Shell Faces Oil-Spill Compensation Claims
Author: Williams, Selina
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]11 Oct 2012: n/a.
ProQuest document link
Abstract:
LONDON--Royal Dutch Shell PLC Thursday appeared in court in the Netherlands for the first time over the actions of one of its foreign subsidiaries, facing compensation claims for environmental damage from oil spills in Nigeria.
Full text: LONDON--Royal Dutch Shell PLC Thursday appeared in court in the Netherlands for the first time over the actions of one of its foreign subsidiaries, facing compensation claims for environmental damage from oil spills in Nigeria.
The case could set a legal precedent over how Dutch companies are held responsible for the actions of their foreign subsidiaries.
The suit has been brought by environmental group Friends of the Earth Netherlands and four Nigerian farmers, who are seeking compensation over claims that oil spills from Shell pipelines in Nigeria have damaged their livelihood. They also say they want the Anglo-Dutch oil company, headquartered in The Hague, to complete a cleanup of the spills.
Shell argues that the three oil spills in question were caused by sabotage of pipelines and as such it isn't liable to pay compensation. A spokesman for the company said its Nigerian subsidiary has cleaned up the pollution at the three locations and that this has been certified by the Nigerian authorities.
The case is important because it is the first time a Dutch multinational is being sued in the Netherlands over the actions of an overseas subsidiary. It could set an important legal precedent, said Channa Samkalden, a lawyer at law firm Bohler, which is representing the Nigerian farmers.
"If the verdict of the Dutch court turns out to be beneficial for my clients, a major precedent will be set," in relation to how companies are held legally responsible in the Netherlands for the actions of international subsidiaries, said Ms. Samkalden.
The verdict will be delivered Jan. 30, 2013.
The oil spills at Oruma, Goi and Ikot Ada Udo in the Niger Delta took place between 2004 and 2007. The total amount of oil spilled in all three incidents combined was about 1,100 barrels.
In addition to demands of a more thorough clean up of the spill site, Friends of the Earth is asking the judge to rule that Shell must improve maintenance and safety of its Nigerian pipelines, some of which are decades old.
Shell said a joint investigation found that sabotage was the cause of the spills in each of the three cases. In the first case a hole had been bored into the pipeline, in the second it had been cut with a hacksaw and in the third a valve had been manually opened, the investigation found. The joint investigation team included members of the local community, local authorities and Shell.
Pipelines are commonly tapped in Nigeria to steal the oil inside. Many parts of the Niger Delta have a thriving trade in oil stolen this way, known locally as "bunkering". A report by the United Nations Office on Drugs and Crime in 2009 estimated as much as 150,000 barrels of oil a day were being stolen in that manner.
The local environmental damage in the Niger Delta from oil spills is well documented. A 2011 report from the U.N. Environment Program, which was funded by Shell, said cleaning up the damage caused by more than 50 years of oil production in one part of the vast Niger Delta would require $1 billion of spending in the first five years.
Shell has said the vast majority of the pollution in its Nigeria operations in recent years has been caused by oil theft and militant attacks. Around 1.6 thousand metric tons of oil were spilled into the Niger Delta in 2011 as a direct result of sabotage or theft, three quarters of total onshore spills, Shell said in its annual sustainability report.
Friends of the Earth Netherlands said that the videos and photographs from the joint investigation into the oil spills at Oruma, Goi and Ikot Ada Udo don't provide incontrovertible evidence of sabotage in all three cases.
Write to Selina Williams at
Corrections & Amplifications The verdict will be delivered Jan. 30, 2013. An earlier version of this article incorrectly stated that the verdict would be delivered Jan. 13, 2013.
Credit: By Selina Williams
Subject: Oil spills; Petroleum industry; Environmental protection; Compensation; Petroleum production
Location: Netherlands Nigeria Niger Delta
Company / organization: Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 11, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1095670112
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1095670112?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohi bited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Climbs on Mideast Tension
Author: Strumpf, Dan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]11 Oct 2012: n/a.
ProQuest document link
Abstract:
The Turkish port of Ceyhan is the delivery point for both the Baku-Tbilisi-Ceyhan Pipeline, which transports up to 1.2 million barrels a day of Azeri crude, and the Kirkuk-Ceyhan pipeline, which carries up to 1.65 million barrels a day of Iraqi crude, according to the U.S. Energy Information Administration.
Full text: NEW YORK--Oil futures rallied Thursday in volatile trading, as rising tension between Turkey and Syria raised fears over supply disruptions.
The concerns trumped a government report showing that U.S. crude stockpiles rose more than expected last week.
Light, sweet crude for November delivery rose 82 cents, or 0.9%, to settle at $92.07 a barrel on the New York Mercantile Exchange.
Nymex crude shot 2% higher to nearly $93 a barrel intraday after unconfirmed rumors of a pipeline explosion resulting from the escalating conflict between Turkey and Syria roiled the market. Although many traders later dismissed the rumor, the widening conflict between the neighboring countries has underpinned crude prices in recent days amid fears that Syria's civil war is spilling over into its neighbors.
"It just shows how nervous the market is," said Andy Lebow, senior vice president of energy futures at Jefferies Bache. "Whatever the pipeline story is, the market rallied on it."
Although neither country is a major oil producer, Turkey is home to several major oil pipelines that transport crude from Iraq and from Azerbaijan. The Turkish port of Ceyhan is the delivery point for both the Baku-Tbilisi-Ceyhan Pipeline, which transports up to 1.2 million barrels a day of Azeri crude, and the Kirkuk-Ceyhan pipeline, which carries up to 1.65 million barrels a day of Iraqi crude, according to the U.S. Energy Information Administration.
Oil prices lost much of their steam by midday, however, after the contracts pared some of their gains after the EIA reported a bigger-than-expected increase in U.S. oil stockpiles, amid weak demand and strong U.S. production.
Thursday's rally is the latest big price swing to overtake the oil market in recent sessions. Traders have been forced to balance concerns about supply disruptions in the Middle East against weak demand in the U.S. and Europe. On Wednesday, Nymex crude slumped 1.2% on demand concerns.
"It seems like there's plentiful supplies and certainly demand concerns," said Peter Donovan, vice president at Vantage Trading, an oil options brokerage. "But there's such a wild card in the Middle East."
U.S. oil inventories rose 1.7 million barrels to 366.4 million barrels, the highest level ever for the week since record-keeping began, according to the EIA. Analysts polled by Dow Jones Newswires expected an increase of just 600,000 barrels.
Gasoline stocks, meanwhile, fell 500,000 barrels. Stocks of distillates, including heating oil and diesel, fell 3.2 million barrels.
Gasoline stockpiles were expected to fall 400,000 barrels, while distillate inventories were seen falling 600,000 barrels, according to analysts.
Front-month November reformulated gasoline blendstock, or RBOB, settled 0.37 cent, or 0.1%, lower at $2.9556 a gallon. November heating oil settled 4.4 cent, or 1.4%, higher at $3.2571 a gallon.
Write to Dan Strumpf at
Credit: By Dan Strumpf
Subject: Pipelines; Petroleum industry; Crude oil prices
Location: Syria United States--US Turkey
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210; Name: Dow Jones Newswires; NAICS: 519110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 11, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1095699852
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1095699852?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Chesapeake to Sell Acres in Oklahoma Oil Fields
Author: Gilbert, Daniel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]11 Oct 2012: n/a.
ProQuest document link
Abstract:
Chesapeake, the country's second-biggest natural-gas producer after Exxon Mobil Corp., continues to grapple with gas prices that hover near decade lows and is shifting to produce more-profitable oil.
Full text: Chesapeake Energy Corp. is selling a chunk of its holdings in Oklahoma as the cash-strapped natural-gas producer continues to trim acreage to raise money for drilling.
The Oklahoma City-based company is selling drilling rights to more than 28,000 acres in western Oklahoma, in an area abutting its "Hogshooter" oil discovery, which the company touted in June. The package for sale includes some of Chesapeake's 30,000 Hogshooter net acres; it doesn't include a well the company boasted to be among the best in drilled decades in the continental U.S.
A Chesapeake spokesman said the property for sale is a "small, noncore package of acreage and not connected to our significant Hogshooter discovery."
The sale wouldn't change the company's drilling plans or budget, he added.
The move is another sign that Chesapeake is trimming its vast land holdings--which span more than 15 million acres across the country--to raise cash for its operations and reduce capital spending. Chesapeake, the country's second-biggest natural-gas producer after Exxon Mobil Corp., continues to grapple with gas prices that hover near decade lows and is shifting to produce more-profitable oil.
Chesapeake CEO and co-founderAubrey McClendon has long spent heavily to secure drilling rights, but the company has been under pressure to curb spending from its biggest shareholders, who in June effectively took control the board. Last month, the company announced a raft of deals it says will net $7 billion. Chesapeake has raised $11.6 billion this year from asset sales, bringing it close to its target of at least $13 billion by the end of 2012.
The company plans to slash drilling expenses next year by about 27%. Even so, it expects to spend about $3 billion more than its projected cash flow in 2013. Chesapeake still plans to raise as much as $5 billion from asset sales next year to make up the difference and meet its debt-reduction goals.
Ben Lefebvre contributed to this article.
Write to Daniel Gilbert at
Credit: By Daniel Gilbert
Subject: Oil exploration; Petroleum industry; Capital expenditures; Natural gas; Fund raising
Location: Oklahoma
People: Gilbert, Daniel
Company / organization: Name: Exxon Mobil Corp; NAICS: 447110, 211111; Name: Chesapeake Energy Corp; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 11, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1095722047
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1095722047?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Canadian Dollar's Oil Correlation Weakens
Author: George-Cosh, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]11 Oct 2012: n/a.
ProQuest document link
Abstract:
The pair's correlation with Brent's oil price is -0.30 The correlation is negative because in currency markets the exchange rate for the U.S./Canadian dollar pair is expressed as the amount of Canadian currency a U.S. dollar buys.
Full text: The Canadian dollar's identity as a "petrodollar" has shifted to the background recently as global growth concerns overshadow the relationship between the price of oil and the currency.
The "petrodollar" description, which implies a close relationship between movements in the currency and in oil prices, has been applied to the loonie since Canada emerged as a major oil-producing nation and a net exporter of energy.
The label became more strongly associated with the Canadian dollar in the 2006-07 period when oil prices surged and the loonie reached record highs.
But the Canadian dollar and light crude oil prices have diverged recently. The 30-day moving average correlation between the U.S./Canadian dollar pair and the most recent light crude contract is currently -0.32, after hitting zero on October 1, according to CQG. The pair's correlation with Brent's oil price is -0.30
The correlation is negative because in currency markets the exchange rate for the U.S./Canadian dollar pair is expressed as the amount of Canadian currency a U.S. dollar buys.
Its correlation has dipped under -0.20 10 times over the past 12 months.
Longer time frames point to a stronger connection. The 90-day correlation is -0.83, with the correlation dipping to -0.49 when looking over a 200 day-period.
To be sure, correlations between currencies and other assets are fluid, waxing and waning as the themes and events that drive asset markets change.
The closer short-term relationship between the Canadian dollar and crude oil could easily be reinstated if the global context changes.
Jasmin Valade, currency strategist at Velocity Trade in Montreal, believes the Canadian dollar now acts more a commodity currency than a petrodollar, reacting to other commodities such as copper or gold than oil.
"The problem with oil is that it's got a risk premium that we've seen over the past two years tied to Middle East concerns, notably in Iran," he said.
As the price of oil is inflated by developments in the Middle East, the Canadian dollar has reacted more strongly to global growth concerns and risk appetite as measured by equity markets.
Mr. Valade said he sees the correlation firming up sometime in the medium term, and sees the Canadian dollar returning back to parity if the price of oil per barrel falls down to $80. The U.S. dollar was recently at C$0.9775, up 0.43% from late Wednesday, according to CQG.
One currency trader at a major Canadian bank who declined to be identified said he doesn't look much at oil's correlation with the Canadian dollar once the currency trades above parity with its U.S. counterpart.
"It stops being a significant influence once it crosses that mark," the trader said.
Another reason behind the recent decoupling of the Canadian dollar to oil may be the introduction of further monetary easing by the U.S. Federal Reserve, which has boosted many risk-sensitive currencies, including the loonie.
"QE3 reduces volatility. It suppresses it," said Greg Moore, currency strategist at TD Securities in Toronto.
Quantitative easing from the Fed supports commodities, but breaks down correlations between asset classes because it essentially debases the U.S. currency, he said.
Credit: By David George-Cosh
Subject: Canadian dollar; American dollar; Crude oil prices; Foreign exchange rates
Location: Canada United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 11, 2012
column: DJ FX Trader
Section: Forex
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1095737119
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1095737119?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Private Properties; A Cape Cod estate previously listed for $12.5 million hits the auction block; a Las Vegas home drops its asking price 30% to $9.9 million; in Dallas, a Mount Vernon replica formerly owned by oil tycoon H.L. Hunt lists for $24.9 million; a large Texas ranch formerly asking $44 million goes up for auction.
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 Oct 2012: n/a.
ProQuest document link
Abstract:
The property includes a 5,000-square-foot bowling center with a four-lane bowling alley, as well as a 4,800-square-foot air-conditioned car showroom that doubles as a ballroom.
Full text: An 8-acre Cape Cod estate owned by Jim E. Feldt, the former executive vice president of Toys 'R' Us, will come up for auction next month. The home was previously listed for $12.5 million.
Located in Cotuit, Mass., the 8,000-square-foot, shingle-style waterfront home has four bedrooms and seven bathrooms and was completed in 2008. Inside the main house there are hand-painted, 100-year-old tiles, 200-year-old columns and reclaimed white oak floors.
The Feldts spent $1 million on landscaping and currently have two full-time groundskeepers on property, says Mark Troen, the chief operating officer of Sheldon Good & Company, who is handling the sale. The sale is a sealed-bid auction with a bid-submission bid of Nov. 28.
A Las Vegas home previously listed for $14 million has re-listed for $9.9 million, a 30% price cut. The home is owned by Jack and Laura Sommer. Mr. Sommer is a commercial real-estate investor and the former owner of the Aladdin casino.
Located in Spanish Trail, a gated community, the two-story, 24,000-square-foot French Mediterranean home has 12 bedrooms and 15 bathrooms. There's a formal dining room, separate staff quarters, a finished basement, a 1,200-square-foot master suite and a 1,000-square-foot kitchen. Kofi Natei Nartey of the Agency, the Los Angeles-based real estate firm, is handling marketing for the listing.
A historic Dallas estate has listed for $24.9 million. Completed in 1930, the 10-acre estate is a replica of George Washington's Mount Vernon and was the home of oil tycoon H.L. Hunt and his children--including Lamar Hunt, creator of the Super Bowl--from 1930 to 2000. The current owners are John and Teresa Amend, who bought the home in 2000 and have since renovated and expanded it, including adding a four-bedroom guest house. Allie Beth Allman of Allie Beth Allman & Associates, a Christie's International Real Estate affiliate, has the listing.
The property includes a 5,000-square-foot bowling center with a four-lane bowling alley, as well as a 4,800-square-foot air-conditioned car showroom that doubles as a ballroom.
The house, eight miles from downtown Dallas, also has a swimming pool, overlooking White Rock Lake.
A 34,430-acre ranch in San Angelo, Tex., is hitting the auction block next month. The property has previously been shopped around for as much as $44 million. About three hours north of San Antonio, the property is known as Pecan Creek Ranch and is one of the largest ranches in the state. It includes a 5,000-square-foot stone lodge and five other homes for staff. The working cattle ranch comes with about 1,400 cows, not included in the sale,as well as recreational hunting for whitetail deer, turkeys, doves and quail. Also included are half of the property's underground mineral rights, which would allow for oil exploration.
The seller is James Powell, a full-time rancher, who is selling because he wants to buy a property closer to another ranch he owns in Texas, according to the listing broker.
The auction will take place Nov. 2 in San Angelo. The property will be auctioned in several separate parcels, or could be purchased in its entirety. Scott Shuman of Hall and Hall is handling the sale.
Subject: Ranches; Bowling; Real estate sales; Mineral rights; Price cuts
Location: Dallas Texas Cape Cod Massachusetts
People: Hunt, Lamar
Company / organization: Name: Aladdin; NAICS: 339911
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 12, 2012
Section: Real Estate
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1095753552
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1095753552?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Chesapeake to Sell Acres in Oklahoma Oil Fields
Author: Gilbert, Daniel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]12 Oct 2012: B.2.
ProQuest document link
Abstract:
Chesapeake, the country's second-biggest natural-gas producer after Exxon Mobil Corp., continues to grapple with gas prices that hover near decade lows and is shifting to produce more-profitable oil.
Full text: Chesapeake Energy Corp. is selling a chunk of its holdings in Oklahoma as the cash-strapped natural-gas producer continues to trim acreage to raise money for drilling.
The Oklahoma City-based company is selling drilling rights to more than 28,000 acres in western Oklahoma, in an area abutting its "Hogshooter" oil discovery, which the company touted in June. The package for sale includes some of Chesapeake's 30,000 Hogshooter net acres; it doesn't include a well the company boasted to be among the best drilled in decades in the continental U.S.
A Chesapeake spokesman said the property for sale is a "small, noncore package of acreage and not connected to our significant Hogshooter discovery."
The move is another sign that Chesapeake is trimming its vast land holdings -- which span more than 15 million acres across the country -- to raise cash for its operations. Chesapeake, the country's second-biggest natural-gas producer after Exxon Mobil Corp., continues to grapple with gas prices that hover near decade lows and is shifting to produce more-profitable oil.
Chesapeake CEO Aubrey McClendon has long spent heavily to secure drilling rights, but the company has been under pressure to curb spending from its biggest shareholders, who in June effectively took control the board. Last month, the company announced a raft of deals it says will net $7 billion. Chesapeake has raised $11.6 billion this year from asset sales, bringing it close to its target of at least $13 billion by the end of 2012.
The company plans to slash drilling expenses next year by about 27%. Even so, it expects to spend about $3 billion more than its projected cash flow in 2013. Chesapeake still plans to raise as much as $5 billion from asset sales next year to make up the difference and meet its debt-reduction goals.
---
Ben Lefebvre contributed to this article.
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Credit: By Daniel Gilbert
Subject: Petroleum industry; Oil exploration; Natural gas; Fund raising; Drilling
People: Gilbert, Daniel McClendon, Aubrey
Company / organization: Name: Chesapeake Energy Corp; NAICS: 211111
Classification: 9190: United States; 2330: Acquisitions & mergers; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.2
Publication year: 2012
Publication date: Oct 12, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1095794713
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1095794713?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Fur ther reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Shell Seeks to Export U.S. Oil
Author: Lefebvre, Ben
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 Oct 2012: n/a.
ProQuest document link
Abstract:
HOUSTON--Royal Dutch Shell PLC said late Thursday it has applied for a permit from the U.S. Commerce Department to export crude oil in a sign of how a boom in U.S. oil production from shale rock is reshaping the country's role in the energy marketplace.
Full text: HOUSTON--Royal Dutch Shell PLC said late Thursday it has applied for a permit from the U.S. Commerce Department to export crude oil in a sign of how a boom in U.S. oil production from shale rock is reshaping the country's role in the energy marketplace.
Shell was seeking the permit to ship U.S. crude to Canada, Shell spokeswoman Kayla Macke said. "Crude trades on a global scale, and imports and exports will follow supply and demand," she said.
The U.S. currently exports less than one half of 1% of the amount of crude it imports, according to the Energy Information Administration, with all of the crude going to Canada.
The move underscores how the revolution in hydraulic fracturing, or "fracking," technology that has coaxed large volumes of oil from shale rock has generated an unprecedented boom. The EIA says the boom will bring U.S. production next year to its highest level in nearly two decades.
Oil production in the U.S. totaled 194 million barrels of crude oil in July, the most in 14 years, according to the latest data from the EIA. Drillers in the Eagle Ford shale area of south Texas--where Shell has significant operations--and the Bakken shale region in North Dakota are producing more oil than pipelines are currently able to carry to market.
This week, the glut of oil production in the center of the country pushed the price for West Texas Intermediate, the U.S. benchmark crude contract, to its lowest level in a year relative to the international benchmark, Brent crude. West Texas Intermediate crude traded Friday at $91.81, down 0.3% from Thursday. Brent traded at $113.78, down 0.8%.
If the mostly light, sweet oil landlocked in the U.S. reaches foreign markets, its price gap with Brent could significantly narrow, said Mike Kelly, senior analyst at Global Hunter Securities. That is because the potential number of buyers of U.S. crude would expand dramatically.
A decades-old law bars export of crude oil produced in the U.S., although special permits can be given in some cases, including shipping oil to Canada. The U.S. exports about 41,000 barrels a day of oil already, according to the EIA.
BP PLC, which already has a license to export U.S. crude oil, sends it to Canada for refining, said a person familiar with the company's operations.
The U.S. will become a net oil exporter but probably not until the end of the decade, said Pavel Molchanov, a Raymond James analyst. Companies now seeking an export license are most likely working to build the logistical networks needed for the future, Mr. Molchanov said.
Write to Ben Lefebvre at
Credit: By Ben Lefebvre
Subject: Crude oil; Petroleum industry; Petroleum production; US exports; Hydraulic fracturing
Location: United States--US Canada
Company / organization: Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: BP PLC; NAICS: 447110, 324110, 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 12, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1095795458
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1095795458?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
OPEC Assures Ample Oil Supply
Author: Talley, Ian
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Oct 2012: n/a.
ProQuest document link
Abstract:
OPEC told the International Monetary Fund's steering committee at its annual meetings in Tokyo that the euro crisis and the slowdown in emerging market growth have cut the rise in global demand for petroleum products for the year to around 800,000 barrels a day.
Full text: TOKYO--The Organization of Petroleum Exporting Countries assured world financial leaders Saturday that the oil market will remain amply supplied next year and that the cartel is committed to a stable market and prices that are healthy for an increasingly fragile global economy.
Oil price strength, stemming partly from fears over an escalating conflict with major oil producer and OPEC member Iran, has weighed on the global economy, adding to factors threatening to push advanced economies into another recession.
OPEC told the International Monetary Fund's steering committee at its annual meetings in Tokyo that the euro crisis and the slowdown in emerging market growth have cut the rise in global demand for petroleum products for the year to around 800,000 barrels a day. That could be further undermined if the recent trends in the U.S. and China are confirmed, Hasan Qabazard, head of OPEC's research division told the IMF.
Combined with a rise in non-OPEC output, that means the demand for supply from the cartel is expected to fall again next year, to an average of 29.8 million barrels a day. That means OPEC's average daily spare capacity will rise next year by 1.1 million barrels a day, and put total OPEC capacity at around 36.7 million barrels a day.
Mr. Qabazard said OPEC is "committed to oil market stability, ensuring a regular supply of petroleum to consumers at price levels that are conducive to the health of the world economy, and at the same time, provide the necessary investments to ensure sufficient future supply."
Brent crude on the ICE was quoted Friday as trading at $113.87 a barrel.
Write to Ian Talley at
Credit: By Ian Talley
Subject: Supply & demand; Petroleum industry; Recessions
Location: United States--US China
Company / organization: Name: Organization of Petroleum Exporting Countries--OPEC; NAICS: 813910; Name: International Monetary Fund--IMF; NAICS: 522298
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 13, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1104322305
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1104322305?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. Oil Boom Falls Short of Pump; Gas Prices Stay High Even as Production Surges, as Midwest Can't Dent Global Market; Some Refiners Profit
Author: Pleven, Liam; Zuckerman, Gregory
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]14 Oct 2012: n/a.
ProQuest document link
Abstract:
CVR runs a 115,000-barrel-per-day refinery in Oklahoma. Since the end of August, CVR shares have climbed from less than $30 to $38.08, close to an all-time high. [...]the region imports at least some gasoline, paying higher international prices, according to economists.
Full text: Surging U.S. oil production is driving down domestic benchmark crude prices and delivering a windfall to some refiners and their investors. But the oil boom is providing little relief for consumers at the pump.
U.S. crude production is expected to rise 12% this year and 8% in 2013, when it will hit the highest level since 1993, according to government figures. The price of West Texas crude, the U.S. benchmark, has fallen 7% this year, held down by rising supplies from new drilling methods.
Yet gasoline prices currently average nearly $4 per gallon nationwide. Rising U.S. crude production may seem like an attractive antidote, but it is proving ineffective on its own at a time when the world's appetite for energy remains voracious and Middle East tension is a reminder that supplies could be disrupted.
"Even the significant increase in U.S. production is a small part of the world oil market," said Severin Borenstein, co-director of the Energy Institute at the Haas School of Business.
Refiners that process the cheaper crude are selling gasoline and diesel into a global market driven more by higher international prices for crude, which are up around 7% in 2012.
Some are benefiting. Refiners in the Midwest--near where much of the new oil is produced or stored--can often pay less for the raw crude than do rivals in U.S. coastal areas and abroad, but can charge market prices for the sought-after gasoline and diesel they churn out.
HollyFrontier Corp., which owns refineries in Oklahoma, Kansas and elsewhere, saw net income jump 149% to $502 million year over year in the second quarter. Tesoro Corp., which operates a refinery in North Dakota, where crude production has roughly quadrupled in four years, reported a 77% leap to $393 million in the same period.
Shares of HollyFrontier are up 60% this year, while Tesoro's shares have gained 64%.
Billionaire financier Carl Icahn has also scored big. Mr. Icahn bought up over 58 million shares in CVR Energy Inc. in the second quarter, boosting his stake to 82% of the Sugar Land, Texas, firm's shares. CVR runs a 115,000-barrel-per-day refinery in Oklahoma.
Since the end of August, CVR shares have climbed from less than $30 to $38.08, close to an all-time high. That has given Mr. Icahn's firm, Icahn Associates, a paper gain of over $600 million in the past six weeks.
"It's been an excellent investment so far," said Mr. Icahn.
"Rising North American crude production should lead to increased stability in the refining industry, which we believe will result in a more secure supply and steady price for the U.S. consumer," Julia Heidenreich, a HollyFrontier spokeswoman, said in a statement. She added, "Given our access to cheaper crude oil in the geographies where we operate, HollyFrontier should enjoy structurally higher margins going forward."
Tesoro declined to comment.
Benchmark U.S. crude is based on prices at the Cushing, Okla., storage hub, and is known as West Texas Intermediate, or WTI. That price is now nearly $23 cheaper than Brent crude, the European benchmark. The gap has more than doubled from $8.55 at year-end, surprising many analysts and investors who expected it to be narrower. Before 2011, the gap was typically within a dollar or two.
WTI settled Friday at $91.86 per barrel. Brent has headed in the other direction, rising 7% this year amid concerns about tight supplies abroad and Middle East tension. Brent settled at $114.62 on Friday.
Part of the trouble is that the oil being pumped out in North Dakota and other states is largely landlocked, because there aren't enough pipelines or other infrastructure to send the crude elsewhere. That is creating a glut that is keeping prices low.
Gasoline prices in the Midwest would be most likely to benefit from declines in the price of WTI. But gas prices there haven't fallen relative to the rest of the country, according to a June study co-written by Mr. Borenstein of the Energy Institute.
The reason is that Midwest refineries are operating at near full capacity and selling everything they can produce, but that still isn't enough to satisfy demand from drivers. As a result, the region imports at least some gasoline, paying higher international prices, according to economists. That keeps the price of all gasoline high.
"They're going to have to pay what basically everybody else is paying," said Michael Plante, a research economist at the Federal Reserve Bank of Dallas.
To be sure, unclogging the Midwest bottleneck wouldn't necessarily have a big impact on retail gasoline prices nationwide, either. Even if far more Midwest oil could get to the wider market, the impact would be "in the pennies. A penny might be it," said Mr. Borenstein.
As well, some investors and analysts expect the gap between West Texas and Brent prices to narrow as supply disruptions ease and the U.S. bottleneck is gradually unclogged. Should Brent fall significantly, cheaper oil everywhere could result in lower pump prices.
Nonetheless, analysts and investors don't expect the difference to disappear soon.
"Some element of the spread will last for quite some time," said Brison Bickerton, managing director at Freepoint Commodities, a trading firm.
Write to Liam Pleven at and Gregory Zuckerman at
Credit: By Liam Pleven and Gregory Zuckerman
Subject: Petroleum refineries; Petroleum industry; Petroleum production; Energy economics; Supplies
Location: United States--US Middle East
Company / organization: Name: CVR Energy Inc; NAICS: 324110; Name: Icahn Associates; NAICS: 523910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 14, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1111788348
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1111788348?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Weak Drilling Curbs Oil-Field Services Firms
Author: Sider, Alison
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]14 Oct 2012: n/a.
ProQuest document link
Abstract:
[...]while during the last quarter international markets were a bright spot that helped offset disappointing domestic activity for oil-field service companies, they have been more sluggish this quarter, with land rig counts down in Latin America and the Middle East in September.
Full text: HOUSTON--Most oil-field services companies are expected to post lower earnings than a year ago, as price volatility and weather issues have damped drilling activity.
Exploration and production companies hire oil-field service providers to perform the specialized tasks required to extract oil and gas from the ground. But facing cash-flow difficulties and volatile prices, some oil producers have slowed the pace of drilling, leaving oil-field service providers to compete over a dwindling number of opportunities. Unfavorable weather conditions also took their toll: heavy rains stalled drilling in Canada and Hurricane Isaac caused two weeks of down time in the Gulf of Mexico in August and September.
The Energy Information Administration says that in 2013, shale output will push U.S. domestic oil production levels to heights not seen since 1993. But the number of oil rigs working fell during the third quarter, according to the Baker Hughes Inc. rig count. In Canada, rigs were down 30% in September from the same month last year.
Halliburton Corp. Chief Financial Officer Mark McCollum told analysts at a conference last month that the rig count in the third quarter "has not been as helpful as we had originally forecasted," and as a result, the company expects its revenue to be lower than in the second quarter, instead of about the same, as it had originally predicted. Analysts expect Halliburton to post a profit of 67 cents a share in the third quarter, down from 94 cents a share in the same period last year, according to Thomson Reuters. The company will report earnings on Wednesday.
Baker Hughes, which reports on Friday, is expected to earn 84 cents a share in the third quarter, down from $1.18 a share in the same quarter last year.
Schlumberger Ltd., the world's largest oil-field services company, is less exposed to North American onshore drilling than others, with strong deep-water and foreign components. Analysts expect it to report earnings on Friday of $1.07 a share in the third quarter, up from 98 cents in the same period last year.
Simmons analyst Bill Herbert said drilling activity in the U.S. and Canada has been weaker than expected, with exploration and production companies tightening their belts and trying to live within their cash flow.
"North America has been more poorly behaved than what companies thought...Revenue generation and margin performance are falling short of what was thought coming out of the second quarter," he said.
And while during the last quarter international markets were a bright spot that helped offset disappointing domestic activity for oil-field service companies, they have been more sluggish this quarter, with land rig counts down in Latin America and the Middle East in September.
International Strategy and Investment Group analysts wrote in a note earlier this month that the North American pressure pumping market is becoming "increasingly cutthroat" in some areas with prices falling to give service providers "razor-thin" margins. Pressure pumping, or injecting fluids into a well, is a key component of the hydraulic fracturing process, in which the fluid is used to break up shale rock to release oil and gas.
Unconventional drilling is "proving to be more challenging and more difficult than industry surmised two years ago," as drilling is turning out to be expensive--and crude oil prices, which reached a peak of $110 per barrel earlier this year, haven't maintained their robustness (oil traded around $90 per barrel during the third quarter.)
Write to Alison Sider at
Credit: By Alison Sider
Subject: Petroleum industry; Earnings; Energy economics; Petroleum production; Oil service industry
Location: United States--US Canada
Company / organization: Name: Halliburton Co; NAICS: 213112, 237990; Name: Schlumberger Ltd; NAICS: 541512, 334 419, 334513, 511210, 213111, 213112; Name: Thomson Reuters; NAICS: 511110, 511140; Name: Baker Hughes Inc; NAICS: 213112, 333132, 333298
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 14, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Documenttype: News
ProQuest document ID: 1111792718
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1111792718?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Three Cheers for Expensive Oil; Why high energy costs could be just what the world's farmers need to save themselves--and the rest of us
Author: Montgomery, David R
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 Oct 2012: n/a.
ProQuest document link
Abstract:
[...]I'd argue that for perhaps the first time in modern history, the short-term incentives for individual farmers are aligning with humanity's long-term interest in conserving the soil and its fertility. [...]after World War II, former munitions factories started cranking out cheap fertilizer, which together with cheap oil made animal husbandry an expensive, labor-intensive anachronism. While chemical fertilizers won't disappear from agriculture anytime soon, rising prices will make it increasingly attractive to rebuild soil fertility using organic matter, particularly on the third of the world's cropland already degraded beyond use.
Full text: Scarce oil may be one of the best things that could happen to agriculture.
To understand how that could be, consider two facts. First, agriculture uses a huge amount of energy--about 7% of the total consumption in the U.S. And second, farming as we know it erodes fertile land far faster than nature can replace it.
Now, thanks to steep rises in oil prices, growers are adopting practices that use less fuel. As a tremendous side benefit, these methods not only fight erosion but they build soil and enrich it with nutrients crops need. In fact, I'd argue that for perhaps the first time in modern history, the short-term incentives for individual farmers are aligning with humanity's long-term interest in conserving the soil and its fertility.
It's a potentially huge change that could reshape farming as we know it.
Here's a look at two of the most rapidly growing and effective practices already in use and another that may take off soon.
Ditching the Plow
The most popular fuel-reducing strategy involves a radically new way of planting seeds. Instead of breaking up the ground with a plow to plant seeds, no-till farming leaves the remains of last year's crop on the surface. Drills punch through this mat of vegetation and insert seeds into the ground.
Ditching the plow can cut fuel consumption by as much as half, bringing substantial savings. It also reduces the need for expensive fertilizer. Specialized machinery can inject fertilizer along with the seeds, putting just enough right where developing crops need it most.
Those savings help explain why farmers have been moving to no-till, and why even more will as the cost of oil rises. But the side benefit of this shift will be alleviating a problem that's been plaguing humanity for thousands of years.
Plowing removes plant cover, and bare fields erode 10 to 100 times faster than shielded soil, far faster than nature can make more. Overplowing has stripped whole regions bare and helped bring down past civilizations. Parts of Syria that were extensively farmed in Roman times are now bare, rocky slopes, for instance, and in southern Greece you can still find ancient agricultural tools scattered on hillsides that can no longer support cultivation.
Modern industrial societies aren't immune. Islands of unplowed prairie in pioneer cemeteries across the American heartland stand higher than the surrounding, eroded fields. On some corn fields in the Midwest, I've seen soil that was so degraded it looked like beach sand.
No-till farming can change all that. The practice can reduce erosion by more than 90%, and bring soil loss close to the pace of soil production. Over time, no-till can also increase soil organic matter and boost microbial activity that helps cycle nutrients from the soil into crops and back again. And not plowing helps reduce runoff, leaving more water in the ground where it's available to crops.
Feeding the Earth
The next strategy involves reducing reliance on fertilizers that don't enrich the soil and require a lot of oil to manufacture. Instead, low-cost organic matter like manure, crop stubble, garden trimmings and even household food scraps are used.
This certainly isn't a new idea. Centuries ago, the Dutch reclaimed land from the sea and enriched it with organic wastes. Long before then, farmers from China to Peru improved their soils by returning organic matter to their fields.
But in the U.S. and Europe, organic sources of fertilizer fell out of favor in the middle of the past century. There are a lot of reasons, some of which don't have anything to do with agricultural effectiveness. Big crop subsidies led many farmers to stop keeping livestock, which meant no more on-farm manure. And after World War II, former munitions factories started cranking out cheap fertilizer, which together with cheap oil made animal husbandry an expensive, labor-intensive anachronism.
Intensive chemical-fertilizer use also dramatically increased crop production, especially on already-degraded land, during the Green Revolution that has helped feed the world's rising population. But the cost of fertilizer is tied to the price of oil.
With the price of manufactured fertilizers rising, recycling organic matter is becoming more cost-effective. It also can build fertile soil. While chemical fertilizers won't disappear from agriculture anytime soon, rising prices will make it increasingly attractive to rebuild soil fertility using organic matter, particularly on the third of the world's cropland already degraded beyond use.
Spurred by high fertilizer prices, some farmers are bringing livestock back onto their land. One energetic couple in Missouri told me how they used chicken and goat manure along with intensive composting to turn an abandoned farm with degraded soil back into a productive and profitable working farm in under five years.
It's not just conventional farmers who are adopting these methods. Some cities are setting up community food gardens to help counter rising food prices. These urban farmers see recycling organic waste as the key to growing fresh, affordable produce in cities, where most of humanity now lives.
I saw this for myself when I visited one such garden built atop a reclaimed landfill near downtown Seattle. Looking at the oversize vegetables and digging my hands into rich fertile soil, I could hardly believe this farm was started less than a decade before with trucked-in, sterilized dirt. Regular additions of compost rapidly turned this small patch of land into a reliable source of fresh fruit and vegetables for residents and local food banks.
Putting Down Roots
The final alternative strategy isn't here yet. But when it arrives, it has the potential to change the way American farmers harvest the country's third-largest crop: wheat.
The Land Institute in Salina, Kan., is developing a range of perennial grains that would make annual plowing unnecessary. To my mind, the most revolutionary efforts involve a version of wheat that can be used in many of the same foods as the regular stuff.
Harvesting perennial wheat would mean fewer passes with the tractor and less oil burned. Meanwhile, the longer roots of perennial wheat reach deeper into the soil, tapping into more of the water it holds, increasing crop tolerance to drought. Longer roots also enhance nutrient uptake, further reducing the need for fertilizer.
There's a dramatic illustration of the idea hanging in a stairwell at the Land Institute: a life-size picture, close to two stories tall, of a perennial wheat plant and its Rapunzel-like roots. Next to it, a picture of a conventional wheat plant looks anemic by comparison, its roots reaching down just several steps.
Perennial wheat also has the potential to do long-term good. Harvesting the wheat would leave the plant and its root system in place, storing a lot of organic matter below ground, where it helps support the growth of the next crop. Minimally disturbed ground, reinforced by interlaced root systems, also means far less soil erosion.
***
To some, I'm sure that all this speculation about a revolution in farming sounds naively optimistic. But the movement toward these new methods is already under way, and the economic case for more farmers to adopt them will only get stronger as oil and fertilizer get pricier.
Let's hope so, for our descendants will need productive, fertile soil just as much as, if not more than, we do today. And what we now consider alternative methods of farming are some of the best ways to ensure that they'll have plenty of it.
Dr. Montgomery, a professor of geomorphology at the University of Washington in Seattle, is the author of "Dirt: The Erosion of Civilizations." He can be reached at .
Corrections & Amplifications The overall food sector is responsible for almost one-fifth of the energy consumption in the U.S. An earlier version of this article incorrectly said that agriculture alone accounts for one-fifth of energy consumption. By itself, farming is responsible for about 7%.
Credit: By David R. Montgomery
Subject: Fertilizers; Composting; Crops; Farmers; Cost control
Location: United States--US
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 15, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1111788405
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1111788405?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. Oil Boom Falls Short of the Pump --- Gas Prices Stay High Even as Production Surges, as Midwest Can't Dent Global Market; Some Refiners Profit
Author: Pleven, Liam; Zuckerman, Gregory
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]15 Oct 2012: C.1.
ProQuest document link
Abstract:
CVR runs a 115,000-barrel-per-day refinery in Oklahoma. Since the end of August, CVR shares have climbed from less than $30 to $38.08, close to an all-time high. [...]the region imports at least some gasoline, paying higher international prices, according to economists.
Full text: Surging U.S. oil production is driving down domestic benchmark crude prices and delivering a windfall to some refiners and their investors. But the oil boom is providing little relief for consumers at the pump.
U.S. crude production is expected to rise 12% this year and 8% in 2013, when it will hit the highest level since 1993, according to government figures. The price of West Texas crude, the U.S. benchmark, has fallen 7% this year, held down by rising supplies from new drilling methods.
Yet gasoline prices currently average nearly $4 per gallon nationwide. Rising U.S. crude production may seem like an attractive antidote, but it is proving ineffective on its own at a time when the world's appetite for energy remains voracious and Middle East tension is a reminder that supplies could be disrupted.
"Even the significant increase in U.S. production is a small part of the world oil market," said Severin Borenstein, co-director of the Energy Institute at the Haas School of Business.
Refiners that process the cheaper crude are selling gasoline and diesel into a global market driven more by higher international prices for crude, which are up around 7% in 2012.
Some are benefiting. Refiners in the Midwest -- near where much of the new oil is produced or stored -- can often pay less for the raw crude than do rivals in U.S. coastal areas and abroad, but can charge market prices for the sought-after gasoline and diesel they churn out.
HollyFrontier Corp., which owns refineries in Oklahoma, Kansas and elsewhere, saw net income jump 149% to $502 million year over year in the second quarter. Tesoro Corp., which operates a refinery in North Dakota, where crude production has roughly quadrupled in four years, reported a 77% leap to $393 million in the same period.
Shares of HollyFrontier are up 60% this year, while Tesoro's shares have gained 64%.
Billionaire financier Carl Icahn has also scored big. Mr. Icahn bought up over 58 million shares in CVR Energy Inc. in the second quarter, boosting his stake to 82% of the Sugar Land, Texas, firm's shares. CVR runs a 115,000-barrel-per-day refinery in Oklahoma.
Since the end of August, CVR shares have climbed from less than $30 to $38.08, close to an all-time high. That has given Mr. Icahn's firm, Icahn Associates, a paper gain of over $600 million in the past six weeks.
"It's been an excellent investment so far," said Mr. Icahn.
"Rising North American crude production should lead to increased stability in the refining industry, which we believe will result in a more secure supply and steady price for the U.S. consumer," Julia Heidenreich, a HollyFrontier spokeswoman, said in a statement. She added, "Given our access to cheaper crude oil in the geographies where we operate, HollyFrontier should enjoy structurally higher margins going forward."
Tesoro declined to comment.
Benchmark U.S. crude is based on prices at the Cushing, Okla., storage hub, and is known as West Texas Intermediate, or WTI. That price is now nearly $23 cheaper than Brent crude, the European benchmark. The gap has more than doubled from $8.55 at year-end, surprising many analysts and investors who expected it to be narrower. Before 2011, the gap was typically within a dollar or two.
WTI settled Friday at $91.86 per barrel. Brent has headed in the other direction, rising 7% this year amid concerns about tight supplies abroad and Middle East tension. Brent settled at $114.62 on Friday.
Part of the trouble is that the oil being pumped out in North Dakota and other states is largely landlocked, because there aren't enough pipelines or other infrastructure to send the crude elsewhere. That is creating a glut that is keeping prices low.
Gasoline prices in the Midwest would be most likely to benefit from declines in the price of WTI. But gas prices there haven't fallen relative to the rest of the country, according to a June study co-written by Mr. Borenstein of the Energy Institute.
The reason is that Midwest refineries are operating at near full capacity and selling everything they can produce, but that still isn't enough to satisfy demand from drivers. As a result, the region imports at least some gasoline, paying higher international prices, according to economists. That keeps the price of all gasoline high.
"They're going to have to pay what basically everybody else is paying," said Michael Plante, a research economist at the Federal Reserve Bank of Dallas.
To be sure, unclogging the Midwest bottleneck wouldn't necessarily have a big impact on retail gasoline prices nationwide, either. Even if far more Midwest oil could get to the wider market, the impact would be "in the pennies. A penny might be it," said Mr. Borenstein.
As well, some investors and analysts expect the gap between West Texas and Brent prices to narrow as supply disruptions ease and the U.S. bottleneck is gradually unclogged. Should Brent fall significantly, cheaper oil everywhere could result in lower pump prices.
Nonetheless, analysts and investors don't expect the difference to disappear soon.
"Some element of the spread will last for quite some time," said Brison Bickerton, managing director at Freepoint Commodities, a trading firm.
Credit: By Liam Pleven and Gregory Zuckerman
Subject: Stock prices; Abreast of the market (wsj); Dow Jones averages
Location: United States--US
Company / organization: Name: CVR Energy Inc; NAICS: 324110; Name: Icahn Associates; NAICS: 523910
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.1
Publication year: 2012
Publication date: Oct 15, 2012
column: Abreast of the Market
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1111850299
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1111850299?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Weak Drilling Curbs Oil-Field Firms
Author: Sider, Alison
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]15 Oct 2012: B.2.
ProQuest document link
Abstract:
[...]while during the last quarter international markets were a bright spot that helped offset disappointing domestic activity for oil-field service companies, they have been more sluggish this quarter, with land rig counts down in Latin America and the Middle East in September.
Full text: HOUSTON -- Most oil-field services companies are expected to post lower earnings than a year ago, as price volatility and weather issues have damped drilling activity.
Exploration and production companies hire oil-field service providers to perform the specialized tasks required to extract oil and gas from the ground. But facing cash-flow difficulties and volatile prices, some oil producers have slowed the pace of drilling, leaving oil-field service providers to compete over a dwindling number of opportunities. Unfavorable weather conditions also took their toll: heavy rains stalled drilling in Canada and Hurricane Isaac caused two weeks of down time in the Gulf of Mexico in August and September.
The Energy Information Administration says that in 2013, shale output will push U.S. domestic oil production levels to heights not seen since 1993. But the number of oil rigs working fell during the third quarter, according to the Baker Hughes Inc. rig count. In Canada, rigs were down 30% in September from the same month last year.
Halliburton Corp. Chief Financial Officer Mark McCollum told analysts at a conference last month that the rig count in the third quarter "has not been as helpful as we had originally forecasted," and as a result, the company expects its revenue to be lower than in the second quarter, instead of about the same, as it had originally predicted. Analysts expect Halliburton to post a profit of 67 cents a share in the third quarter, down from 94 cents a share in the same period last year, according to Thomson Reuters. The company will report earnings on Wednesday.
Baker Hughes, which reports on Friday, is expected to earn 84 cents a share in the third quarter, down from $1.18 a share in the same quarter last year.
Schlumberger Ltd., the world's largest oil-field services company, is less exposed to North American onshore drilling than others, with strong deep-water and foreign components. Analysts expect it to report earnings on Friday of $1.07 a share in the third quarter, up from 98 cents in the same period last year.
Simmons analyst Bill Herbert said drilling activity in the U.S. and Canada has been weaker than expected, with exploration and production companies tightening their belts and trying to live within their cash flow.
"North America has been more poorly behaved than what companies thought . . . Revenue generation and margin performance are falling short of what was thought coming out of the second quarter," he said.
And while during the last quarter international markets were a bright spot that helped offset disappointing domestic activity for oil-field service companies, they have been more sluggish this quarter, with land rig counts down in Latin America and the Middle East in September.
International Strategy and Investment Group analysts wrote in a note earlier this month that the North American pressure pumping market is becoming "increasingly cutthroat" in some areas with prices falling to give service providers "razor-thin" margins. Pressure pumping, or injecting fluids into a well, is a key component of the hydraulic fracturing process, in which the fluid is used to break up shale rock to release oil and gas.
Unconventional drilling is "proving to be more challenging and more difficult than industry surmised two years ago," as drilling is turning out to be expensive -- and crude oil prices, which reached a peak of $110 per barrel earlier this year, haven't maintained their robustness (oil traded around $90 per barrel during the third quarter.)
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Credit: By Alison Sider
Subject: Petroleum industry; Competition; Petroleum production; Earnings forecasting; Oil service industry
Location: United States--US
Classification: 9190: United States; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.2
Publication year: 2012
Publication date: Oct 15, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1111850420
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1111850420?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Innovations in Agriculture (A Special Report) --- Three Cheers for Expensive Oil: Why high energy costs could be just what the world's farmers need to save themselves -- and the rest of us
Author: Montgomery, David R
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]15 Oct 2012: R.4.
ProQuest document link
Abstract:
[...]I'd argue that for perhaps the first time in modern history, the short-term incentives for individual farmers are aligning with humanity's long-term interest in conserving the soil and its fertility. [...]after World War II, former munitions factories started cranking out cheap fertilizer, which together with cheap oil made animal husbandry an expensive, labor-intensive anachronism. While chemical fertilizers won't disappear from agriculture anytime soon, rising prices will make it increasingly attractive to rebuild soil fertility using organic matter, particularly on the third of the world's cropland already degraded beyond use.
Full text: Corrections & Amplifications
The overall food sector is responsible for almost one-fifth of the energy consumption in the U.S. An article in Monday's Innovations in Agriculture special report incorrectly said that agriculture alone accounts for one-fifth of energy consumption. By itself, farming is responsible for about 7%.
(WSJ October 18, 2012)
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Scarce oil may be one of the best things that could happen to agriculture.
To understand how that could be, consider two facts. First, agriculture uses a huge amount of energy -- almost a fifth of the total consumption in the U.S. alone. And second, farming as we know it erodes fertile land far faster than nature can replace it.
Now, thanks to steep rises in oil prices, growers are adopting practices that use less fuel. As a tremendous side benefit, these methods not only fight erosion but they build soil and enrich it with nutrients crops need. In fact, I'd argue that for perhaps the first time in modern history, the short-term incentives for individual farmers are aligning with humanity's long-term interest in conserving the soil and its fertility.
It's a potentially huge change that could reshape farming as we know it.
Here's a look at two of the most rapidly growing and effective practices already in use and another that may take off soon.
The most popular fuel-reducing strategy involves a radically new way of planting seeds. Instead of breaking up the ground with a plow to plant seeds, no-till farming leaves the remains of last year's crop on the surface. Drills punch through this mat of vegetation and insert seeds into the ground.
Ditching the plow can cut fuel consumption by as much as half, bringing substantial savings. It also reduces the need for expensive fertilizer. Specialized machinery can inject fertilizer along with the seeds, putting just enough right where developing crops need it most.
Those savings help explain why farmers have been moving to no-till, and why even more will as the cost of oil rises. But the side benefit of this shift will be alleviating a problem that's been plaguing humanity for thousands of years.
Plowing removes plant cover, and bare fields erode 10 to 100 times faster than shielded soil, far faster than nature can make more. Overplowing has stripped whole regions bare and helped bring down past civilizations. Parts of Syria that were extensively farmed in Roman times are now bare, rocky slopes, for instance, and in southern Greece you can still find ancient agricultural tools scattered on hillsides that can no longer support cultivation.
Modern industrial societies aren't immune. Islands of unplowed prairie in pioneer cemeteries across the American heartland stand higher than the surrounding, eroded fields. On some corn fields in the Midwest, I've seen soil that was so degraded it looked like beach sand.
No-till farming can change all that. The practice can reduce erosion by more than 90%, and bring soil loss close to the pace of soil production. Over time, no-till can also increase soil organic matter and boost microbial activity that helps cycle nutrients from the soil into crops and back again. And not plowing helps reduce runoff, leaving more water in the ground where it's available to crops.
The next strategy involves reducing reliance on fertilizers that don't enrich the soil and require a lot of oil to manufacture. Instead, low-cost organic matter like manure, crop stubble, garden trimmings and even household food scraps are used.
This certainly isn't a new idea. Centuries ago, the Dutch reclaimed land from the sea and enriched it with organic wastes. Long before then, farmers from China to Peru improved their soils by returning organic matter to their fields.
But in the U.S. and Europe, organic sources of fertilizer fell out of favor in the middle of the past century. There are a lot of reasons, some of which don't have anything to do with agricultural effectiveness. Big crop subsidies led many farmers to stop keeping livestock, which meant no more on-farm manure. And after World War II, former munitions factories started cranking out cheap fertilizer, which together with cheap oil made animal husbandry an expensive, labor-intensive anachronism.
Intensive chemical-fertilizer use also dramatically increased crop production, especially on already-degraded land, during the Green Revolution that has helped feed the world's rising population. But the cost of fertilizer is tied to the price of oil.
With the price of manufactured fertilizers rising, recycling organic matter is becoming more cost-effective. It also can build fertile soil. While chemical fertilizers won't disappear from agriculture anytime soon, rising prices will make it increasingly attractive to rebuild soil fertility using organic matter, particularly on the third of the world's cropland already degraded beyond use.
Spurred by high fertilizer prices, some farmers are bringing livestock back onto their land. One energetic couple in Missouri told me how they used chicken and goat manure along with intensive composting to turn an abandoned farm with degraded soil back into a productive and profitable working farm in under five years.
It's not just conventional farmers who are adopting these methods. Some cities are setting up community food gardens to help counter rising food prices. These urban farmers see recycling organic waste as the key to growing fresh, affordable produce in cities, where most of humanity now lives.
I saw this for myself when I visited one such garden built atop a reclaimed landfill near downtown Seattle. Looking at the oversize vegetables and digging my hands into rich fertile soil, I could hardly believe this farm was started less than a decade before with trucked-in, sterilized dirt. Regular additions of compost rapidly turned this small patch of land into a reliable source of fresh fruit and vegetables for residents and local food banks.
The final alternative strategy isn't here yet. But when it arrives, it has the potential to change the way American farmers harvest the country's third-largest crop: wheat.
The Land Institute in Salina, Kan., is developing a range of perennial grains that would make annual plowing unnecessary. To my mind, the most revolutionary efforts involve a version of wheat that can be used in many of the same foods as the regular stuff.
Harvesting perennial wheat would mean fewer passes with the tractor and less oil burned. Meanwhile, the longer roots of perennial wheat reach deeper into the soil, tapping into more of the water it holds, increasing crop tolerance to drought. Longer roots also enhance nutrient uptake, further reducing the need for fertilizer.
There's a dramatic illustration of the idea hanging in a stairwell at the Land Institute: a life-size picture, close to two stories tall, of a perennial wheat plant and its Rapunzel-like roots. Next to it, a picture of a conventional wheat plant looks anemic by comparison, its roots reaching down just several steps.
Perennial wheat also has the potential to do long-term good. Harvesting the wheat would leave the plant and its root system in place, storing a lot of organic matter below ground, where it helps support the growth of the next crop. Minimally disturbed ground, reinforced by interlaced root systems, also means far less soil erosion.
---
To some, I'm sure that all this speculation about a revolution in farming sounds naively optimistic. But the movement toward these new methods is already under way, and the economic case for more farmers to adopt them will only get stronger as oil and fertilizer get pricier.
Let's hope so, for our descendants will need productive, fertile soil just as much as, if not more than, we do today. And what we now consider alternative methods of farming are some of the best ways to ensure that they'll have plenty of it.
---
Dr. Montgomery, a professor of geomorphology at the University of Washington in Seattle, is the author of "Dirt: The Erosion of Civilizations." He can be reached at reports@wsj.com.
Credit: By David R. Montgomery
Subject: Agriculture; Tillage; Farmers; Soil erosion; Series & special reports; Crude oil prices; Conservation
Location: United States--US
Classification: 9190: United States; 8400: Agriculture industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: R.4
Publication year: 2012
Publication date: Oct 15, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And E conomics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1111851669
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1111851669?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. Oil Boom Falls Short of Pump; Gas Prices Stay High Even as Production Surges, as Midwest Can't Dent Global Market; Some Refiners Profit
Author: Pleven, Liam; Zuckerman, Gregory
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 Oct 2012: n/a.
ProQuest document link
Abstract:
CVR runs a 115,000-barrel-per-day refinery in Oklahoma. Since the end of August, CVR shares have climbed from less than $30 to $38.08, close to an all-time high. [...]the region imports at least some gasoline, paying higher international prices, according to economists.
Full text: Surging U.S. oil production is driving down domestic benchmark crude prices and delivering a windfall to some refiners and their investors. But the oil boom is providing little relief for consumers at the pump.
U.S. crude production is expected to rise 12% this year and 8% in 2013, when it will hit the highest level since 1993, according to government figures. The price of West Texas crude, the U.S. benchmark, has fallen 7% this year, held down by rising supplies from new drilling methods.
Yet gasoline prices currently average nearly $4 per gallon nationwide. Rising U.S. crude production may seem like an attractive antidote, but it is proving ineffective on its own at a time when the world's appetite for energy remains voracious and Middle East tension is a reminder that supplies could be disrupted.
"Even the significant increase in U.S. production is a small part of the world oil market," said Severin Borenstein, co-director of the Energy Institute at the Haas School of Business.
Refiners that process the cheaper crude are selling gasoline and diesel into a global market driven more by higher international prices for crude, which are up around 7% in 2012.
Some are benefiting. Refiners in the Midwest--near where much of the new oil is produced or stored--can often pay less for the raw crude than do rivals in U.S. coastal areas and abroad, but can charge market prices for the sought-after gasoline and diesel they churn out.
HollyFrontier Corp., which owns refineries in Oklahoma, Kansas and elsewhere, saw net income jump 149% to $502 million year over year in the second quarter. Tesoro Corp., which operates a refinery in North Dakota, where crude production has roughly quadrupled in four years, reported a 77% leap to $393 million in the same period.
Shares of HollyFrontier are up 60% this year, while Tesoro's shares have gained 64%.
Billionaire financier Carl Icahn has also scored big. Mr. Icahn bought up over 58 million shares in CVR Energy Inc. in the second quarter, boosting his stake to 82% of the Sugar Land, Texas, firm's shares. CVR runs a 115,000-barrel-per-day refinery in Oklahoma.
Since the end of August, CVR shares have climbed from less than $30 to $38.08, close to an all-time high. That has given Mr. Icahn's firm, Icahn Associates, a paper gain of over $600 million in the past six weeks.
"It's been an excellent investment so far," said Mr. Icahn.
"Rising North American crude production should lead to increased stability in the refining industry, which we believe will result in a more secure supply and steady price for the U.S. consumer," Julia Heidenreich, a HollyFrontier spokeswoman, said in a statement. She added, "Given our access to cheaper crude oil in the geographies where we operate, HollyFrontier should enjoy structurally higher margins going forward."
Tesoro declined to comment.
Benchmark U.S. crude is based on prices at the Cushing, Okla., storage hub, and is known as West Texas Intermediate, or WTI. That price is now nearly $23 cheaper than Brent crude, the European benchmark. The gap has more than doubled from $8.55 at year-end, surprising many analysts and investors who expected it to be narrower. Before 2011, the gap was typically within a dollar or two.
WTI settled Friday at $91.86 per barrel. Brent has headed in the other direction, rising 7% this year amid concerns about tight supplies abroad and Middle East tension. Brent settled at $114.62 on Friday.
Part of the trouble is that the oil being pumped out in North Dakota and other states is largely landlocked, because there aren't enough pipelines or other infrastructure to send the crude elsewhere. That is creating a glut that is keeping prices low.
Gasoline prices in the Midwest would be most likely to benefit from declines in the price of WTI. But gas prices there haven't fallen relative to the rest of the country, according to a June study co-written by Mr. Borenstein of the Energy Institute.
The reason is that Midwest refineries are operating at near full capacity and selling everything they can produce, but that still isn't enough to satisfy demand from drivers. As a result, the region imports at least some gasoline, paying higher international prices, according to economists. That keeps the price of all gasoline high.
"They're going to have to pay what basically everybody else is paying," said Michael Plante, a research economist at the Federal Reserve Bank of Dallas.
To be sure, unclogging the Midwest bottleneck wouldn't necessarily have a big impact on retail gasoline prices nationwide, either. Even if far more Midwest oil could get to the wider market, the impact would be "in the pennies. A penny might be it," said Mr. Borenstein.
As well, some investors and analysts expect the gap between West Texas and Brent prices to narrow as supply disruptions ease and the U.S. bottleneck is gradually unclogged. Should Brent fall significantly, cheaper oil everywhere could result in lower pump prices.
Nonetheless, analysts and investors don't expect the difference to disappear soon.
"Some element of the spread will last for quite some time," said Brison Bickerton, managing director at Freepoint Commodities, a trading firm.
Write to Liam Pleven at and Gregory Zuckerman at
Credit: By Liam Pleven and Gregory Zuckerman
Subject: Petroleum refineries; Petroleum industry; Petroleum production; Energy economics; Supplies
Location: United States--US Middle East
Company / organization: Name: CVR Energy Inc; NAICS: 324110; Name: Icahn Associates; NAICS: 523910
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 15, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1112043197
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1112043197?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Rallies to End Flat
Author: Strumpf, Dan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 Oct 2012: n/a.
ProQuest document link
Abstract:
NEW YORK--U.S. oil futures finished nearly unchanged Monday, as traders weighed additional signs of weak global oil demand against the prospect of supply disruptions in the Middle East.
Full text: NEW YORK--U.S. oil futures finished nearly unchanged Monday, as traders weighed additional signs of weak global oil demand against the prospect of supply disruptions in the Middle East.
Light, sweet crude for November delivery settled a penny lower at $91.85 a barrel on the New York Mercantile Exchange. But Brent crude on the ICE futures exchange, the European benchmark, settled $1.18, or 1%, higher at $115.80 a barrel.
Nymex crude traded as low as $89.79 earlier in the session, but clawed back its losses as concerns over rising tensions in the Middle East kept traders from pushing prices lower. Several market participants pointed to an article in the German magazine Der Spiegel, which said Iran could create a massive oil spill to block the flow of crude through the Strait of Hormuz.
"There was some attention given to that Der Spiegel article," said John Kilduff, founding partner at Again Capital. "There's an upward bias here."
Oil futures spent much of the day in the red, as market participants remained focused on slowing global oil demand. Last week, the International Energy Agency cut its outlook for oil-demand growth this year and said it sees higher production than previously thought thanks to rising output in the U.S., Iraq and Libya.
On Saturday, the Organization of the Petroleum Exporting Countries said during a meeting with the International Monetary Fund that it expects the market to remain well supplied into next year.
"There have been a couple of downgrades in terms of projected [oil] demand growth," said Kyle Cooper, managing partner at IAF Advisors in Houston. "The demand situation does remain very, very tepid."
Oil prices have been on a downward trend in recent months, as economic troubles in Europe and a tepid recovery in the U.S. curb demand for oil and refined products like gasoline. U.S. prices topped $100 in September but have fallen steadily since.
Underpinning prices, however, remains the threat of supply disruptions due to intensifying unrest in the Middle East. Border skirmishes between Turkey and Syria in recent weeks have raised fears that the civil war in the latter country is spreading to its neighbors, potentially disrupting key oil-transit routes in Turkey or elsewhere.
Over the weekend, Der Spiegel reported that Western officials had obtained a report outlining an Iranian plan to disrupt shipping through the Strait of Hormuz by creating a vast oil spill. The strait is one of the world's most important oil-shipping channels.
Front-month November reformulated gasoline blendstock, or RBOB, settled 4.25 cents, or 1.5%, lower at $2.8503 a gallon. November heating oil settled 1.48 cents, or 0.5%, lower at $3.2091 a gallon.
Write to Dan Strumpf at
Credit: By Dan Strumpf
Subject: Petroleum industry; Crude oil; Futures
Location: Iran United States--US Strait of Hormuz Middle East
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210; Name: International Monetary Fund--IMF; NAICS: 522298; Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 15, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1112043218
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1112043218?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Murphy Oil to Spin Off U.S. Downstream Unit
Author: Sider, Alison; Warner, Melodie
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 Oct 2012: n/a.
ProQuest document link
Abstract:
[...]Point had spelled out a four-step process for the energy company that included a spinoff of the retail business, selling its Canadian natural-gas assets, completely exiting the U.K. refining business and selling its 5% stake in Syncrude oil-sands projects.
Full text: Murphy Oil Corp.'s board approved the spinoff of its U.S. fuel-making and distribution business into a new company, Murphy Oil USA Inc., as the company intends to focus on oil and gas extraction in the U.S., Canada and Malaysia.
The board also declared a $500 million special dividend and a stock repurchase plan of up to $1 billion. It plans to pay the special $2.50 dividend on, or about, Dec. 3, to shareholders of record as of Nov. 16.
The move is part of a recent trend in which some integrated oil companies have jettisoned their relatively low-margin fuel-making and retail operations, which are perceived to weigh on share value at a time when extracting and selling crude oil is a very profitable business. Earlier this year ConocoPhillips completed the process of spinning off its refining arm into Phillips 66, and in 2011, refining company Marathon Petroleum Corp. split off from Marathon Oil Corp.
Murphy Oil USA's business will consist of retail marketing of petroleum products, a chain of retail gasoline stations, seven product-distribution terminals and two ethanol-production facilities in North Dakota and Texas.
Meanwhile, Murphy Oil reaffirmed its plan to sell its U.K. refining and fuel-marketing business, which has been up for sale since 2010, and said it will continue to review sales of natural-gas production assets in Canada that have been recommended by shareholders.
Tuesday's announcement pushes forward a process Murphy started in 2010 when it announced plans to get out of the refining business. Last year it completed the sales of its two U.S. refineries in Superior, Wisc., and Meraux, La.
Simmons & Co. analysts wrote in a note Tuesday that they viewed Murphy's announcement as a move that could unlock up $5 per share in "trapped enterprise value."
It "could be a sign for more aggressive moves to continue to improve the valuation in shares (more aggressive divestments for example)," the analysts wrote.
Murphy said it expects to complete the spinoff of Murphy USA in 2013, with the process likely to take around six to nine months.
Earlier this month, Murphy Oil said it was meeting with Third Point LLC, a hedge fund run by Dan Loeb that had accumulated a "significant stake" and had recently filed for regulatory approval to increase that position, if it desired.
Third Point had spelled out a four-step process for the energy company that included a spinoff of the retail business, selling its Canadian natural-gas assets, completely exiting the U.K. refining business and selling its 5% stake in Syncrude oil-sands projects.
Murphy Chief Executive Steve Cosse said on a conference call with analysts that the company is taking those recommendations to heart and has hired an investment bank for advice as it considers selling the Syncrude assets as well as its position in the Montney formation in western Canada.
"When you consider the future of these assets in our portfolio, you have to take measured pace and deliberative process," he said, describing the two as "cornerstone assets."
But, he added, selling those assets has been a "recurring theme" brought up by shareholders and said the company would be remiss not to pay attention.
As an independent exploration-and-production company, Mr. Cosse said Murphy will focus on accelerating development in some of the company's existing positions; its 220,000 acres in the Eagle Ford shale play in south Texas, the Seal heavy-oil project in northern Alberta, Canada, and its international exploration business.
Mr. Cosse said Murphy's retail business lost money during the first quarter but has been turned around after a consulting firm suggested some organizational changes.
Murphy Oil reported in August its second-quarter earnings fell 5.2% as a drop in oil and natural-gas prices contributed to a 3% revenue decline.
Write to Melodie Warner at
Credit: By Alison Sider And Melodie Warner
Subject: Petroleum industry; Acquisitions & mergers; Spinoffs; Dividends; Natural gas; Regulatory approval
Location: United Kingdom--UK United States--US Texas Malaysia Canada
Company / organization: Name: ConocoPhillips Co; NAICS: 211111; Name: Marathon Petroleum Corp; NAICS: 324110; Name: Third Point LLC; NAICS: 523920; Name: Murphy Oil USA Inc; NAICS: 211111; Name: Marathon Oil Corp; NAICS: 486110, 324110, 211111, 213112
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 16, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1112231186
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1112231186?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Buys Canadian Gas Driller for $2.63 Billion
Author: McKinnon, Judy; Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Oct 2012: n/a.
ProQuest document link
Abstract:
Exxon Mobil Corp. said Wednesday it agreed to buy Canadian oil and natural-gas producer Celtic Exploration Ltd. for 2.59 billion Canadian dollars (US$2.63 billion) in a deal that expands the oil giant's North American shale-gas portfolio at a time when gas prices--and asset values--are suffering from a continent-wide glut.
Full text: Exxon Mobil Corp. said Wednesday it agreed to buy Canadian oil and natural-gas producer Celtic Exploration Ltd. for 2.59 billion Canadian dollars (US$2.63 billion) in a deal that expands the oil giant's North American shale-gas portfolio at a time when gas prices--and asset values--are suffering from a continent-wide glut.
The companies said Exxon's Canadian unit is offering C$24.50 a share for Calgary-based Celtic's outstanding shares, plus half a share of a new company that will be created to hold several assets not included in the purchase. The cash portion of the deal represents a 35% premium to Celtic's closing price of C$18.12 in Toronto Tuesday. Including debt considerations, the two companies said the deal was worth C$3.1 billion.
The deal is Exxon's largest since the 2010 purchase of natural-gas-focused XTO Energy for about $26 billion, a transaction that many analysts say was a poorly timed effort to get in on the shale-gas boom. Overproduction of natural gas sent U.S. prices to a decade low earlier this year.
Celtic's production and proved reserves are heavily focused on natural gas versus liquids, note analysts with Raymond James Financial, with about 76% of its reserves in gas. But they are just a tiny fraction of Exxon's estimated daily production of 4,368 million barrels of oil equivalent for 2012, and year-end 2011 proved reserves of 24.9 billion barrels of oil equivalent.
Exxon continues to take a long-term perspective on natural gas, expecting it to be a fuel of choice globally in decades to come.
"This latest deal, similar to XTO in some respects--albeit on a much smaller scale--can be thought of as Exxon's attempt to dollar-cost average what, in retrospect, was clearly not an optimally timed deal," Raymond James said in its research note.
It is also the latest in a string of big deals by foreign buyers in the Canadian oil patch. Ottawa faces a Friday deadline to decide whether to green-light a $5.8 billion proposal by Malaysian state oil company Petroliam Nasional Bhd., or Petronas, to buy Progress Energy Resources Corp., another Canadian gas producer.
In July, Beijing-controlled Cnooc Ltd. said it agreed to buy Nexen Inc., one of Canada's biggest oil companies, for $15.1 billion. Amid government reviews of those two deals, Ottawa has promised to clarify its criteria for big, foreign, state-owned acquirers. Exxon's deal isn't likely to attract the same scrutiny since it isn't a state-owned buyer. It is also making its acquisition of Celtic through a Canadian affiliate, which has a long history working in Canada.
"This acquisition will add significant liquids-rich resources to our existing North American unconventional portfolio," Andrew Barry, president of Exxon Mobil Canada, said in a statement.
The value of a company's reserves can change over time based on how it develops them. Like many smaller firms, Celtic acquired a large position in a number of shale fields and used cash flow from production to keep growing. More selective drilling and exploration over time--a strategy Exxon has said previously it is pursuing in its acquisition of XTO--can lead to larger reserves.
"Exxon has the sufficient size and scope that we don't have to produce everything available to keep cash flow going. We can step back and develop long-term plans to produce when it's most optimal," said Alan Jeffers, an Exxon Mobil spokesman.
Canadian natural-gas production may be destined for overseas export through liquefied natural-gas projects that are proposed for Canada's Pacific Coast. Mr. Jeffers said Exxon is still in the early stages of evaluating taking part in such projects.
Around midday in Toronto, Celtic shares were up C$8.14, or 45%, to C$26.26. A number of other small Canadian gas producers saw their stock price rise Wednesday after the Exxon deal.
Exxon's proposed deal includes Celtic's current production of 72 million cubic feet a day of natural gas and 4,000 barrels a day of crude, condensate and natural-gas liquids. Celtic is focused on exploration, development and production of crude oil and natural-gas resources primarily in west central Alberta.
The two companies said they plan to spin off several other assets into a new company. Representatives for Celtic weren't immediately available to comment.
The deal, which includes a C$90 million break-up fee payable under certain circumstances by Celtic, is subject to Celtic shareholder approval and approval by Canadian regulators.
Angel Gonzalez contributed to this article.
Write to Judy McKinnon at
Credit: By Judy McKinnon And Tom Fowler
Subject: Acquisitions & mergers; Oil reserves; Natural gas; Petroleum industry
Location: United States--US Canada
Company / organization: Name: Nexen Inc; NAICS: 211111; Name: Progress Energy Resources Corp; NAICS: 221122; Name: Celtic Exploration Ltd; NAICS: 211111; Name: Raymond James Financial Inc; NAICS: 523120, 523930; Name: Petronas; NAICS: 211111; Name: CNOOC Ltd; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 17, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1112372790
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1112372790?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Mobil to Buy Celtic Exploration
Author: McKinnon, Judy
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Oct 2012: n/a.
ProQuest document link
Abstract:
Exxon Mobil's buy, which includes current production of 72 million cubic feet a day of natural gas and 4,000 barrels a day of crude, condensate and natural gas liquids, comes at a time when foreign companies are looking to bolster their presence in resource-rich Canada.
Full text: Exxon Mobil Corp. agreed Wednesday to buy Canadian oil and gas producer Celtic Exploration Ltd. in a deal worth about 3.1 billion Canadian dollars ($3.14 billion), including debt.
Calgary, Alberta-based Celtic said Exxon Mobil's Canadian unit is offering C$24.50 a share for its outstanding shares, plus 0.5 of a share of a new company, representing a 35% premium to Celtic's closing price of C$18.12 in Toronto Tuesday.
Based on Celtic's outstanding 105.7 million shares, the offer has a cash value of about C$2.59 billion.
"This acquisition will add significant liquids-rich resources to our existing North American unconventional portfolio," Andrew Barry, president of Exxon Mobil Canada, said in a statement.
Exxon Mobil's buy, which includes current production of 72 million cubic feet a day of natural gas and 4,000 barrels a day of crude, condensate and natural gas liquids, comes at a time when foreign companies are looking to bolster their presence in resource-rich Canada.
The Celtic assets being acquired include 545,000 net acres in the liquids-rich Montney shale, 104,000 net acres in the Duvernay shale and additional acreage in other areas of Alberta. Celtic is focused on exploration, development and production of crude oil and natural gas resources primarily in west central Alberta.
The deal, which includes a C$90 million break-up fee payable under certain circumstances by Celtic, is subject to Celtic shareholder approval and approval by Canadian regulators.
Write to Judy McKinnon at
Credit: By Judy McKinnon
Subject: Natural gas; Petroleum industry; Acquisitions & mergers
Location: Calgary Alberta Canada
Company / organization: Name: Celtic Exploration Ltd; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 17, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1112372971
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1112372971?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil-Rich Angola Launches Wealth Fund
Author: McGroarty, Patrick
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Oct 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: JOHANNESBURG--Angola on Wednesday launched a $5 billion sovereign-wealth fund that will focus on infrastructure and hotel projects at home and will seek investment opportunities beyond the borders of the oil-rich southern African country.
The fund will be seeded with proceeds from Angola's vast oil earnings and governed by allies of the country's authoritarian president, who has held power since 1979 and was recently elected to another five-year term. Angola is Africa's second-largest oil producer after Nigeria.
The sovereign-wealth fund said it would invest in hotels in both Angola and the region, where the industry is growing quickly as international hoteliers jostle to accommodate an increasing number of business travelers flocking to resource-rich countries on the continent.
Angola is a prime target for hotel developers, with fast growth rates and a notorious reputation as one of the most expensive countries in the world, thanks to a shortage of high-end hotels and restaurants in places such as Luanda, the capital.
"There are still considerable challenges facing the country," said José Filomeno de Sousa dos Santos, a member of the fund's board and the son of President José Eduardo dos Santos. "However, we are committed to promoting social and economic development by investing in projects that create opportunities that will positively impact the lives of all Angolans today and to generate wealth for future generations."
Little of Angola's oil wealth or rapid economic expansion--expected to reach 6.8% this year, according to the International Monetary Fund--has trickled down to the bulk of Angola's 18 million people. Half live under the poverty line, while government graft rates are among the worst in the world, according to Transparency International.
Earlier this year the IMF said Angola had failed to account for about $32 billion that state oil giant Sonangol spent on the government's behalf between 2007 and 2010. The IMF approved the final $133 million tranche of a $1.33 billion loan to Angola despite the discrepancy, and in May the fund said Angola had since accounted for the bulk of the unrecorded spending.
State oil giant Sonangol was already seen as effectively operating as a sovereign-wealth fund because it holds big stakes in Portuguese companies such as Millennium BCP, Portugal's biggest private bank.
More than a dozen other African countries have established such funds in the past two decades, according to the African Development Bank, using revenue from oil, gas and mineral production to fund African development projects as well as investments in sovereign bonds and other assets widely traded on international markets.
Write to Patrick McGroarty at
Credit: By Patrick McGroarty
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 17, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1112409685
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1112409685?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Australia Oil Producers See Quarterly Boost
Author: Winning, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Oct 2012: n/a.
ProQuest document link
Abstract:
Pluto is the first of about 12 new LNG projects that international energy companies such as Chevron Corp. and ExxonMobil Corp. hope to bring online in the region in a narrow window from this year through 2017.
Full text: SYDNEY--Woodside Petroleum Ltd. and Santos Ltd. each reported record quarterly revenue Thursday, pushing their shares up and reassuring investors that Australia's resources boom may have further to run.
Woodside said revenue in the third quarter jumped 28% to US$1.83 billion from the previous quarter, driving shares in Australia's second-largest oil company after BHP Billiton Ltd. up as much as 4%. Santos shares also rose after higher natural-gas output in Australia's Carnarvon Basin helped increase revenue in the quarter through September to 851 million Australian dollars (US$882 million).
The companies have been plowing billions of dollars into gas-export projects targeting Asian customers in an effort to shift away from oil production to generate the bulk of their revenue from natural gas. The companies placed bold bets on developments in Australia and Papua New Guinea that are capable of supplying Asia's demand for cleaner-burning fuels.
Woodside said Thursday that its flagship US$14.9 billion Pluto liquefied-natural-gas project in Western Australia state had performed so well since starting in March that oil and natural-gas output this year across its business may be as much as 8% above earlier guidance.
Pluto is the first of about 12 new LNG projects that international energy companies such as Chevron Corp. and ExxonMobil Corp. hope to bring online in the region in a narrow window from this year through 2017. The investment boom has added pressure on an already stretched resources-services sector, sharply driving up labor and equipment costs.
LNG projects account for about two-thirds of the roughly US$260 billion in new investments committed by Australia's resources industry, and have been largely shielded from the wave of project cancellations and delays in mineral projects in recent months.
Whereas prices of iron ore--Australia's largest export-revenue generator--slumped 22% in the July-September period compared with the previous quarter and forced mining companies to scale back investments, Santos said natural-gas prices were up 13% over the same time period.
Still, the sudden downturn in the market for iron ore and coal prompted Australia's Resources Minister Martin Ferguson among others to call the end of the boom in high commodity prices.
In its statement Thursday, Woodside predicted oil and natural-gas production this calendar year would be in a range of 83 million and 86 million barrels of oil equivalent, comfortably above its earlier guidance of between 77 million and 83 million BOE.
"The increase in the range is due to better-than-expected performance from Pluto LNG and the number of contingent shutdown days being reduced from 20 to three days for the remainder of 2012," Woodside said.
Management had thought Pluto would operate at only 83% of its capacity in the July-September quarter, but it outperformed expectations by running at a rate of 95% and producing 1.1 million metric tons of LNG and 851,102 barrels of condensate, a type of light oil.
Pluto's importance to Woodside is underscored by management expectations that it will account for 41% of total oil and natural gas production next year.
Santos is poised for sharp production and revenue growth in 2014, when the Exxon-led US$15.7 billion PNG LNG project in Papua New Guinea is slated to ship its first LNG cargo to Asia, while the company's US$18.5 billion GLNG project in Queensland state is due to follow it into production a year later.
Santos said changes to the timing of spending on the GLNG project and development of assets in the Gunnedah Basin of New South Wales state prompted a cut to its guidance for capital expenditure in the current calendar year to A$3.5 billion from a previous forecast of A$3.75 billion.
On a quarterly basis, Woodside said its oil and natural-gas production rose 65% on year to a record 26.5 million BOE, while Santos said its output rose 6% on-year.
Write to David Winning at
Credit: By David Winning
Subject: LNG; Petroleum industry; Petroleum production; Natural gas; Energy industry; Iron compounds
Location: Asia United States--US Papua New Guinea Western Australia Australia
Company / organization: Name: Chevron Corp; NAICS: 324110, 211111; Name: BHP Billiton; NAICS: 211111, 212231, 212234; Name: Woodside Petroleum Ltd; NAICS: 211111; Name: Exxon Mobil Corp; NAICS: 447110, 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 18, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1112565040
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1112565040?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Exxon Buys Canadian Gas Driller for $2.63 Billion
Author: McKinnon, Judy; Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Oct 2012: n/a.
ProQuest document link
Abstract:
Exxon Mobil Corp. said Wednesday it agreed to buy Canadian oil and natural-gas producer Celtic Exploration Ltd. for 2.59 billion Canadian dollars (US$2.63 billion) in a deal that expands the oil giant's North American shale-gas portfolio at a time when gas prices--and asset values--are suffering from a continent-wide glut.
Full text: Exxon Mobil Corp. said Wednesday it agreed to buy Canadian oil and natural-gas producer Celtic Exploration Ltd. for 2.59 billion Canadian dollars (US$2.63 billion) in a deal that expands the oil giant's North American shale-gas portfolio at a time when gas prices--and asset values--are suffering from a continent-wide glut.
The companies said Exxon's Canadian unit is offering C$24.50 a share for Calgary-based Celtic's outstanding shares, plus half a share of a new company that will be created to hold several assets not included in the purchase. The cash portion of the deal represents a 35% premium to Celtic's closing price of C$18.12 in Toronto Tuesday. Including debt considerations, the two companies said the deal was worth C$3.1 billion.
The deal is Exxon's largest since the 2010 purchase of natural-gas-focused XTO Energy for about $26 billion, a transaction that many analysts say was a poorly timed effort to get in on the shale-gas boom. Overproduction of natural gas sent U.S. prices to a decade low earlier this year.
Celtic's production and proved reserves are heavily focused on natural gas versus liquids, note analysts with Raymond James Financial, with about 76% of its reserves in gas. But they are just a tiny fraction of Exxon's estimated daily production of 4.368 million barrels of oil equivalent for 2012, and year-end 2011 proved reserves of 24.9 billion barrels of oil equivalent.
Exxon continues to take a long-term perspective on natural gas, expecting it to be a fuel of choice globally in decades to come.
"This latest deal, similar to XTO in some respects--albeit on a much smaller scale--can be thought of as Exxon's attempt to dollar-cost average what, in retrospect, was clearly not an optimally timed deal," Raymond James said in its research note.
It is also the latest in a string of big deals by foreign buyers in the Canadian oil patch. Ottawa faces a Friday deadline to decide whether to green-light a $5.8 billion proposal by Malaysian state oil company Petroliam Nasional Bhd., or Petronas, to buy Progress Energy Resources Corp., another Canadian gas producer.
In July, Beijing-controlled Cnooc Ltd. said it agreed to buy Nexen Inc., one of Canada's biggest oil companies, for $15.1 billion. Amid government reviews of those two deals, Ottawa has promised to clarify its criteria for big, foreign, state-owned acquirers. Exxon's deal isn't likely to attract the same scrutiny since it isn't a state-owned buyer. It is also making its acquisition of Celtic through a Canadian affiliate, which has a long history working in Canada.
"This acquisition will add significant liquids-rich resources to our existing North American unconventional portfolio," Andrew Barry, president of Exxon Mobil Canada, said in a statement.
The value of a company's reserves can change over time based on how it develops them. Like many smaller firms, Celtic acquired a large position in a number of shale fields and used cash flow from production to keep growing. More selective drilling and exploration over time--a strategy Exxon has said previously it is pursuing in its acquisition of XTO--can lead to larger reserves.
"Exxon has the sufficient size and scope that we don't have to produce everything available to keep cash flow going. We can step back and develop long-term plans to produce when it's most optimal," said Alan Jeffers, an Exxon Mobil spokesman.
Canadian natural-gas production may be destined for overseas export through liquefied natural-gas projects that are proposed for Canada's Pacific Coast. Mr. Jeffers said Exxon is still in the early stages of evaluating taking part in such projects.
Around midday in Toronto, Celtic shares were up C$8.14, or 45%, to C$26.26. A number of other small Canadian gas producers saw their stock price rise Wednesday after the Exxon deal.
Exxon's proposed deal includes Celtic's current production of 72 million cubic feet a day of natural gas and 4,000 barrels a day of crude, condensate and natural-gas liquids. Celtic is focused on exploration, development and production of crude oil and natural-gas resources primarily in west central Alberta.
The two companies said they plan to spin off several other assets into a new company. Representatives for Celtic weren't immediately available to comment.
The deal, which includes a C$90 million break-up fee payable under certain circumstances by Celtic, is subject to Celtic shareholder approval and approval by Canadian regulators.
Angel Gonzalez contributed to this article.
Write to Judy McKinnon at
Credit: By Judy McKinnon And Tom Fowler
Subject: Acquisitions & mergers; Oil reserves; Natural gas; Petroleum industry
Location: United States--US Canada
Company / organization: Name: Nexen Inc; NAICS: 211111; Name: Progress Energy Resources Corp; NAICS: 221122; Name: Celtic Exploration Ltd; NAICS: 211111; Name: Raymond James Financial Inc; NAICS: 523120, 523930; Name: Petronas; NAICS: 211111; Name: CNOOC Ltd; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 18, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1112565043
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1112565043?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Global Finance: Oil-Rich Angola Launching Fund
Author: McGroarty, Patrick
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]18 Oct 2012: C.3.
ProQuest document link
Abstract:
More than a dozen African countries have established such funds in the past two decades, according to the African Development Bank, using revenue from oil, gas and mineral production to fund African development projects as well as investments in sovereign bonds and other assets widely traded on international markets.
Full text: Angola launched a $5 billion sovereign-wealth fund that will focus on infrastructure and hotel projects at home and will seek investment opportunities beyond the borders of the oil-rich southern African country.
The fund will be seeded with proceeds from Angola's vast oil earnings and governed by allies of the country's authoritarian president, who has held power since 1979 and was recently elected to another five-year term. Angola is Africa's second-largest oil producer after Nigeria.
The sovereign-wealth fund said it would invest in hotels in both Angola and the region, where the industry is growing quickly as international hoteliers jostle to accommodate an increasing number of business travelers flocking to resource-rich countries on the continent.
Angola is a prime target for hotel developers, with fast growth rates and a reputation as one of the most expensive countries in the world, thanks to a shortage of high-end hotels and restaurants in places such as Luanda, the capital.
"There are still considerable challenges facing the country," said Jose Filomeno de Sousa dos Santos, a member of the fund's board and the son of President Jose Eduardo dos Santos.
"However, we are committed to promoting social and economic development by investing in projects that create opportunities that will positively impact the lives of all Angolans today and to generate wealth for future generations."
Little of Angola's oil wealth or rapid economic expansion -- expected to reach 6.8% this year, according to the International Monetary Fund -- has trickled down to the bulk of Angola's 18 million people. Half live below the poverty line, while government graft rates are among the worst in the world, according to Transparency International.
Earlier this year, the IMF said Angola had failed to account for about $32 billion that state oil giant Sonangol spent on the government's behalf between 2007 and 2010.
The IMF approved the final $133 million tranche of a $1.33 billion loan to Angola despite the discrepancy, and in May the fund said Angola had since accounted for the bulk of the unrecorded spending.
Sonangol already was seen as effectively operating as a sovereign-wealth fund because it holds big stakes in Portuguese companies such as Millennium BCP, that country's biggest private bank.
More than a dozen African countries have established such funds in the past two decades, according to the African Development Bank, using revenue from oil, gas and mineral production to fund African development projects as well as investments in sovereign bonds and other assets widely traded on international markets.
Subscribe to WSJ:
Credit: By Patrick McGroarty
Subject: Hotels & motels; International finance; Petroleum industry; Sovereign wealth funds
Location: Nigeria Africa Angola Angola
People: Dos Santos, Jose Eduardo
Company / organization: Name: Sonangol; NAICS: 211111; Name: Transparency International; NAICS: 813319; Name: International Monetary Fund--IMF; NAICS: 522298; Name: African Development Bank; NAICS: 523110
Classification: 9177: Africa; 8130: Investment services; 9550: Public sector
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.3
Publication year: 2012
Publication date: Oct 18, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1112643579
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Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Exxon Acquires Canadian Gas Driller
Author: McKinnon, Judy; Fowler, Tom
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]18 Oct 2012: B.2.
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Exxon Mobil Corp. said Wednesday it agreed to buy Canadian oil and natural-gas producer Celtic Exploration Ltd. for 2.59 billion Canadian dollars (US$2.63 billion) in a deal that expands the oil giant's North American shale-gas portfolio at a time when gas prices -- and asset values -- are suffering from a continent-wide glut.
Full text: Exxon Mobil Corp. said Wednesday it agreed to buy Canadian oil and natural-gas producer Celtic Exploration Ltd. for 2.59 billion Canadian dollars (US$2.63 billion) in a deal that expands the oil giant's North American shale-gas portfolio at a time when gas prices -- and asset values -- are suffering from a continent-wide glut.
The companies said Exxon's Canadian unit is offering C$24.50 a share for Calgary-based Celtic's shares outstanding, plus half a share of a new company that will be created to hold several assets not included in the purchase. The cash portion of the deal represents a 35% premium to Celtic's closing price of C$18.12 in Toronto Tuesday. Including debt considerations, the two companies said the deal was worth C$3.1 billion.
The deal is Exxon's largest since the 2010 purchase of natural-gas-focused XTO Energy for about $26 billion, a transaction that many analysts say was a poorly timed effort to get in on the shale-gas boom. Overproduction of natural gas sent U.S. prices to a decade low earlier this year.
Celtic's production and proved reserves are heavily focused on natural gas versus liquids, note analysts with Raymond James Financial, with about 76% of its reserves in gas. But they are just a tiny fraction of Exxon's estimated daily production of 4.368 million barrels of oil equivalent for 2012, and year-end 2011 proved reserves of 24.9 billion barrels of oil equivalent.
Exxon continues to take a long-term perspective on natural gas, expecting it to be a fuel of choice globally in decades to come.
"This latest deal, similar to XTO in some respects -- albeit on a much smaller scale -- can be thought of as Exxon's attempt to dollar-cost average what, in retrospect, was clearly not an optimally timed deal," Raymond James said in its research note.
It is also the latest in a string of big deals by foreign buyers in the Canadian oil patch.
In July, Beijing-controlled Cnooc Ltd. said it agreed to buy Nexen Inc., one of Canada's biggest oil companies, for $15.1 billion.
Exxon's deal isn't likely to attract the same scrutiny since it isn't a state-owned buyer. It is also making its acquisition of Celtic through a Canadian affiliate, which has a long history working in Canada.
---
Angel Gonzalez contributed to this article.
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Credit: By Judy McKinnon and Tom Fowler
Subject: Acquisitions & mergers
Location: United States--US Canada
Company / organization: Name: Celtic Exploration Ltd; NAICS: 211111; Name: Exxon Mobil Corp; NAICS: 447110, 211111
Classification: 9180: International; 8510: Petroleum industry; 2330: Acquisitions & mergers
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.2
Publication year: 2012
Publication date: Oct 18, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1112644436
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1112644436?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Russia Nears Deal To Tighten Hold on Oil
Author: White, Gregory L; Cimilluca, Dana; Flynn, Alexis; Williams, Selina
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]18 Oct 2012: B.1.
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A Rosneft takeover of TNK-BP would be a major milestone in Mr. Putin's reassertion of Kremlin control over the strategic oil sector, much of which was sold off in the privatizations of the 1990s to well-connected tycoons like AAR. Since Mr. Putin came to power in 2000, the tide has turned the other way in an industry that the Kremlin depends on both as a source of international influence and more than half of all tax revenues.
Full text: BP PLC is close to a pact to sell its 50% stake in troubled Russian venture TNK-BP Ltd. to state oil company OAO Rosneft for about $25 billion in cash and shares, people close to the talks said, in a deal the British oil giant hopes will secure its position in a vital energy market.
Rosneft also has signed a preliminary agreement to buy out BP's partners in TNK-BP, a group of Soviet-born billionaires known as AAR, for as much as $28 billion, the people said. A deal for all of TNK-BP, Russia's No. 3 oil company by output, would reshape the oil industry in the world's largest energy producer, shifting ownership further into Kremlin hands.
Acquiring all of TNK-BP would also cement Rosneft's position as the largest publicly traded oil producer in the world, giving it output of four million barrels a day -- more oil than produced by Iraq.
Rosneft President Igor Sechin, a close ally of President Vladimir Putin, is expected to present his offer to BP in London as soon as Thursday. BP's board is expected to consider the offer on Friday, people close to the deal said. Rosneft, in which the government owns 75.5%, said in July it would bid on BP's stake.
People familiar with the talks said the situation remains fluid and one or both of the deals could fall through. Buying out AAR and BP would be a heavy financial burden for Rosneft, so it could wind up buying out only one in the end.
Deputy Prime Minister Arkady Dvorkovich said Wednesday that while he had heard Rosneft and AAR had signed a preliminary deal, "there are no legally binding agreements yet." Mr. Dvorkovich has opposed Rosneft's ambitions to expand in Russia's oil sector. But officials said Mr. Putin has backed Mr. Sechin in his drive to build the company into a so-called national champion.
A Rosneft takeover of TNK-BP would be a major milestone in Mr. Putin's reassertion of Kremlin control over the strategic oil sector, much of which was sold off in the privatizations of the 1990s to well-connected tycoons like AAR. Since Mr. Putin came to power in 2000, the tide has turned the other way in an industry that the Kremlin depends on both as a source of international influence and more than half of all tax revenues.
Rosneft was the main beneficiary of the Kremlin's breakup of OAO Yukos, once the country's largest crude producer, acquiring most of its main assets.
Rosneft and state-controlled natural-gas giant OAO Gazprom are key elements of Kremlin foreign policy, using business deals to help cement political relationships around the globe -- from gas deals in Africa and oil projects in Venezuela to an alliance with Exxon Mobil Corp. that Rosneft announced last year.
Foreign giants like Exxon have been key sources of technology and management expertise for the Russian state companies. Both are still struggling to shake off their Soviet legacies and have very little experience with the hard-to-reach reserves that are vital for sustaining Russian output. Some analysts have speculated Rosneft ultimately could bring another partner into a deal for TNK-BP, for example.
For BP, a TNK-BP deal would resolve one of the concerns that have troubled investors, alongside the terms of a settlement of U.S. government claims over the 2010 spill in the Gulf of Mexico.
Still, TNK-BP has been one of BP's best investments, returning $19 billion in dividends on the roughly $8 billion paid for the 50% stake in 2003. The venture accounts for nearly a quarter of BP's reserves and production. But tensions with AAR over strategy and governance have plagued the venture for years.
AAR went to court last year to block a planned Arctic partnership between BP and Rosneft. In May of last year, the three groups were close to a deal to buy AAR out of TNK-BP for about $32 billion in cash and stock, but the agreement fell through at the last moment.
BP this June said it was considering selling its TNK-BP stake. Offers are due Thursday, but Rosneft is expected to be the only bidder. AAR's efforts to raise money for a bid of its own met with little success, people close to the process said.
Rosneft is expected to offer between 10% and 15% of its own shares, valued at as much as $12.5 billion, to BP as part of the deal for the TNK-BP holding.
People close to BP said a Rosneft stake would help cement BP's unique relationship with the dominant oil company in an important energy-producing nation -- ties that could open the way to lucrative agreements in other parts of Russia, such as the Arctic shelf.
For Rosneft, buying 100% of TNK-BP at a valuation possibly over $50 billion, even if it used shares for partial payment, would be a major, but not impossible, financial burden, analysts said.
People close to AAR said if BP accepts Rosneft's offer, Rosneft might pull out of the preliminary agreement to also buy out AAR because a BP deal would be enough to give Rosneft effective control.
---
James Marson contributed to this article.
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Credit: By Gregory L. White, Dana Cimilluca, Alexis Flynn and Selina Williams
Subject: Acquisitions & mergers; Divestiture; Equity stake; Negotiations
Location: Russia United Kingdom--UK
Company / organization: Name: OAO Rosneft; NAICS: 324110; Name: TNK-BP; NAICS: 211111; Name: BP PLC; NAICS: 211111, 324110, 447110
Classification: 9176: Eastern Europe; 9175: Western Europe; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.1
Publication year: 2012
Publication date: Oct 18, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1112644733
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1112644733?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Nears Sale of South Iraq Stake
Author: Hassan Hafidh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Oct 2012: n/a.
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Anglo-Dutch oil-and-gas company Royal Dutch Shell PLC has a 15% stake in the West Qurna-1 development contract, while the remaining 25% is owned by the Iraqi state oil company.
Full text: Exxon Mobil Corp. is in talks to sell its stake in a contract to develop a multibillion-dollar oil project in southern Iraq while gearing up to start a controversial drilling effort in the Kurdistan region, people familiar with the matter said on Thursday.
The U.S. energy giant's move to exit southern Iraq and push forward with its plans in Kurdistan, in northern Iraq, suggests the central government's efforts to keep it operating solely in southern Iraq are likely to fail. This comes as talks between the Kurdistan regional government, or KRG, and the federal government in Baghdad aimed at resolving differences over oil rights appear to have stalled again after a brief period of progress.
"Exxon has informed top Iraqi government officials that it is intending to leave," a person familiar with the Iraqi oil ministry said.
Exxon Mobil is in talks with international oil companies about selling its 60% stake in a service agreement to develop the massive West Qurna-1 oil field in southern Iraq, one person familiar with the Iraqi Oil Ministryand another person familiar with Exxon Mobil's operations in Kurdistan said on Thursday. Exxon's 2010 deal with the Iraqi central government to improve production in the West Qurna-1 field was never expected to be lucrative under the best of circumstances, the person said.
The government had agreed to pay Exxon Mobil and its partners $1.90 for each additional barrel of oil they pumped after refurbishing the already producing field. The fees would barely be enough to cover the companies' costs. Other deals in southern Iraq between Baghdad and foreign oil companies had similar terms.
Anglo-Dutch oil-and-gas company Royal Dutch Shell PLC has a 15% stake in the West Qurna-1 development contract, while the remaining 25% is owned by the Iraqi state oil company.
Shell declined to comment when asked whether it is interested to buy Exxon Mobil's stake in West Qurna-1 field.
Meanwhile, Exxon Mobil s planning to start exploratory drilling in Kurdistan as soon as early 2013, people with knowledge of Exxon Mobil and the KRG said, after delaying such plans for months in order to resolve a dispute with Baghdad over deals signed with the KRG.
Exxon Mobil declined to comment about the talks on exiting southern Iraq and plans to begin drilling in Kurdistan.
The U.S. company has already ordered the purchase of oil-well casing heads and is negotiating a contract with an oil-services firm to start drilling in Kurdistan, said another person familiar with Exxon Mobil's operations in the region. "They have opened an office in Erbil," the KRG capital, he said.
"We know they have been active," an executive at a Western oil company in Kurdistan said about Exxon Mobil.
Two of the people familiar with the situation said Exxon Mobil would start drilling operations near Mosul in one of the disputed areas that have inflamed tensions between Baghdad and Erbil.
In November last year, Exxon Mobil provoked protest from Baghdad when it became the first major international oil company to sign petroleum contracts with the KRG despite Baghdad's threats to expel it from a contract in southern Iraq. Exxon Mobil signed a deal to develop six blocks with the KRG, which is locked in a feud with the Arab-dominated central government over land and oil rights.
Three of the blocks are in areas disputed by Erbil and Baghdad.
Earlier this year, U.S. oil giant Chevron Corp., France's Total SA and the oil-producing arm of Russia's OAO Gazprom followed Exxon Mobil's lead by striking their own deals in Kurdistan.
The Iraqi central government has excluded companies that signed deals with the KRG from participating in auctions for future oil-exploration rights in southern Iraq.
The central government's reaction suggests Kurdish oil developments still face huge political hurdles. Leaders in Baghdad and Erbil disagree on the appropriate distribution of power between the regional and central governments. The Kurds have signed at least 30 oil deals despite the central government's objections, and the oil ministry in Baghdad has considered those contracts null and void.
This week, a high-level committee failed to convene a planned meeting aimed at resolving the oil dispute between Baghdad and Erbil, casting doubt on recent progress with the dispute. Iraq's federal oil minister Abdul Kareem Luaiby and Kurdish oil minister Ashti Hawrami, both members of the committee, met in Baghdad three weeks ago to discuss a draft hydrocarbon law that would regulate the oil industry and to try to agree on a version that would be acceptable to both sides. The country's parliament hasn't been able to advance toward enacting the legislation for years, as Baghdad and Erbil have been at loggerheads over oil rights.
Last month, the central government decided to pay international oil companies working in Kurdistan some 1 trillion Iraqi dinars [$850 million] and said the KRG should increase exports to 200,000 barrels a day from this month until the end of the year via Iraq's federally controlled pipelines, but that settled only part of the dispute between them.
"So far there is no agreement," said Firhad al-Atroshi, a Kurdish parliamentarian, and a member of the high-level committee set up to try to reach an agreement on the draft oil law.
The hydrocarbon law will be important in settling a long-standing dispute between Baghdad and the regional government in Kurdistan. Baghdad doesn't recognize scores of deals signed by the Kurds with foreign companies. The central government wants to review these deals and bring them in line with oil laws valid in Baghdad.
Kurds are opposing a new version of the law that assigns powers of the highest hydrocarbon authority, the Federal Oil and Gas Council, to the federal prime minister, while the Kurds want powers to rest with a collective authority whose members are to be nominated by the parliament.
Baghdad and the Kurds are most divided over the extent of decentralization and federalism in the oil sector.
"We are opposing a provision of the current draft law that forbids regions within Iraq from having the right to negotiate and sign contracts," said Mr. al-Atroshi.
Some experts on the region say that both sides need to make some concessions to reach agreement on the draft law, while others say the Kurds wouldn't accept Baghdad controlling the region's oil resources and changing deals already signed with international oil companies.
"Compromise on the oil and gas issue has always been important because of a fundamental contradiction between Baghdad's and Erbil's vision of power and sovereignty in Iraq," said Raad Alkadiri, director for country strategies and partner at PFC Energy, the Washington, D.C.-based strategic-advisory firm.
"I do not expect the Kurds to be willing to compromise away their own oil law [which gives them exclusive right to govern their own resources] and the control over their natural resources, as this is the economic fundament for their retention of their far-reaching autonomy over the long term," said Samuel Ciszuk, an analyst at U.K.-based consultancy KBC Energy Economics.
The Kurds also disagree with the current draft of the Iraq hydrocarbon law because it gives the federal oil ministry exclusive powers that overwhelm those of the proposed Federal Oil and Gas Council, Mr. al-Atroshi said.
Write to Hassan Hafidh at
Credit: By Hassan Hafidh
Subject: Petroleum industry
Location: United States--US Baghdad Iraq Kurdistan
Company / organization: Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Exxon Mobil Corp; NAICS: 447110, 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 18, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1112811774
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1112811774?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
After Falling Under $91, Oil Ends Flat
Author: DiColo, Jerry A
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Oct 2012: n/a.
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On Thursday, oil prices began the session lower after a report from the Labor Department shows a larger-than-expected increase in weekly U.S. jobless claims, raising fresh concerns about the sluggish economic recovery.
Full text: NEW YORK--U.S. crude-oil futures settled nearly where they began Thursday, as traders spent another session weighing rising oil supplies against concerns about slumping demand growth.
Light, sweet crude for November delivery fell two cents to settle at $92.10 a barrel on the New York Mercantile Exchange after swinging as low as $90.66 a barrel earlier in the session.
Futures have settled between $91 and $93 a barrel for the past eight sessions, showing a surprising consistency after big price swings that brought futures to nearly triple digits in mid-September before tumbling almost $10.
For some analysts, the pause suggests further declines may be ahead.
"It's just sitting there and not rebounding and not rebounding. The longer this goes by, just sitting here, the more it resembles a bear-market correction," said Walter Zimmermann, a technical analyst at brokerage United-ICAP.
On Thursday, oil prices began the session lower after a report from the Labor Department shows a larger-than-expected increase in weekly U.S. jobless claims, raising fresh concerns about the sluggish economic recovery.
But prices pared losses after TransCanada Corp. said its Keystone pipeline, which brings oil from Western Canada to the U.S., will be down for three days to deal with an anomaly found in a Missouri section of the pipeline.
Meanwhile, Europe's Brent crude on the ICE futures exchange fell 80 cents to close at $112.42 a barrel, helping to narrow the wide gap between Brent and Nymex-traded West Texas Intermediate.
Goldman Sachs on Thursday lowered its Brent oil-price forecast for 2013 to $110 a barrel from $130 a barrel on signs that supplies from the U.S. and other regions are helping to balance the oil market.
But the bank warned that the price members of the Organization of the Petroleum Exporting Countries require to balance their budgets will rise to $100 a barrel by 2015, which may result in OPEC becoming "more aggressive in trying to defend a relatively high price," Goldman analysts said in a research report.
Supply problems in the North Sea had pushed Brent's premium over Nymex-traded WTI to nearly $24 earlier this month, but the gap has narrowed to under $21 as analysts have forecast a resumption of supplies through the end of 2012.
Front-month November reformulated gasoline blendstock, or RBOB, settled 3.66 cents lower at $2.7451 a gallon. November heating oil settled 0.28 cents lower at $3.1866 a gallon.
Write to Jerry A. DiColo at
Credit: By Jerry A. DiColo
Subject: Petroleum industry; Supplies; Futures
Location: United States--US
Company / organization: Name: TransCanada Corp; NAICS: 486210; Name: Goldman Sachs Group Inc; NAICS: 523110, 523120; Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 18, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1112821128
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1112821128?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Slick Not From Sealed BP Well
Author: Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Oct 2012: n/a.
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A thin slick of oil in the Gulf of Mexico appears to be coming from a containment dome that was abandoned on the sea floor during efforts to stop the 2010 Deepwater Horizon oil spill, not from the plugged well, according to the U.S. Coast Guard and BP PLC. Remote-controlled submarines that were sent down to search for the source of the light slick earlier this week found a small amount of oil leaking from two places on the dome, a four-story-tall steel box which in May 2010 was lowered onto the oil leaking from BP's well some 5,000 feet below the ocean surface.
Full text: A thin slick of oil in the Gulf of Mexico appears to be coming from a containment dome that was abandoned on the sea floor during efforts to stop the 2010 Deepwater Horizon oil spill, not from the plugged well, according to the U.S. Coast Guard and BP PLC.
Remote-controlled submarines that were sent down to search for the source of the light slick earlier this week found a small amount of oil leaking from two places on the dome, a four-story-tall steel box which in May 2010 was lowered onto the oil leaking from BP's well some 5,000 feet below the ocean surface.
The device was meant to collect the oil and allow it to flow to a ship, but got clogged with ice crystals. It was left on the sea floor about 500 yards from the well. The flow was finally stopped on July 15, 2010, by a series of valves that were attached to the top of the well and the well was permanently sealed in September.
Video inspections of the containment dome showed small, intermittent drops of oil coming from two openings on the device, according to a Coast Guard statement. The flow rate is estimated to be less than 100 gallons per day.
Inspections of the sealed well, two relief wells, rig wreckage and a pipe that connected the drilling rig Deepwater Horizon with the well before the accident, didn't show signs of leaking.
"The Coast Guard is further evaluating what is believed to be seepage from the containment dome to determine how best to respond," said Capt. Duke Walker.
The Coast Guard has said the thin slick, called a sheen, is too dispersed to recover and doesn't pose a risk to the coast.
BP said the latest survey, which took place over three days, is the third time since the well was sealed that it has been visually inspected at the sea floor and found not to be leaking.
The oil sheen was first reported by BP on Sept. 16 about 50 miles off the coast of Louisiana. Last week the Coast Guard notified BP and rig owner Transocean Ltd. that a lab had matched the oil from the sheen to oil from the well.
Write to Tom Fowler at
Credit: By Tom Fowler
Subject: Petroleum industry; Oil spills
Location: Gulf of Mexico
Company / organization: Name: Transocean Ltd; NAICS: 213111, 213112
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 18, 2012
Section: US
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1112899770
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1112899770?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. Oil Boom Upends Nigerian Exports
Author: Gross, Jenny
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Oct 2012: n/a.
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Abstract:
Mr. Kjus said that if the premiums on West African crude grades continue to fall, buyers from Europe will start importing more to offset declining rates of production in the North Sea, which has aging oil fields and infrastructure.
Full text: A surge in unconventional U.S. energy production has been a boon for the world's largest oil-consuming economy, but it could come at a significant cost to Nigeria, which needs to find new buyers for its light, sweet crude as American demand tumbles.
Changes in the destination of Nigerian crude, which contributes roughly 95% of the country's export earnings, could shift the commodity's pricing. And it could have a knock-on effect on Brent crude, the benchmark against which a majority of the world's oil is valued.
The most recent figures from the U.S. Energy Information Administration, published in September, show that just 361,000 barrels a day of Nigerian crude made it across the Atlantic in July, down from 810,000 barrels a day a year earlier and from more than one million barrels a day in July 2010.
Nigeria's total crude exports have topped two million barrels a day for five of the past seven years, EIA data shows. It is the largest oil producer in Africa.
The reduction in sales to the U.S. has caused Nigeria's state oil company to lower the premiums it charges for its oil above the cost of Brent crude over the past year, traders say. Prices in October for Qua Iboe, one of its key crude grades, are at a premium of $1.70 a barrel over the dated Brent benchmark, down from a differential of $3.65 a year ago, according to traders of West African crude.
Part of the reason for the fall compared with the previous year is because of oil supply from Libya coming back online. But traders say prices of the light, sweet crude could fall even further in the coming months as grades of Nigerian crude struggle to find homes while global energy flows are redrawn because of growing unconventional oil production.
The results could mean more crude headed to Europe, a development that could cause prices of Brent crude to fall, analysts said.
"West African barrels will be pushed away from the U.S.," says Torbjorn Kjus, oil-market analyst at DnB NOR ASA, Norway's biggest financial-services group. "They'll have their own crude, totally replaceable light sweet, just like they used to get from West Africa. Right now, it seems like there's too much available."
Mr. Kjus said that if the premiums on West African crude grades continue to fall, buyers from Europe will start importing more to offset declining rates of production in the North Sea, which has aging oil fields and infrastructure. This could ultimately push prices of Brent crude lower, Mr. Kjus said.
Nigerian National Petroleum Corp., the country's state-owned oil company, didn't respond to calls for comment.
Patrick Kulsen, commercial director of oil-market research firm PJK International B.V., said more West African crude is likely to flow to Europe and India to fill in the gap left by the fall in U.S. demand.
"That slice that goes to the U.S. will be less and more will go to Europe and Asia," he said.
A London-based ship broker said China and India have also been increasing imports of Nigerian crude, with companies like China National Petroleum Corp. and Cnooc taking cargoes east in the past week. While this has helped to fill the gap, market participants have still been struggling to sell Nigerian crude, he said.
A second London-based ship broker said traders won't risk sending barrels to the U.S. because of the slump in demand.
"Any unsold cargoes owned by traders will always head to [Europe]," he said. He added that where before traders would pay close attention to the cost of shipping oil to the U.S., they are now much more focused on the rate charged for transporting to Europe.
Another problem for Nigeria is that as refineries across the globe become more advanced, they are able to take heavier, sour grades of crude, which are generally cheaper, and refine them into high-end products. This has lessened demand for the lighter, sweet grades that Nigeria produces.
Future shale-oil production in the U.S. depends on the rate of technological progress and on the volatility of future oil prices, the EIA said.
Sarah Kent in London contributed to this report.
Credit: By Jenny Gross
Subject: Petroleum production; Petroleum industry
Location: Nigeria United States--US Europe West Africa
Company / organization: Name: DnB NOR ASA; NAICS: 522310; Name: Nigerian National Petroleum Corp; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 18, 2012
column: Market Focus
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1112899789
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1112899789?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Valero Putting Two Oil Refineries on Market
Author: Lefebvre, Ben; Dezember, Ryan; Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 Oct 2012: n/a.
ProQuest document link
Abstract:
Valero Energy Corp. is putting its two California oil refineries on the block, attempting to exit the state ahead of a ratcheting up of air-pollution regulations, people familiar with the matter said.
Full text: Valero Energy Corp. is putting its two California oil refineries on the block, attempting to exit the state ahead of a ratcheting up of air-pollution regulations, people familiar with the matter said.
San Antonio-based Valero has enlisted Citigroup Inc. to help find a buyer for the facilities, these people said, adding that the process is in the early stages.
Valero, one of the largest refiners in the U.S., operates a 78,000-barrel-a-day refinery in Wilmington outside Los Angeles and a 132,000-barrel-a-day refinery in Benicia, in the San Francisco Bay area.
Together the plants represent about 10% of the company's U.S. refining capacity. A Valero spokesman declined to comment. A Citi spokesman also declined to comment.
California in 2006 passed legislation that calls for air emissions to be cut to 1990 levels by the end of this decade, goals that Valero and other refiners have said will cost them hundreds of millions of dollars to meet. Even if the refiners reach those goals, the state is also pushing measures designed to cut demand for the refiners' product--namely, petroleum-based fuels.
Valero and rival Tesoro Corp. waged an unsuccessful fight to overturn the legislation in a November 2010 ballot initiative.
"We think state policy...other fiscal policies, regulations, continue to adversely affect the economy" in California, Valero Chief Executive Bill Klesse said late last year at an investor meeting. "We're looking at our options."
Valero has not yet put a price tag on the refineries, one of the people said.
Write to Ben Lefebvre at , Ryan Dezember at and Tom Fowler at
Credit: By Ben Lefebvre, Ryan Dezember and Tom Fowler
Subject: Petroleum industry
Location: United States--US California San Francisco Bay Los Angeles California
Company / organization: Name: Tesoro Corp; NAICS: 324110; Name: Citigroup Inc; NAICS: 551111; Name: Valero Energy Corp; NAICS: 486210, 324110, 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 19, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1113405346
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1113405346?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Rosneft Set To Buy BP's Holding in Russian Oil
Author: Cimilluca, Dana; Williams, Selina
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]22 Oct 2012: B.1.
ProQuest document link
Abstract:
A Rosneft takeover of TNK-BP would bring the Russian state's control over oil production to nearly 50% and mark a major milestone in Mr. Putin's reassertion of Kremlin control over the strategic oil sector, much of which was sold off in the privatizations of the 1990s to well-connected tycoons like AAR's owners. Since Mr. Putin came to power in 2000, the tide has turned the other way in an industry the Kremlin depends on both as a source of international influence and more than half of all tax revenues.
Full text: BP PLC is aiming to announce Monday a preliminary agreement to sell its 50% stake in the lucrative but problematic Russian oil venture TNK-BP to OAO Rosneft, according to people familiar with the matter, a deal that would dramatically alter the British energy giant's presence in a country that is the world's largest energy producer.
The deal, and another one involving Rosneft's likely buyout of the other half of TNK, Russia's No. 3 oil company by output, promise to reshape the Russian oil industry in favor of state-owned giant Rosneft.
BP is gearing up to announce Monday the outlines of the cash-and-stock deal with Rosneft, which would be valued at either $26.6 billion or $28 billion depending on how it is calculated, one of the people said.
The share component of the deal would leave BP with a stake in Rosneft of just under 20%, this person said.
Separately, Rosneft is negotiating to buy out BP's partners in the venture -- a collection of Soviet-born billionaires known as AAR -- for $28 billion. That deal is likely to happen, this person said, with an announcement possibly coming soon after the BP-Rosneft tie-up officially surfaces.
Final terms of the BP-Rosneft deal could come in November, the people said. BP was to get two seats on the board of Rosneft as part of the deal.
Rosneft Chief Executive Igor Sechin plans to meet Russian President Vladimir Putin in Moscow Monday, the people said; should the meeting take place as planned, an announcement could come soon after that. Should the timing slip or should Mr. Putin balk, the announcement could come later. The Russian government owns 75.5% of Rosneft.
If BP and Rosneft get the deal over the finish line, it would represent a historic shift in BP's presence in the key Russian oil market. The BP and AAR deals would hand Rosneft control of around one-third of crude output in Russia, with the company churning out more than four million barrels a day.
A Rosneft takeover of TNK-BP would bring the Russian state's control over oil production to nearly 50% and mark a major milestone in Mr. Putin's reassertion of Kremlin control over the strategic oil sector, much of which was sold off in the privatizations of the 1990s to well-connected tycoons like AAR's owners. Since Mr. Putin came to power in 2000, the tide has turned the other way in an industry the Kremlin depends on both as a source of international influence and more than half of all tax revenues.
The deal would also enable BP to reap a windfall from a partnership that, while successful, produced headaches as the British company quarreled repeatedly with its Russian partners. BP is hoping that by maintaining a big stake in Rosneft, it can be in a good position to continue profiting from the booming Russian oil market.
A deal would be a vindication for BP CEO Bob Dudley, who suffered a major setback last year when his previous effort to partner with Rosneft was blocked by opposition from AAR.
As it is currently envisioned, the complicated deal will have a headline value of $28 billion in proceeds to BP. It calls for Rosneft to pay BP with shares representing a nearly 13% stake in the Russian company. BP's stake will climb closer to 20% -- taking into account a roughly 1% stake it already owns in Rosneft -- after it uses cash proceeds from the deal to buy additional Rosneft shares from the Russian government. Taking into account a premium it will pay for those shares, the actual proceeds to BP fall to $26.6 billion. The net cash component for BP after it buys the additional shares is just over $12 billion.
Peter Hutton of RBC Capital Markets said the terms look disappointing. "It's all very well getting a stake in Rosneft, but if it's illiquid and BP can't realize it, then it becomes a lower-quality asset," Mr. Hutton added.
Citigroup Inc. and Bank of AmericaMerrill Lynch are advising Rosneft and are expected to help it with financing, while BP is being advised by Morgan Stanley and others.
---
James Marson and Alexis Flynn contributed to this article.
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Credit: By Dana Cimilluca and Selina Williams
Subject: Petroleum industry; Petroleum production; Acquisitions & mergers
Location: Russia
Company / organization: Name: OAO Rosneft; NAICS: 324110; Name: TNK-BP; NAICS: 211111
Classification: 9180: International; 2330: Acquisitions & mergers; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.1
Publication year: 2012
Publication date: Oct 22, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1113971381
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1113971381?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
IEA Sees Asia Bearing Burden of Middle East, Africa Oil-Supply Risk
Author: Gronholt-Pedersen, Jacob; Yep, Eric
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 Oct 2012: n/a.
ProQuest document link
Abstract:
SINGAPORE--Asian countries will bear more of the risk of a disruption to oil supplies from less-stable regions of the world as a result of North America's oil-production boom, Maria van der Hoeven, the executive director of the International Energy Agency, said Monday.
Full text: SINGAPORE--Asian countries will bear more of the risk of a disruption to oil supplies from less-stable regions of the world as a result of North America's oil-production boom, Maria van der Hoeven, the executive director of the International Energy Agency, said Monday.
The U.S. and Canada are projected to produce more crude oil in the coming decade, making the U.S., the world's top oil consumer, less dependent on oil from the Middle East and Africa. Asian economies, meanwhile, will account for a greater share of exports from the Middle East and Africa, as well as most of the new crude-oil demand, Ms. van der Hoeven said.
So a disruption of supplies from those regions would "touch Asia first," she said during a speech at Singapore International Energy Week.
She noted that Western sanctions targeting Iran's crude-oil exports have been "particularly challenging in Asia," which is already the main outlet for Middle Eastern crude oil
In addition, rising domestic demand in the Middle East will limit the percentage of oil production available for exports from the region, she said.
Write to Jacob Gronholt-Pedersen at jacob.pedersen@dowjones.com and write to Eric Yep at eric.yep@dowjones.com
Credit: By Jacob Gronholt-Pedersen and Eric Yep
Subject: Petroleum industry; Petroleum production; International; Exports; Crude oil
Location: Iran Asia United States--US Africa Canada North America Middle East
Company / organization: Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 22, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1114000292
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1114000292?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
BP Sells Out in Russia; The British oil major should consider itself lucky that it's being paid to exit its joint venture.
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 Oct 2012: n/a.
ProQuest document link
Abstract:
According to Monday's announcement, BP is to plow $4.8 billion of the cash it will receive from the sale back into Rosneft shares.
Full text: Four years after Russia chased TNK-BP CEO Bob Dudley out of the country by revoking his visa, the British oil major has succumbed to the inevitable, selling its 50% stake in the joint venture to the state-controlled Rosneft. BP's partner in the deal, a group of Russian oligarchs, is also expected to sell out to Rosneft.
BP will emerge from the venture with $19 billion in dividends, as well as $17.1 billion in cash from the sale. The company will also end up with a nearly 20% stake in Rosneft when the deal closes, assuming Moscow approves the terms. According to Monday's announcement, BP is to plow $4.8 billion of the cash it will receive from the sale back into Rosneft shares.
This deal fits a pattern going back a decade in which Moscow welcomes foreign investment in its oil business long enough for the Western companies to put up risk capital and prove the investments' worth, then later reasserts control. We suppose BP should consider itself lucky that it's being paid to exit the joint venture, rather than finding itself on the short end of a multibillion-dollar tax claim or a sudden bout of environmental punctiliousness, as has happened to the likes of Yukos and Shell.
Rosneft itself is largely built on the bones of Yukos, the Russian oil major that Vladimir Putin dismantled starting in 2003 when its co-founder and CEO, Mikhail Khodorkovsky, became politically inconvenient. As Ariel Cohen writes nearby, several Western courts have ruled the expropriation of Yukos illegal. But perhaps Moscow hopes that a substantial BP stake in Rosneft will help insulate the Russian firm from claims in Europe related to its acquisition of Yukos assets.
BP, in taking a large chunk of its payment for the joint venture in Rosneft shares, is plainly hoping that its minority stake in Rosneft will be treated better than many other minority shareholders in Russia. We wish Mr. Dudley better luck this time around.
So far, Mr. Putin and his circle have proved adept at allowing most Western firms just enough upside to keep them coming back. Even so, the increased nationalization of Russia's oil wealth has taken its toll, with growth in both exports and total production slowing dramatically since 2004. Moscow seems to realize that it needs Western know-how to extract its oil and gas. But the Kremlin also knows that it only needs to respect property rights and the rule of law so much to keep the capitalists interested.
Subject: Joint ventures; Petroleum industry
People: Putin, Vladimir
Company / organization: Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: OAO Rosneft; NAICS: 324110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 22, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1114062401
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1114062401?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: BP Russian Venture Is Sold --- State Oil Giant Rosneft Acquires Both Partners' TNK-BP Stakes for $55 Billion
Author: Marson, James; Williams, Selina
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]23 Oct 2012: B.2.
ProQuest document link
Abstract:
The $26.8 billion cash-and-stock sale to OAO Rosneft reflects a massive bet by the British giant on a state-controlled company to help secure BP's future in the world's largest energy-producing nation.
Full text: BP PLC confirmed it is selling its stake in its troubled Russian venture TNK-BP in a deal that will make the British giant a one-fifth holder of the Kremlin's oil champion, a company that will control nearly 40% of Russian output.
The $26.8 billion cash-and-stock sale to OAO Rosneft reflects a massive bet by the British giant on a state-controlled company to help secure BP's future in the world's largest energy-producing nation.
Rosneft, through the BP deal and another one announced Monday to pay $28 billion for the other half of TNK-BP from the Soviet-born tycoons who own it, will be transformed into the largest publicly traded oil producer in the world. That marks a stunning turnabout for a company that was nearly taken over by state gas giant OAO Gazprom less than a decade ago.
The deals were blessed Monday by Russian President Vladimir Putin at a meeting with Rosneft Chief Executive Igor Sechin, a close ally in his drive over the last decade to re-establish state control over the Russian oil industry.
"This is a good, big deal, not only for the Russian energy sector, but also for the Russian economy," Mr. Putin said.
BP's stock was off 1.5% at the close of London trading on Monday.
BP says the deal is a unique chance to be a co-owner, not a contractor, with a national oil company. Analysts say that is a new approach for international majors, which have struggled to get access to new resources globally.
"What we have is a position that will be difficult to replicate," David Peattie, BP's top executive for Eurasia, said in an interview.
BP said its Rosneft stake will allow it to book its share of Rosneft's huge reserves and production, as well as the Russian company's profits, which are expected to be lower than highly efficient TNK-BP's.
BP will receive two seats on Rosneft's nine-person board, although some analysts say it may struggle to influence the company's strategy, which will still be dominated by the Kremlin.
"If there's a conflict, then BP's small position means they would be likely to lose out," said one top BP shareholder.
The deal provides BP with a way out of its profitable but troublesome TNK-BP venture, which Mr. Peattie called BP's "best investment in 100 years" but has been marred by numerous clashes with the co-owners.
Rosneft will pay BP $17.1 billion and 12.8% of shares from its treasury, worth about $9.7 billion on the bid date, for the 50% stake in TNK-BP.
BP will then buy further shares in Rosneft from a state holding company to increase its stake to almost 20%. Rosneft will pay the group of billionaires, known as the AAR consortium, $28 billion in cash for their stake. Mr. Sechin said the cash for both deals could be raised from Western banks.
BP's Mr. Peattie said the company wasn't expecting to get access to projects such as Exxon Mobil Corp.'s Arctic-exploration deal with Rosneft, as its 20% stake would allow it to benefit from them as a shareholder. He said BP has high expectations for the financial results of Rosneft's projects in Venezuela.
Mr. Putin touted the deal as a way to reduce the state's amount of shares in companies it controls -- a nod to some members of the government, who have pushed for a reduced state role in the energy sector.
A Rosneft takeover of TNK-BP would mark a major milestone in Mr. Putin's reassertion of Kremlin control over oil production, much of which was sold off in the privatizations of the 1990s to well-connected tycoons like AAR's owners. Since Mr. Putin came to power in 2000, the tide has turned the other way in an industry the Kremlin depends on both as a source of international influence and more than half of all tax revenues.
The transaction enables BP to reap a windfall from the sale of its stake in Russia's third-largest oil producer, which it paid around $8 billion for in 2003 but which has returned around $19 billion in dividends.
The deal is a vindication for BP Chief Executive Bob Dudley, who suffered a major setback last year when his previous effort to partner with Rosneft in Russian oil exploration was blocked by opposition from AAR.
"This investment builds on BP's track record of value creation in Russia. It is consistent with our strategy of deepening our positions in the world's most prolific oil and gas regions," Mr. Dudley said.
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Credit: By James Marson and Selina Williams
Subject: Petroleum industry; Equity stake
Location: Russia
Company / organization: Name: OAO Rosneft; NAICS: 324110; Name: BP PLC; NAICS: 211111, 324110, 447110; Name: TNK-BP; NAICS: 211111
Classification: 9176: Eastern Europe; 2330: Acquisitions & mergers; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.2
Publication year: 2012
Publication date: Oct 23, 2012
Publisher: Dow Jones & Compan y Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1114280793
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1114280793?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iraq Poised to Become Major Oil Supplier to World, IEA Says
Author: Tracy, Tennille
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]23 Oct 2012: n/a.
ProQuest document link
Abstract:
Iraq's oil could be stuck in the ground, however, if its leaders fail to enact a legal framework by which oil resources are governed or if the country is unable to build pipelines, export terminals and other pieces of vital equipment that make oil production possible.
Full text: WASHINGTON--Iraq is poised to become one of the most important suppliers of oil to the world, laying claim to vast pools of untapped resources that are far cheaper to produce than many other sources of oil, the International Energy Agency's chief economist said Monday.
Iraq's oil could be stuck in the ground, however, if its leaders fail to enact a legal framework by which oil resources are governed or if the country is unable to build pipelines, export terminals and other pieces of vital equipment that make oil production possible.
"I think there is no need to elaborate on the crucial importance of the country for the global oil markets," IEA chief economist Fatih Birol said at a briefing Monday.
With Iraq's oil production at about 3 million barrels a day, an IEA report earlier this month said production levels could more than double by 2020 and reach 8.3 million barrels by 2035.
Nearly half of the world's oil production growth will come from Iraq, Dr. Birol said, speaking at the Center for Strategic and International Studies.
A bustling oil sector could generate $200 billion in annual revenue for Iraq. In 20 years, the country's economy could be just as strong as Saudi Arabia's.
For companies looking to invest in the country, the cost of producing Iraq's oil will be 13 to 14 times cheaper than Canada's oil sands, a vast new resource that prompted a controversial proposal to build the Keystone XL pipeline from Canada to the U.S. Gulf Coast.
China would be a dominant consumer of that oil and IEA projects that Asian countries will absorb about 80% of Iraq's oil, Dr. Birol said.
Write to Tennille Tracy at
Credit: By Tennille Tracy
Subject: Petroleum production; Petroleum industry
Location: Canada Iraq
Company / organization: Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 2 3, 2012
Section: World
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1114666867
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1114666867?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Marathon Oil Has About $1.1 Billion in Asset-Sale Agreements
Author: Stynes, Tess
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 Oct 2012: n/a.
ProQuest document link
Abstract:
The company in August reported that its second-quarter earnings fell 61% as lower prices for crude oil and natural-gas liquids hurt its exploration-and-production earnings, prompting the company to pare back its U.S. drilling activity.
Full text: Marathon Oil Corp. said it reached agreements for divestitures of about $1.1 billion so far this year, including the pending sale of the exploration-and-production company's Alaska Cook Inlet assets.
Marathon announced the sale of the Alaska assets earlier this year but hadn't disclosed financial terms. Wednesday Marathon estimated the deal at $375 million.
A total of about $700 million of the divestitures have been completed, Marathon said. The company has been aiming to shed $1.5 billion to $3 billion of assets under a program that began in 2011 and is expected to continue through 2013.
Marathon said it has discussed a potential sale of part of its 20% outside-operated interest in the Athabasca Oil Sands Project in Alberta, Canada. However, the potential proceeds haven't been included in its divestiture program estimate owing to uncertainty a deal will be reached.
Last year, Marathon Oil spun off its downstream and petroleum assets, creating Marathon Petroleum Corp., as it looks to focus its drilling efforts on unconventional U.S. oil shales, like the Bakken in North Dakota, Anadarko Woodford in Oklahoma and Eagle Ford in Texas.
The company on Wednesday also said it has continued efforts to expand in the Eagle Ford play in south Texas. So far this year Marathon has acquired or reached agreements for nearly 25,000 additional net acres in the energy field for about $1 billion.
Marathon also said it plans to offer two series of senior notes to help repay debt and for other purposes. Further terms weren't provided.
The company in August reported that its second-quarter earnings fell 61% as lower prices for crude oil and natural-gas liquids hurt its exploration-and-production earnings, prompting the company to pare back its U.S. drilling activity.
Marathon is set to report third-quarter financial results Nov. 6.
Credit: By Tess Stynes
Subject: Petroleum industry; Divestiture
Location: Alaska United States--US Alberta Canada Texas
Company / organization: Name: Marathon Petroleum Corp; NAICS: 324110; Name: Athabasca Oil Sands Corp; NAICS: 211111; Name: Marathon Oil Corp; NAICS: 486110, 324110, 211111, 213112
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 24, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1114818507
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1114818507?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Supply Boom Upends the Oil Market; Only a few months ago, traders and investors were fretting about a shortage of crude oil. Now, many are worried there may be too much.
Author: DiColo, Jerry A
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]24 Oct 2012: n/a.
ProQuest document link
Abstract:
The bank's analysts said additional barrels are set to weigh on prices as new transportation networks relieve bottlenecks in the U.S. The outlook for rising oil supplies extinguished a rally in September that was driven by hopes that Federal Reserve stimulus efforts would bolster oil prices. Harry Tchilinguirian, a commodities analyst at BNP Paribas, said operators of oil fields in the North Sea, where oil output helps determine Brent prices, should resume normal shipments by the end of this year.
Full text: Suddenly, the world is awash in oil.
Only a few months ago, traders and investors were fretting about whether tensions in the Middle East and production problems elsewhere would lead to a shortage of crude oil. Now, many are worried there may be too much.
Forecasters say that in the fourth quarter, global oil output will top demand by more than 630,000 barrels a day, the biggest surplus in four years. The jump is due to a confluence of events: Turmoil in the Middle East has subsided along with the production and transportation problems that had been stifling oil flows from the U.S., North Sea and Africa. Meanwhile, Saudi Arabia is pumping more oil to replace falling Iranian exports, keeping output from the Organization of the Petroleum Exporting Countries steady.
That is causing some investors and traders to change their view on the direction of prices. Already, Brent crude, the benchmark in Europe, is down 7.8% from a three-month high in August. U.S. crude prices are down 13% from a mid-September peak.
Crude-oil prices have been particularly vulnerable to worries about the global economy that have recently seized financial markets. Many investors and traders say that with growth in many major oil-consuming countries still sluggish, demand isn't going to be strong enough to absorb all the extra supply.
A sustained decline in crude-oil prices should lead cheaper gasoline and diesel products used by consumers and businesses, they add.
"There's plenty of oil out there now," said Tariq Zahir, head of Tyche Capital Advisors, a $4 million commodity-trading advisor. He has wagered that rising supplies will push prices lower.
Over the past month, hedge funds and other money managers cut by 23% their bullish bets on crude-oil futures and options on the New York Mercantile Exchange.
On Wednesday, oil prices fell following a report from the U.S. Energy Department that showed domestic stockpiles rose last week to the highest level since July. Crude for December delivery fell $0.94, or 1.08%, to $85.73 a barrel on the Nymex. Brent crude on the ICE Futures U.S. exchange closed down 40 cents, or 0.37%, at $107.85 a barrel.
Goldman Sachs Group Inc. last week cut its 2013 price forecast for Brent crude to $110 a barrel from $130. The bank's analysts said additional barrels are set to weigh on prices as new transportation networks relieve bottlenecks in the U.S.
The outlook for rising oil supplies extinguished a rally in September that was driven by hopes that Federal Reserve stimulus efforts would bolster oil prices. Past stimulus efforts have resulted in a weakening dollar, which tends to lift prices.
"The oil price has gotten ahead of itself," said Bob Shearer, a portfolio manager at Blackrock Inc. with $38 billion in assets under management. He has cut the size of his positions in the energy sector over the past year on concerns that rising supplies will weigh on prices.
The International Energy Agency earlier this month forecast supplies from countries outside OPEC will rise to 53.6 million barrels a day in the fourth quarter, up 600,000 barrels a day from the third quarter.
Non-OPEC nations account for nearly 60% of world output. While OPEC tries to control its members' production to keep prices higher, other countries and private firms are more focused on increasing output.
Skeptics see lingering U.S. bottlenecks and Middle East conflicts keeping prices higher. There still aren't enough pipelines to bring all of the increased U.S. and Canadian production to refineries along the coast, limiting the impact of rising supplies, some investors and analysts said.
Also, turmoil in the Middle East remains a factor, says Christopher Burton, a portfolio manager for the $11 billion Credit Suisse Total Commodity Return Strategy. Syria's civil war risks pulling in neighboring Turkey, where pipelines help transport oil to European customers. The number of money managers' bullish bets on Brent has held steady due in part to the conflict.
Still, as parts of the Middle East simmer, some countries in the region are boosting production. Iraq oil output this summer rose above 3 million barrels a day for the first time since 2000, and Saudi Arabia, the world's biggest oil exporter, has pledged to keep pumping near record levels to offset any supply shortfalls from other OPEC members.
Harry Tchilinguirian, a commodities analyst at BNP Paribas, said operators of oil fields in the North Sea, where oil output helps determine Brent prices, should resume normal shipments by the end of this year. Oil deliveries from West Africa should also increase, which will weigh on Brent, he said.
Ed Morse, global head of commodities research at Citi Global Markets Inc., says the IEA's fourth-quarter estimate for global oil output is too conservative. He estimates the U.S. alone could increase production by 600,000 barrels a day. "It's the beginning of a big change," he said.
Write to Jerry A. DiColo at
Credit: By Jerry A. DiColo
Subject: Petroleum industry; Crude oil prices; Pipelines; Energy industry; Supplies
Location: United States--US Saudi Arabia West Africa Middle East North Sea
Company / organization: Name: International Energy Agency; NAICS: 928120; Name: New York Mercantile Exchange; NAICS: 523210; Name: Goldman Sachs Group Inc; NAICS: 523110, 523120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 24, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1114898027
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1114898027?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Supply Boom Upends the Oil Market
Author: DiColo, Jerry A
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]25 Oct 2012: C.1.
ProQuest document link
Abstract:
The bank's analysts said additional barrels are set to weigh on prices as new transportation networks relieve bottlenecks in the U.S. The outlook for rising oil supplies extinguished a rally in September that was driven by hopes that Federal Reserve stimulus efforts would bolster oil prices. Harry Tchilinguirian, a commodities analyst at BNP Paribas, said operators of oil fields in the North Sea, where oil output helps determine Brent prices, should resume normal shipments by the end of this year.
Full text: Suddenly, the world is awash in oil.
Only a few months ago, traders and investors were fretting about whether tensions in the Middle East and production problems elsewhere would lead to a shortage of crude oil. Now, many are worried there may be too much.
Forecasters say that in the fourth quarter, global oil output will top demand by more than 630,000 barrels a day, the biggest surplus in four years. The jump is due to a confluence of events: Turmoil in the Middle East has subsided along with the production and transportation problems that had been stifling oil flows from the U.S., North Sea and Africa. Meanwhile, Saudi Arabia is pumping more oil to replace falling Iranian exports, keeping output from the Organization of the Petroleum Exporting Countries steady.
That is causing some investors and traders to change their view on the direction of prices. Already, Brent crude, the benchmark in Europe, is down 7.8% from a three-month high in August. U.S. crude prices are down 13% from a mid-September peak.
Crude-oil prices have been particularly vulnerable to worries about the global economy that have recently seized financial markets. Many investors and traders say that with growth in many major oil-consuming countries still sluggish, demand isn't going to be strong enough to absorb all the extra supply.
A sustained decline in crude-oil prices should lead cheaper gasoline and diesel products used by consumers and businesses, they add.
"There's plenty of oil out there now," said Tariq Zahir, head of Tyche Capital Advisors, a $4 million commodity-trading advisor. He has wagered that rising supplies will push prices lower.
Over the past month, hedge funds and other money managers cut by 23% their bullish bets on crude-oil futures and options on the New York Mercantile Exchange.
On Wednesday, oil prices fell following a report from the U.S. Energy Department that showed domestic stockpiles rose last week to the highest level since July. Crude for December delivery fell $0.94, or 1.08%, to $85.73 a barrel on the Nymex. Brent crude on the ICE Futures U.S. exchange closed down 40 cents, or 0.37%, at $107.85 a barrel.
Goldman Sachs Group Inc. last week cut its 2013 price forecast for Brent crude to $110 a barrel from $130. The bank's analysts said additional barrels are set to weigh on prices as new transportation networks relieve bottlenecks in the U.S.
The outlook for rising oil supplies extinguished a rally in September that was driven by hopes that Federal Reserve stimulus efforts would bolster oil prices. Past stimulus efforts have resulted in a weakening dollar, which tends to lift prices.
"The oil price has gotten ahead of itself," said Bob Shearer, a portfolio manager at Blackrock Inc. with $38 billion in assets under management. He has cut the size of his positions in the energy sector over the past year on concerns that rising supplies will weigh on prices.
The International Energy Agency earlier this month forecast supplies from countries outside OPEC will rise to 53.6 million barrels a day in the fourth quarter, up 600,000 barrels a day from the third quarter.
Non-OPEC nations account for nearly 60% of world output. While OPEC tries to control its members' production to keep prices higher, other countries and private firms are more focused on increasing output.
Skeptics see lingering U.S. bottlenecks and Middle East conflicts keeping prices higher. There still aren't enough pipelines to bring all of the increased U.S. and Canadian production to refineries along the coast, limiting the impact of rising supplies, some investors and analysts said.
Also, turmoil in the Middle East remains a factor, says Christopher Burton, a portfolio manager for the $11 billion Credit Suisse Total Commodity Return Strategy. Syria's civil war risks pulling in neighboring Turkey, where pipelines help transport oil to European customers. The number of money managers' bullish bets on Brent has held steady due in part to the conflict.
Still, as parts of the Middle East simmer, some countries in the region are boosting production. Iraq oil output this summer rose above 3 million barrels a day for the first time since 2000, and Saudi Arabia, the world's biggest oil exporter, has pledged to keep pumping near record levels to offset any supply shortfalls from other OPEC members.
Harry Tchilinguirian, a commodities analyst at BNP Paribas, said operators of oil fields in the North Sea, where oil output helps determine Brent prices, should resume normal shipments by the end of this year. Oil deliveries from West Africa should also increase, which will weigh on Brent, he said.
Ed Morse, global head of commodities research at Citi Global Markets Inc., says the IEA's fourth-quarter estimate for global oil output is too conservative. He estimates the U.S. alone could increase production by 600,000 barrels a day. "It's the beginning of a big change," he said.
Subscribe to WSJ:
Credit: By Jerry A. DiColo
Subject: Commodity prices; Crude oil
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.1
Publication year: 2012
Publication date: Oct 25, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1114943586
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1114943586?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Shell to Buy North Sea Oil Fields From Hess
Author: Williams, Selina
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 Oct 2012: n/a.
ProQuest document link
Abstract:
Shell's acquisition should help to enhance the performance and economic potential from key Shell North Sea operated and non-operated assets, lifting Shell's production in the Beryl area fields to 24,000 barrels of oil equivalent a day from currently 9,000 boe/d, the company said.
Full text: LONDON--Royal Dutch Shell PLC said Thursday it has agreed to buy U.S.-based Hess Corp.'s interest in the Beryl area fields in the U.K. North Sea and the Scottish Area Gas Evacuation System for $525 million.
The move further cements Shell's position in the U.K. sector of the North Sea, where it is already a leading operator. Shell's share of U.K. oil and gas production was about 8%, or about 140,000 barrels of oil equivalent a day, in 2011.
The Beryl area includes 12 oil fields located on the U.K. continental shelf northeast of Aberdeen, Scotland. The fields are operated by Apache Corp. and with the acquisition increases Shell's interest in the different fields by a range of between 9% to 65%, depending on the field.
The Beryl cluster has a far longer anticipated lifetime than originally thought and may produce for a further two decades, Shell said.
Shell's acquisition should help to enhance the performance and economic potential from key Shell North Sea operated and non-operated assets, lifting Shell's production in the Beryl area fields to 24,000 barrels of oil equivalent a day from currently 9,000 boe/d, the company said.
Shell intends to invest in these assets to substantially extend the production life for potentially a further 20 years.
Subject to regulatory approval the deal is expected to close in the first quarter of 2013, Hess said.
Write to Selina Williams at
Credit: By Selina Williams
Subject: Petroleum industry; Oil reserves; Regulatory approval
Location: Scotland United Kingdom--UK United States--US
Company / organization: Name: Hess Corp; NAICS: 447110, 324110, 211111; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Apache Corp; NAICS: 324110, 211111, 213112
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 25, 20 12
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1114947230
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1114947230?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Firms Fund Political Outreach to Employees
Author: Mullins, Brody
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 Oct 2012: n/a.
ProQuest document link
Abstract:
Backed by Exxon Mobil Corp., Chevron Corp., ConocoPhillips, the U.S. units of Royal Dutch Shell PLC and BP PLC and other big oil companies, the campaign, which is costing "tens of millions of dollars," is a rare effort by a major U.S. industry in an election year.
Full text: The U.S. oil industry is for the first time making a direct political pitch to its employees and others, borrowing from traditional union tactics in a bid to secure a friendlier environment in Washington.
Backed by Exxon Mobil Corp., Chevron Corp., ConocoPhillips, the U.S. units of Royal Dutch Shell PLC and BP PLC and other big oil companies, the campaign, which is costing "tens of millions of dollars," is a rare effort by a major U.S. industry in an election year. Companies tend to shy away from such direct involvement in elections because they worry about a backlash from lawmakers and employees.
The industry's campaign is focused on the roughly nine million Americans whose jobs are tied to the oil and natural-gas industry, from drillers to truck drivers to low-skilled workers who help build pipelines. The goal is to persuade a majority of Americans to support expanded oil drilling, hydraulic fracturing and pipeline construction, including the Keystone XL Pipeline.
"We realized that we are sitting on a vast resource of employees who can register their views," said Jack Gerard, the president of the American Petroleum Institute, the industry's Washington trade association and organizer of the effort.
The industry says it isn't backing specific candidates. But by elevating the importance of energy production in key states, it could help Republicans, including presidential hopeful Mitt Romney, in battleground states where energy issues are important, such as Ohio, Pennsylvania and Colorado.
The campaign has riled Democrats and environmental groups who say that the energy industry shouldn't be advocating among their employees on elections.
The oil-industry campaign is "a cynical K Street attempt to create the appearance of grass-roots support for more pipelines, offshore drilling, fracking and Arctic exploitation, things normal Americans are highly skeptical about," said Kert Davies of Greenpeace.
The campaign borrows tactics used by unions, which have held outsize influence in Washington for decades because they are effective at persuading millions of members to vote for labor-friendly candidates. Even as the share of union workers is falling in workplaces, union members make up a larger percentage of voters, because they are more likely to go to the polls, and a sizable majority of them pull the lever for Democrats.
In a similar fashion, Mr. Gerard said the industry's polling indicates that when people understand the issues, they support the industry by a two-to-one margin.
To help reach out to individuals, the oil industry looked across the aisle and hired Deryck Spooner, 45 years old, who previously worked as a political organizer for the AFL-CIO, the Service Employees International Union and a leading environmental organization.
Mr. Spooner, who is African-American, says his job is to tap into political demographics not normally associated with the oil industry or Republicans, including blacks and Latinos. His political pitch: More oil drilling in the U.S. will mean lower energy prices and more well-paying jobs, particularly for minorities.
Instead of relying solely on television ads and Washington lobbyists, the American Petroleum Institute and its allies are going door-to-door to persuade employees and others that promoting energy production will lead to more American jobs. As part of that effort, Mr. Spooner and the industry is building a network that can contact and talk to employees and others about energy issues, sometimes at their homes.
In a Columbus, Ohio, suburb recently, a few dozen residents gathered at the home of a local supporter for a party arranged by industry representatives. While sipping Miller Lite and munching on microwave pizza, those gathered listened as local speakers recruited by the industry spoke about the impact of high energy prices and the benefits to Ohio of more hydraulic fracturing.
Marty Durbin, an official with the American Petroleum Institute, told the group that the industry's message was "not about which candidate to support or which candidate not to support." He continued: "We think that if people understand the issues, we're going to get good policy in Washington."
Later, in an interview, he added: "I'm a Democrat; this shouldn't be a partisan issue." Mr. Durbin is the nephew of Sen. Richard Durbin, the second-ranking Democrat in the Senate.
Ed Hastie, the host, said later that talking about the benefits of energy production will influence votes. "It's about learning about the stuff and eventually translating that to the ballot box," said Mr. Hastie, a local lawyer and city council member.
Not everyone was completely on message. One speaker, Mike Engbert, a local union official with the Laborers International Union of North America, agreed that approving more shale drilling in Ohio would boost employment. "If you vote for energy, you are voting for jobs," he said.
But he worried about reports that many of the jobs created by hydraulic fracturing were being taken by workers who drove up from Texas and Oklahoma. "We see too many out-of-state license plates around these plants," he complained afterward.
Write to Brody Mullins at
Credit: By Brody Mullins
Subject: Hydraulic fracturing; Petroleum industry; Environmental protection; Pipelines; Energy policy
Location: Ohio United States--US
People: Romney, W Mitt
Company / organization: Name: Greenpeace; NAICS: 813312, 813940; Name: Chevron Corp; NAICS: 324110, 211111; Name: BP PLC; NAICS: 447110, 324110, 211111; Name: American Petroleum Institute; NAICS: 813910, 541820; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Exxon Mobil Corp; NAICS: 447110, 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 25, 2012
Section: US
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1115013813
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1115013813?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Canada's Energy Stumble; The country needs foreign capital, not oil and gas nationalism.
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 Oct 2012: n/a.
ProQuest document link
Abstract:
Maybe Mr. Culbert was focusing on his Malaysian buyer while Ottawa was looking past Petronas at a $15.1 billion bid from Chinese state-owned oil company Cnooc to buy the Canadian oil and gas company Nexen.
Full text: Prime Minister Stephen Harper likes to advertise Canada as a market-friendly destination for capital. But at three minutes to a midnight deadline on Friday, Ottawa announced that it won't allow the $5.2 billion purchase of Progress Energy Resource Corporation by Malaysia's state-owned oil and gas company Petronas. Investors are left to wonder if Mr. Harper has had a change of heart about attracting global capital to develop Canada's vast oil and gas resources.
Unlike President Obama, Mr. Harper views fossil-fuel deposits as something to be exploited for faster economic development. Recognizing that Canada lacks the domestic capital to do so, his government has been hawking energy opportunities to foreign investors. On a trip to China earlier this year, Mr. Harper said, "We are an emerging energy superpower. We want to sell our energy to people who want to buy our energy. It's that simple."
Apparently not.
Progress Resources is a natural gas exploration company with sizeable investments in northeastern British Colombia and northwestern Alberta. In June 2011 it formed a joint venture with Petronas to develop select gas fields. Petronas subsequently bid for the company and Progress Resources accepted the offer. CEO Michael Culbert has said that until the final hours last week he believed the Canadian government would not stand in the way.
Maybe Mr. Culbert was focusing on his Malaysian buyer while Ottawa was looking past Petronas at a $15.1 billion bid from Chinese state-owned oil company Cnooc to buy the Canadian oil and gas company Nexen. A ruling on that deal is due November 9. Canada is in the midst of revising its "net benefits test" for acquisitions by foreign, state-owned enterprises under the Canada Investment Act, and it will be under pressure to apply the same standards to China as to Malaysia.
One Canadian motive may be reciprocity. Mr. Harper said Tuesday in Ottawa that "Canada has had a situation with China for some years where their investment has been virtually unrestricted here and we have had more difficulty with our investment there." Malaysia also has restrictions on ownership in oil and gas, and an attempt to pry open these foreign markets isn't all bad.
But if Ottawa is getting ready to require reciprocity from Asian states as a price of investing in Canada, it won't be good news for Canadians. "Net benefits" as defined by some special interests would undoubtedly become "net losses" for others. As the Journal reported on Monday, the Canada Pension Plan Investment Board, "one of Canada's biggest and most influential institutional investors," has a 16% stake in Progress. The fund called Ottawa's Petronas decision "unfortunate."
It still isn't clear that Canada intends to send Petronas packing. The company has been given 30 days to submit a new proposal and says it is working on something that will satisfy regulators. On Sunday Canadian finance minister Jim Flaherty stressed that the deal isn't dead.
Before regulators write their new rules, they might like to note the remarks of Canadian Minister of Energy Joe Oliver last week: "Over the next 10 years as many as 600 major resource projects, worth more than $650 billion, could come on stream." If that is allowed to happen Canadians will experience some pretty impressive "net benefits," whether Asian states open their markets or not.
Subject: Petroleum industry; Natural gas; Institutional investments
Location: Malaysia Canada China
People: Obama, Barack
Company / organization: Name: CNOOC Ltd; NAICS: 211111; Name: Petronas; NAICS: 211111; Name: Canada Pension Plan Investment Board; NAICS: 923130
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 25, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1115014110
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1115014110?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Supply Boom Upends the Oil Market; Only a few months ago, traders and investors were fretting about a shortage of crude oil. Now, many are worried there may be too much.
Author: DiColo, Jerry A
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]25 Oct 2012: n/a.
ProQuest document link
Abstract:
The bank's analysts said additional barrels are set to weigh on prices as new transportation networks relieve bottlenecks in the U.S. The outlook for rising oil supplies extinguished a rally in September that was driven by hopes that Federal Reserve stimulus efforts would bolster oil prices. Harry Tchilinguirian, a commodities analyst at BNP Paribas, said operators of oil fields in the North Sea, where oil output helps determine Brent prices, should resume normal shipments by the end of this year.
Full text: Suddenly, the world is awash in oil.
Only a few months ago, traders and investors were fretting about whether tensions in the Middle East and production problems elsewhere would lead to a shortage of crude oil. Now, many are worried there may be too much.
Forecasters say that in the fourth quarter, global oil output will top demand by more than 630,000 barrels a day, the biggest surplus in four years. The jump is due to a confluence of events: Turmoil in the Middle East has subsided along with the production and transportation problems that had been stifling oil flows from the U.S., North Sea and Africa. Meanwhile, Saudi Arabia is pumping more oil to replace falling Iranian exports, keeping output from the Organization of the Petroleum Exporting Countries steady.
That is causing some investors and traders to change their view on the direction of prices. Already, Brent crude, the benchmark in Europe, is down 7.8% from a three-month high in August. U.S. crude prices are down 13% from a mid-September peak.
Crude-oil prices have been particularly vulnerable to worries about the global economy that have recently seized financial markets. Many investors and traders say that with growth in many major oil-consuming countries still sluggish, demand isn't going to be strong enough to absorb all the extra supply.
A sustained decline in crude-oil prices should lead cheaper gasoline and diesel products used by consumers and businesses, they add.
"There's plenty of oil out there now," said Tariq Zahir, head of Tyche Capital Advisors, a $4 million commodity-trading advisor. He has wagered that rising supplies will push prices lower.
Over the past month, hedge funds and other money managers cut by 23% their bullish bets on crude-oil futures and options on the New York Mercantile Exchange.
On Wednesday, oil prices fell following a report from the U.S. Energy Department that showed domestic stockpiles rose last week to the highest level since July. Crude for December delivery fell $0.94, or 1.08%, to $85.73 a barrel on the Nymex. Brent crude on the ICE Futures U.S. exchange closed down 40 cents, or 0.37%, at $107.85 a barrel.
Goldman Sachs Group Inc. last week cut its 2013 price forecast for Brent crude to $110 a barrel from $130. The bank's analysts said additional barrels are set to weigh on prices as new transportation networks relieve bottlenecks in the U.S.
The outlook for rising oil supplies extinguished a rally in September that was driven by hopes that Federal Reserve stimulus efforts would bolster oil prices. Past stimulus efforts have resulted in a weakening dollar, which tends to lift prices.
"The oil price has gotten ahead of itself," said Bob Shearer, a portfolio manager at Blackrock Inc. with $38 billion in assets under management. He has cut the size of his positions in the energy sector over the past year on concerns that rising supplies will weigh on prices.
The International Energy Agency earlier this month forecast supplies from countries outside OPEC will rise to 53.6 million barrels a day in the fourth quarter, up 600,000 barrels a day from the third quarter.
Non-OPEC nations account for nearly 60% of world output. While OPEC tries to control its members' production to keep prices higher, other countries and private firms are more focused on increasing output.
Skeptics see lingering U.S. bottlenecks and Middle East conflicts keeping prices higher. There still aren't enough pipelines to bring all of the increased U.S. and Canadian production to refineries along the coast, limiting the impact of rising supplies, some investors and analysts said.
Also, turmoil in the Middle East remains a factor, says Christopher Burton, a portfolio manager for the $11 billion Credit Suisse Total Commodity Return Strategy. Syria's civil war risks pulling in neighboring Turkey, where pipelines help transport oil to European customers. The number of money managers' bullish bets on Brent has held steady due in part to the conflict.
Still, as parts of the Middle East simmer, some countries in the region are boosting production. Iraq oil output this summer rose above 3 million barrels a day for the first time since 2000, and Saudi Arabia, the world's biggest oil exporter, has pledged to keep pumping near record levels to offset any supply shortfalls from other OPEC members.
Harry Tchilinguirian, a commodities analyst at BNP Paribas, said operators of oil fields in the North Sea, where oil output helps determine Brent prices, should resume normal shipments by the end of this year. Oil deliveries from West Africa should also increase, which will weigh on Brent, he said.
Ed Morse, global head of commodities research at Citi Global Markets Inc., says the IEA's fourth-quarter estimate for global oil output is too conservative. He estimates the U.S. alone could increase production by 600,000 barrels a day. "It's the beginning of a big change," he said.
Write to Jerry A. DiColo at
Credit: By Jerry A. DiColo
Subject: Petroleum industry; Crude oil prices; Pipelines; Energy industry; Supplies
Location: United States--US Saudi Arabia West Africa Middle East North Sea
Company / organization: Name: International Energy Agency; NAICS: 928120; Name: New York Mercantile Exchange; NAICS: 523210; Name: Goldman Sachs Group Inc; NAICS: 523110, 523120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 25, 2012
Section: World
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1115129408
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1115129408?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Election 2012: Oil Firms Fund Political Outreach to Employees
Author: Mullins, Brody
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]26 Oct 2012: A.6.
ProQuest document link
Abstract:
Backed by Exxon Mobil Corp., Chevron Corp., ConocoPhillips, the U.S. units of Royal Dutch Shell PLC and BP PLC and other big oil companies, the campaign, which is costing "tens of millions of dollars," is a rare effort by a major U.S. industry in an election year.
Full text: The U.S. oil industry is for the first time making a direct political pitch to its employees and others, borrowing from traditional union tactics in a bid to secure a friendlier environment in Washington.
Backed by Exxon Mobil Corp., Chevron Corp., ConocoPhillips, the U.S. units of Royal Dutch Shell PLC and BP PLC and other big oil companies, the campaign, which is costing "tens of millions of dollars," is a rare effort by a major U.S. industry in an election year. Companies tend to shy away from such direct involvement in elections because they worry about a backlash from lawmakers and employees.
The industry's campaign is focused on the roughly nine million Americans whose jobs are tied to the oil and natural-gas industry, from drillers to workers who help build pipelines. The goal is to persuade a majority of Americans to support expanded oil drilling, hydraulic fracturing and pipeline construction, including the Keystone XL Pipeline.
"We realized that we are sitting on a vast resource of employees who can register their views," said Jack Gerard, the president of the American Petroleum Institute, the industry's Washington trade association and organizer of the effort.
The industry says it isn't backing specific candidates. But by elevating the importance of energy production in key states, it could help Republicans, including presidential hopeful Mitt Romney, in battleground states where energy issues are important, such as Ohio, Pennsylvania and Colorado.
The campaign has riled Democrats and environmental groups who say that the energy industry shouldn't be advocating among their employees on elections.
The oil-industry campaign is "a cynical K Street attempt to create the appearance of grass-roots support for more pipelines, offshore drilling, fracking and Arctic exploitation, things normal Americans are highly skeptical about," said Kert Davies of Greenpeace.
The campaign borrows tactics used by unions, which have held outsize influence in Washington for decades because they are effective at persuading millions of members to vote for labor-friendly candidates. Even as the share of union workers is falling in workplaces, union members make up a larger percentage of voters, because they are more likely to go to the polls, and a sizable majority of them pull the lever for Democrats.
In a similar fashion, Mr. Gerard said the industry's polling indicates that when people understand the issues, they support the industry by two-to-one.
To help reach out to individuals, the oil industry looked across the aisle and hired Deryck Spooner, 45 years old, who previously worked as a political organizer for the AFL-CIO, the Service Employees International Union and a leading environmental organization.
Mr. Spooner, who is African-American, says his job is to tap into political demographics not normally associated with the oil industry or Republicans, including blacks and Latinos. His political pitch: More oil drilling in the U.S. will mean lower energy prices and more well-paying jobs, particularly for minorities.
Instead of relying solely on television ads and Washington lobbyists, the American Petroleum Institute and its allies are going door-to-door to persuade employees and others that promoting energy production will lead to more American jobs. As part of that effort, Mr. Spooner and the industry is building a network that can talk to employees and others about energy issues, sometimes at their homes.
In a Columbus, Ohio, suburb recently, a few dozen residents gathered at the home of a local supporter for a party arranged by industry representatives. While sipping Miller Lite and munching on microwave pizza, those gathered listened as local speakers recruited by the industry spoke about the impact of high energy prices and the benefits to Ohio of more hydraulic fracturing.
Marty Durbin, an official with the American Petroleum Institute, told the group that the industry's message was "not about which candidate to support or which candidate not to support." He continued: "We think that if people understand the issues, we're going to get good policy in Washington."
Later, in an interview, he added: "I'm a Democrat; this shouldn't be a partisan issue." Mr. Durbin is the nephew of Sen. Richard Durbin, the second-ranking Democrat in the Senate.
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Credit: By Brody Mullins
Subject: Hydraulic fracturing; Environmental protection; Pipelines; Energy policy; Political campaigns; Petroleum industry; Lobbying; Elections -- United States--US
Location: Ohio United States--US
People: Romney, W Mitt
Company / organization: Name: American Petroleum Institute; NAICS: 813910, 541820
Classification: 9190: United States; 8510: Petroleum industry; 1210: Politics & political behavior
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.6
Publication year: 2012
Publication date: Oct 26, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1115059011
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1115059011?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Belgians Probe Death of Exxon Manager
Author: Torello, Alessandro
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 Oct 2012: n/a.
ProQuest document link
Abstract:
BRUSSELS--An executive with U.S. oil giant Exxon Mobil Corp. was shot dead in Brussels earlier this month after leaving a restaurant with his wife, Belgian authorities said Friday.
Full text: BRUSSELS--Belgian authorities are seeking clues about the death of an Exxon Mobil Corp. manager, killed earlier this month with no apparent motive after a Sunday dinner at a local restaurant.
Nicholas Mockford was killed on the night of Oct. 14 as he was leaving a restaurant on the outskirts of the Belgian capital after dining there with his wife, authorities said Friday. He was shot three times, while his wife was fiercely beaten, but not shot.
"All lines of inquiry are being pursued," Geneviève Seressia, a spokeswoman for the investigating judge, said Friday. "There was no theft," she said.
Two people attacked the Mockfords, Ms. Seressia said.
Mr. Mockford was a department manager at Exxon Mobil's offices in Mechelen, a town just outside Brussels where about 1,000 employees work at the company's regional headquarters, a spokesman for Exxon Mobil Belgium said. Mr. Mockford had worked at Exxon for many years, and he had been posted in Belgium for several, the spokesman said, without giving specific details.
Mr. Mockford's work was related to chemicals and their use in making plastics. At a conference two years ago, he was listed as a speaker on possible alternatives to phthalate plasticizer, a material that is used to soften polyvinyl chloride, which is in turn used to make window frames and other things.
Exxon Mobil said in a statement that there is no indication the killing is linked to Mr. Mockford's work.
"Mr. Mockford was a department manager at our office close to Brussels, but we have no indication that the incident was work-related," the company said in a statement. "Our thoughts are with his family, friends and colleagues and we are supporting them as best we can at this very difficult time," it said.
Mr. Mockford was a member of a golf club just on the outskirts of Brussels. He played in a competition there the very day he was killed, the club's sports manager, Andrew Watson, said.
"He wasn't the greatest golfer, but he was a very nice person," Mr. Watson said, adding that Mr. Mockford would show up at the club--which he had joined at least six years ago--every couple of weekends if not more.
A resident of Grimbergen, a wealthy neighborhood just outside Brussels, Mr. Mockford was very discreet and polite. "He didn't talk an awful lot about his work," Mr. Watson said, adding that Mr. Mockford, who also spoke French but not Dutch, used to go to the club on the weekend, even though he didn't seem to travel much for work.
Sarah Kent in London contributed to this article.
Write to Alessandro Torello at
Credit: By Alessandro Torello
Subject: Petroleum industry; Manycountries
Location: United States--US
Company / organization: Name: Exxon Mobil Corp; NAICS: 447110, 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 26, 2012
Section: World
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1115270194
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1115270194?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Statoil to Cut 2013 Oil and Gas Production
Author: Hovland, Kjetil Malkenes
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 Oct 2012: n/a.
ProQuest document link
Abstract:
OSLO--Statoil ASA said Friday its oil and gas output will fall in 2013, contrary to the Norwegian company's own forecasts, as it produces less natural gas than planned in the U.S. in response to a drop in prices and after selling fields off the coast of Norway.
Full text: OSLO--Statoil ASA said Friday its oil and gas output will fall in 2013, contrary to the Norwegian company's own forecasts, as it produces less natural gas than planned in the U.S. in response to a drop in prices and after selling fields off the coast of Norway.
The change in the 2013 forecast was announced as Statoil posted a better-than-expected 38% rise in third-quarter net profit to 14.4 billion Norwegian kroner ($2.5 billion).
Statoil has decided to cut natural-gas production in the U.S. by 25,000 barrels of oil equivalent a day, compared with its previous plan. Production of natural gas released from shale rock by a new combination of technologies has created a glut of supply in North America. North American gas production will still grow next year, but not by enough to offset a decline in the rest of the company.
"We think there's value for us in delaying production," the company's chief executive, Helge Lund, said.
A boom in shale gas production has pushed the benchmark Henry Hub U.S. natural-gas price down from around $12 per million British thermal units in 2008 to less than $3 per million Btus earlier this year.
"We are reducing the number of rigs and the production. Growth will come later when prices are better," said Chief Financial Officer Torgrim Reitan. The cut "will have a limited effect on earnings," he said.
The U.S. Energy Information Administration forecasts the average Henry Hub gas price will rise to $3.35 per million Btu next year, from $2.71 per million Btu this year. Prices are expected to increase slightly in 2014.
Statoil will lose nearly 40,000 barrels per day of oil and gas production in 2013 due to its decision to sell the Brage field and parts of the Gjoa and Vega licenses offshore Norway to Wintershall AG for $1.45 billion. As part of the deal, Statoil is also purchasing a 15% stake in the undeveloped Edvard Grieg field from Wintershall.
"We are selling off a large portfolio on the Norwegian continental shelf, which we think creates value for us," said Mr. Lund.
The drop in 2013 output doesn't change Statoil's target to produce 2.5 million barrels equivalent a day of oil and gas in 2020. Average annual production will grow from 2% to 3% between 2012 and 2016, and 3% to 4% between 2016 and 2020, Mr. Lund said. Projects in the U.S., Angola, Brazil and Norway will be the main driver of this growth, he said.
Statoil produced 1.811 million barrels per day in the third quarter.
Analysts said the lower forecast for 2013 production was in line with expectations, and that the longer-term growth targets were achievable provided oil price stay at current levels or rise.
"These production targets are not cut in stone," said Arctic Securities analyst Trond Omdal. "But given our oil price expectations, we think they can be achieved."
Credit: By Kjetil Malkenes Hovland
Subject: Petroleum industry; Natural gas; Petroleum production; Prices
Location: United States--US Norway North America
People: Grieg, Edvard (1843-1907)
Company / organization: Name: Statoil ASA; NAICS: 324110, 211111; Name: Wintershall AG; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 26, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1115303529
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1115303529?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Brent, Nymex Aren't Going Away as Oil Benchmarks
Author: Rozhnov, Konstantin
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 Oct 2012: n/a.
ProQuest document link
Abstract:
"Many market participants consider that WTI is a broken benchmark....I would suggest that the Brent benchmark may be equally broken, as a portion of the price of Brent is being driven by the underperformance of the North Sea and not fully reflective of the global supply and demand balances," said Dominick Chirichella, an analyst at the Energy Management Institute in New York.
Full text: Brent and Nymex crude are likely to retain their status as the world's two key oil benchmarks for the foreseeable future, despite concerns about their reliability that have prompted calls for a more accurate pricing measure.
Production problems in the North Sea and the continuing oil glut in the U.S. Midwest have led to a disconnect between the price of European marker Brent and the New York Mercantile Exchange oil contract based on the West Texas Intermediate, or WTI, oil grade, with the front-month spread holding above $20 since breaching that level Oct. 5.
"Many market participants consider that WTI is a broken benchmark....I would suggest that the Brent benchmark may be equally broken, as a portion of the price of Brent is being driven by the underperformance of the North Sea and not fully reflective of the global supply and demand balances," said Dominick Chirichella, an analyst at the Energy Management Institute in New York.
But although many analysts believe the multibillion-dollar market could be better-served, the two contracts have production volumes and receive investment that other grades simply can't yet compete with.
"It isn't easy to establish a new benchmark," said Bahattin Buyuksahin, a senior analyst at the International Energy Agency who focuses on oil price formation.
Many industry experts name ESPO blend--a light, sour Russian grade shipped to Asia and North America and not traded as a futures contract--and the Dubai Mercantile Exchange's oil-futures contract as potential future benchmarks.
"Benchmark is a place where sellers and buyers can meet and find liquidity and transparency," said Ole Hansen, Saxo Bank's head of commodity strategy. Oil producers, hedge funds and financial investors all need to be involved in a successful benchmark, he said, not just one of these factors.
The 700,000 Brent futures and options contracts traded daily on IntercontinentalExchange in September equals more than $70 billion in daily trading volumes, with Nymex crude volumes only slightly lower.
In contrast, average daily trading volumes of DME Oman, the flagship contract of the Dubai Mercantile Exchange, are only around 5,000 contracts, and no more than $1.5 billion worth of oil is delivered monthly on DME, according to Christopher Fix, DME chief executive.
There is a huge pull of liquidity in the Middle East, said Mr. Fix, pointing to crude oil, financing, refining and pipeline systems. But DME still needs to work hard to attract it, as its trading volumes are starting from such a low base.
Then there is the issue of physical volumes. A global crude benchmark should have at least 500,000 barrels a day of output, said Jorge Montepeque, global director of markets reporting at Platts, which is responsible for assessing the price of Dated Brent, a physical marker.
But Russia's ESPO exports are expected to average only 300,000 barrels a day in 2012, rising to 400,000 barrels a day next year. Nevertheless, ESPO has strong benchmark potential given the projected export volumes, Mr. Montepeque said.
"In some ways [ESPO] can already be called a marker crude in that it is closely monitored by producers and refiners alike," he said.
Benchmark Brent--the basket of four North Sea crude grades--itself has faced falling output, with daily November loadings scheduled at 780,000 barrels. But Mr. Montepeque said Platts is prepared for any future decline and has already indicated that it may inject production from other North Sea fields.
Olivier Jakob, managing director of Swiss consultancy Petromatrix, argues that Brent and Nymex crude are, in fact, regional, rather than global benchmarks, as they depend on localized production and transportation issues in the same way as other crudes.
"I think it is a bit idealistic to think there could be a [truly] global benchmark," he said, adding that having more benchmarks would be preferable but could prove difficult because it will require financial liquidity volumes to be diluted.
A key barrier to creating a new benchmark is attracting investors to a platform with low liquidity, or how to create liquidity when there aren't many investors in sight.
"It's the chicken and egg thing: investors first or liquidity?" said Saxo Bank's Mr. Hansen.
It means that Brent will likely remain a marker for much longer even despite falling production volumes in the North Sea.
"You can't just ignore Brent, as it's used to price 70% of the world's oil," said Mr. Buyuksahin.
And while Nymex crude has been struggling due to its landlocked status, it could revive thanks to implementation of pipeline projects "earlier than many expect," Mr. Hansen said.
Credit: By Konstantin Rozhnov
Subject: Petroleum industry; Benchmarks; Energy management; Futures; Competition
Location: North Sea
Company / organization: Name: Platts; NAICS: 511140, 541613; Name: New York Mercantile Exchange; NAICS: 523210; Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 28, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y .
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1115470000
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1115470000?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Canada's Energy Stumble; The country needs foreign capital, not oil and gas nationalism.
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Oct 2012: 13.
ProQuest document link
Abstract:
Maybe Mr. Culbert was focusing on his Malaysian buyer while Ottawa was looking past Petronas at a $15.1 billion bid from Chinese state-owned oil company Cnooc to buy the Canadian oil and gas company Nexen.
Full text: Prime Minister Stephen Harper likes to advertise Canada as a market-friendly destination for capital. But at three minutes to a midnight deadline on Friday, Ottawa announced that it won't allow the $5.2 billion purchase of Progress Energy Resource Corporation by Malaysia's state-owned oil and gas company Petronas. Investors are left to wonder if Mr. Harper has had a change of heart about attracting global capital to develop Canada's vast oil and gas resources.
Unlike President Obama, Mr. Harper views fossil-fuel deposits as something to be exploited for faster economic development. Recognizing that Canada lacks the domestic capital to do so, his government has been hawking energy opportunities to foreign investors. On a trip to China earlier this year, Mr. Harper said, "We are an emerging energy superpower. We want to sell our energy to people who want to buy our energy. It's that simple."
Apparently not.
Progress Resources is a natural gas exploration company with sizeable investments in northeastern British Colombia and northwestern Alberta. In June 2011 it formed a joint venture with Petronas to develop select gas fields. Petronas subsequently bid for the company and Progress Resources accepted the offer. CEO Michael Culbert has said that until the final hours last week he believed the Canadian government would not stand in the way.
Maybe Mr. Culbert was focusing on his Malaysian buyer while Ottawa was looking past Petronas at a $15.1 billion bid from Chinese state-owned oil company Cnooc to buy the Canadian oil and gas company Nexen. A ruling on that deal is due November 9. Canada is in the midst of revising its "net benefits test" for acquisitions by foreign, state-owned enterprises under the Canada Investment Act, and it will be under pressure to apply the same standards to China as to Malaysia.
One Canadian motive may be reciprocity. Mr. Harper said Tuesday in Ottawa that "Canada has had a situation with China for some years where their investment has been virtually unrestricted here and we have had more difficulty with our investment there." Malaysia also has restrictions on ownership in oil and gas, and an attempt to pry open these foreign markets isn't all bad.
But if Ottawa is getting ready to require reciprocity from Asian states as a price of investing in Canada, it won't be good news for Canadians. "Net benefits" as defined by some special interests would undoubtedly become "net losses" for others. As the Journal reported on Monday, the Canada Pension Plan Investment Board, "one of Canada's biggest and most influential institutional investors," has a 16% stake in Progress. The fund called Ottawa's Petronas decision "unfortunate."
It still isn't clear that Canada intends to send Petronas packing. The company has been given 30 days to submit a new proposal and says it is working on something that will satisfy regulators. On Sunday Canadian finance minister Jim Flaherty stressed that the deal isn't dead.
Before regulators write their new rules, they might like to note the remarks of Canadian Minister of Energy Joe Oliver last week: "Over the next 10 years as many as 600 major resource projects, worth more than $650 billion, could come on stream." If that is allowed to happen Canadians will experience some pretty impressive "net benefits," whether Asian states open their markets or not.
Subject: Petroleum industry; Natural gas; Institutional investments
Location: Malaysia Canada China
People: Obama, Barack
Company / organization: Name: CNOOC Ltd; NAICS: 211111; Name: Petronas; NAICS: 211111; Name: Canada Pension Plan Investment Board; NAICS: 923130
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: 13
Publication year: 2012
Publication date: Oct 29, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1115470008
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1115470008?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Norges Bank Won't Sell Kroner in Nov To Buy FX For Oil Fund
Author: Duxbury, Charles
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]31 Oct 2012: n/a.
ProQuest document link
Abstract:
Norges Bank explained the decision by saying that, among other things, it would use foreign exchange generated by the state's oil and gas fields to meet the requirements of the oil fund thus reducing the central bank's need to buy foreign currency in the market during November.
Full text: Norway's central bank said Wednesday that it doesn't plan to sell Norwegian kroner in November to buy foreign currency on behalf of the country's sovereign wealth fund, the Pension Fund Global.
The central bank announces on the last working day of each month how much foreign currency it will buy in the coming month in order to then buy foreign stocks and bonds on behalf of the pension fund.
In October the central bank sold NOK500 million ($86.86 million) daily to buy foreign currency for the pension fund, which is also known as the oil fund.
The announcement was a surprise as economists had expected foreign exchange purchases to continue in November. It led to a sharp strengthening of the krone against the euro to NOK7.3972 from NOK7.4395.
Norges Bank explained the decision by saying that, among other things, it would use foreign exchange generated by the state's oil and gas fields to meet the requirements of the oil fund thus reducing the central bank's need to buy foreign currency in the market during November.
Norges Bank manages the oil fund, which consulting firm Monitor Group assesses to be the world's largest sovereign wealth fund. It was set up in 1990 to safeguard Norway's oil wealth and has a market value of around $650 billion.
-Write to Charles Duxbury at charles.duxbury@dowjones.com
Credit: By Charles Duxbury
Subject: Central banks; Sovereign wealth funds; Pension funds
Location: Norway
Company / organization: Name: Norges Bank; NAICS: 521110; Name: Monitor Group; NAICS: 541611
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 31, 2012
column: DJ FX Trader
Section: Forex
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1123838872
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1123838872?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Edward Burtynsky's 'Watermarks'; Edward Burtynsky spent most of the past decade with his lens on the oil industry. Now he is shifting his focus to what he calls "the next great liquid" in a new photo exhibit, "Watermarks," at Sundaram Tagore in Hong Kong.
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]31 Oct 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: 'Oil Spill #14, Marsh Islands, Gulf of Mexico.'
'Dryland Farming #11, Monegros County, Aragon, Spain'
'Dryland Farming #12, Monegros County,Aragon, Spain'
'Dryland Farming #29, Monegros County, Aragon, Spain'
'Pivot Irrigation #9, High Plains, Texas Panhandle, USA'
'Pivot Irrigation #14, High Plains, Texas Panhandle, USA'
'Pivot Irrigation #18, High Plains, Texas Panhandle, USA'
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 31, 2012
Section: Life and Style
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: Ne ws
ProQuest document ID: 1123847151
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1123847151?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
For Shell, Wait 'til Next Year in Arctic; Oil Giant Suspends Drilling Off Alaska Until Spring Thaw, After Missing Out on Initial Well Targets
Author: Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]31 Oct 2012: n/a.
ProQuest document link
Abstract:
Even the simplest acts are more complicated for drillers in the Chukchi Sea, which helps explain why Shell is the first company in more than two decades to even try coaxing oil out of the Arctic Ocean here, despite a potential bonanza trapped below--and why other companies watching its struggles are having second thoughts about attempts of their own.
Full text: ABOARD THE NOBLE DISCOVERER--In the frigid seas that surrounded this drilling ship, parked by Royal Dutch Shell PLC between Alaska and the North Pole, there are no signs of humanity, just an endless horizon of empty gray water.
The helicopter pilot kept the engine running when he landed on the drill ship's helipad, for fear it wouldn't start again in the harsh cold. Visitors come clad in $3,000 survival suits to give them a fighting chance should their aircraft crash into the sea below.
"Alaska is defined by its remoteness," said Pete Slaiby, vice president of Shell's Alaska operations. "What we do here has to be different than what we would do in places like the Gulf of Mexico."
Even the simplest acts are more complicated for drillers in the Chukchi Sea, which helps explain why Shell is the first company in more than two decades to even try coaxing oil out of the Arctic Ocean here, despite a potential bonanza trapped below--and why other companies watching its struggles are having second thoughts about attempts of their own.
After spending more than $4.5 billion in permits, personnel and equipment over the past six years to assure regulators and native Alaskans that its work would be safe and environmentally benign, Shell finally got a shot to try drilling wells here this fall. It didn't go as planned.
Shell initially hoped to complete six wells by the end of October, before the onset of winter. But its drilling rigs packed it in for the year Wednesday, having only completed two "top holes"--the initial stages of exploration wells--after a series of setbacks with spill-response equipment. Shell said in September those problems would limit it to drilling top holes this year, which didn't go unnoticed by rivals.
Statoil ASA, the Norway-based oil company that is no stranger to cold waters, said it will delay plans to drill in the U.S. Arctic Ocean by at least a year due to the difficulties Shell has faced. An executive with French oil giant Total SA said the risks of an oil spill in environmentally sensitive Arctic waters are too high for companies to continue plumbing for crude there.
Still, Shell plans to resume drilling next year and believes that its patience will pay off with a huge oil find. The U.S. Geological Survey estimates the U.S. Arctic Ocean could hold as much as 42 billion barrels of recoverable oil and gas. Shell estimates the areas it is exploring could produce more than 400,000 barrels of oil a day.
Tyler Priest, a University of Iowa history professor who focuses on the energy industry, said Shell's setbacks weren't unusual for companies that have repeatedly overcome hard engineering problems and hostile environments to succeed.
"We should be careful not to minimize the risks and serious environmental concerns surrounding Shell's Arctic adventure, but nor would it be fair to magnify what are relatively minor, learning-curve mistakes that have forced Shell to curtail drilling," Mr. Priest said.
Yet it was clear from the start that Shell's Arctic project was no ordinary drilling challenge.
The Noble Discoverer and a second rig Shell hired, the Kulluk, endured a week's journey more than 1,000 miles from the nearest port at Dutch Harbor, Alaska, through the rough Bering Strait, just to set up here.
Travel to and from the rig required a 160-mile roundtrip helicopter flight from Barrow, Alaska, the northernmost city in the U.S. The Noble Discoverer appeared suddenly out of the haze, a metal splinter bobbing in the waves.
On the Disco, as the drilling ship is known to its crew, workers recently prepared to install several hundred feet of 30-inch-diameter steel casing into the hole that had been drilled in the sea floor. Once secured in place with cement, the casing would provide a guide for drilling deeper into suspected oil deposits 8,000 feet down.
The rig's 124-person crew included a half-dozen wildlife spotters hired from native Alaskan firms. While federal environmental laws don't require such spotters, Shell brought them on board to ease concerns among the Inupiat people, who worried about impacts on their annual whale harvest.
Jennifer Scott, one of the biologists on watch, said there were some signs of life amid the empty expanse: in addition to humpback and bowhead whales, a polar bear swam by the vessel one day, and a snowy owl took up temporary residence above the bridge.
The drilling crews on deck didn't have time to notice. They moved steel casing and pipes into place as the ice-slicked decks heaved with the waves, trying to make the most of the lowered drilling expectations.
In a few weeks the area will be encased in sea ice again, blocking Shell's progress for another year.
Write to Tom Fowler at
Credit: By Tom Fowler
Subject: Petroleum industry; Oil exploration; Energy industry
Location: Alaska North Pole
Company / organization: Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Statoil ASA; NAICS: 324110, 211111; Name: Total SA; NAICS: 447190, 324110, 211111; Name: University of Iowa; NAICS: 611310
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Oct 31, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1124573595
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1124573595?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Shell Profit Hit by Weaker Oil, Gas Prices
Author: Williams, Selina
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]01 Nov 2012: n/a.
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Abstract:
LONDON--Royal Dutch Shell PLC Thursday said it was shifting the focus of its energy production in North America away from natural gas and toward oil as weak prices from the shale-gas glut reduced its earnings and prompted a big write-down in the value of assets.
Full text: LONDON--Royal Dutch Shell PLC Thursday said it was shifting the focus of its energy production in North America away from natural gas and toward oil as weak prices from the shale-gas glut reduced its earnings and prompted a big write-down in the value of assets.
For the second consecutive quarter, the Anglo-Dutch energy giant's earnings were weighed down by U.S. natural-gas prices, which have been hovering around a 10-year low. U.K.-listed BP PLC and BG Group PLC suffered similar negative effects in their earnings this week, underscoring how disruptive the shale boom of the past few years has been to the sector.
Prices have recovered recently as more power plants have switched from burning coal to natural gas but not by enough to dissuade Shell from taking steps to refocus on oil, said Chief Financial Officer Simon Henry.
Around three quarters of Shell's current drilling activity in North America is now focused on shale formations that are rich in oil, said Mr. Henry on a conference call with reporters..
Shell has more than tripled the number of rigs drilling for shale oil over the past year, to 21 rigs in the third quarter, a Shell spokesman said. Over the same period, it has reduced by two-thirds the number of rigs drilling on formations that contain only gas, with 15 operating in the third quarter, he said.
This shift has been mirrored across the industry, where there are now less than 500 rigs drilling onshore for shale gas, just a third of what it was two years ago, Mr. Henry said.
"That will impact [natural gas] supply, no question," he said. And oil is "where you'll see the growth from shale in the next year or two," he added.
Analysts said Shell needed to do something to address its exposure to the North American natural-gas market.
In the third quarter, Shell's oil and gas exploration-and-production earnings fell 24% on the year. The average price Shell received for its gas in North America fell 38%, in contrast with an 8% rise in the price it earned in the rest of the world.
"The U.S. is something they need to tackle," said Royal Bank of Canada analyst Peter Hutton. "I would expect to see a renewed drive for cost efficiency in the Americas to counteract the low gas prices."
In addition to trying to produce more oil, several companies, including Shell and BG Group, are looking for ways to increase natural-gas demand. This includes converting buses and trucks to use it as a road fuel and exporting it in liquid form to regions with higher prices, such as Asia and Europe.
Many companies are seeking export permits for the gas they produce, but the issue has become highly politicized on concerns that a higher U.S. gas prices could dent the competitiveness of U.S. industry.
Liquefied-natural-gas exports are unlikely to occur on a scale large enough to significantly shift the balance between supply and demand in North America before 2020, Mr. Henry said.
The Anglo-Dutch energy company said its profit on the basis of clean current cost of supplies--a keenly watched figure that strips gains or losses from inventories and other nonoperating items out of net profit--fell to $6.56 billion in the three months ended Sept. 30, down 6.3% from the third quarter of 2011. This was above average expectations of $6.31 billion in a Dow Jones Newswires poll of 13 analysts.
Including a $1.01 billion gain on the value of inventories and a $432 million impairment mainly on the value of natural-gas assets in the U.S. and tax changes in the U.K., Shell's net profit for the quarter was $7.14 billion, up 2.3% from a year earlier.
Total oil-and-gas production was 2.982 million barrels of oil equivalent a day, a decrease of 1% from a year earlier, because of asset sales, security problems at its onshore operations in Nigeria and the impact of Hurricane Isaac on offshore operations in the Gulf of Mexico. Analysts had expected production to rise 2%.
Total revenue amounted to $115.43 billion, down 8.4% from the third quarter of 2011.
Write to Selina Williams at
Corrections & Amplifications Shell accounted for a $432 million impairment in its earnings. An earlier version of the story said the impairment totaled $423 million.
Credit: By Selina Williams
Subject: Profits; Natural gas; Natural gas reserves; Petroleum industry
Location: United States--US United Kingdom--UK North America
Company / organization: Name: BP PLC; NAICS: 447110, 324110, 211111; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Royal Bank of Canada; NAICS: 522110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 1, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1124693688
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1124693688?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Tokyo Electric: To Use More LNG, Crude Oil This Fiscal Year
Author: Iwata, Mari
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]01 Nov 2012: n/a.
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Abstract:
TOKYO--Tokyo Electric Power Co. (9501.TO), or Tepco, has raised its planned use of liquefied natural gas, coal and crude oil in the fiscal year ending March 31, 2013, compared with projections it made in May, and it cut its planned consumption of more costly heavy fuel oil, a company spokesman said Thursday.
Full text: TOKYO--Tokyo Electric Power Co. (9501.TO), or Tepco, has raised its planned use of liquefied natural gas, coal and crude oil in the fiscal year ending March 31, 2013, compared with projections it made in May, and it cut its planned consumption of more costly heavy fuel oil, a company spokesman said Thursday.
The change comes as Tepco seeks to cut costs, the spokesman said. Tepco has been mired in debt as it faces compensation claims for the accident at the Fukushima Daiichi nuclear power plant as well as massive charges for the decommissioning reactors that were irreparably damaged last March.
Details of Tepco's planned fossil fuel consumption are as follows, with volumes in thousand metric tons for LNG and coal and thousand kiloliters for heavy fuel oil and crude oil.
Product Volume Change Vs. Previous Plan LNG 23,950 +2.9% Heavy Fuel Oil 7,830 -14.1% Crude Oil 3,260 +13.6% Coal 3,170 +6.3%
Write to Mari Iwata at
Credit: By Mari Iwata
Subject: Petroleum industry; Coal; Crude oil; Nuclear power plants
Company / organization: Name: Tokyo Electric Power Co; NAICS: 221121, 221122
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 1, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1124693695
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1124693695?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
For Shell, Wait 'til Next Year in Arctic --- Oil Giant Suspends Drilling Off Alaska Until Spring Thaw, After Missing Out on Initial Well Targets
Author: Fowler, Tom
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]01 Nov 2012: B.10.
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Abstract:
Even the simplest acts are more complicated for drillers in the Chukchi Sea, which helps explain why Shell is the first company in more than two decades to even try coaxing oil out of the Arctic Ocean here, despite a potential bonanza trapped below -- and why other companies watching its struggles are having second thoughts about attempts of their own.
Full text: ABOARD THE NOBLE DISCOVERER -- In the frigid seas that surrounded this drilling ship, parked by Royal Dutch Shell PLC between Alaska and the North Pole, there are no signs of humanity, just an endless horizon of empty gray water.
The helicopter pilot kept the engine running when he landed on the drill ship's helipad, for fear it wouldn't start again in the harsh cold. Visitors come clad in $3,000 survival suits to give them a fighting chance should their aircraft crash into the sea below.
"Alaska is defined by its remoteness," said Pete Slaiby, vice president of Shell's Alaska operations. "What we do here has to be different than what we would do in places like the Gulf of Mexico."
Even the simplest acts are more complicated for drillers in the Chukchi Sea, which helps explain why Shell is the first company in more than two decades to even try coaxing oil out of the Arctic Ocean here, despite a potential bonanza trapped below -- and why other companies watching its struggles are having second thoughts about attempts of their own.
After spending more than $4.5 billion in permits, personnel and equipment over the past six years to assure regulators and native Alaskans that its work would be safe and environmentally benign, Shell finally got a shot to try drilling wells here this fall. It didn't go as planned.
Shell initially hoped to complete six wells by the end of October, before the onset of winter. But its drilling rigs packed it in for the year Wednesday, having only completed two "top holes" -- the initial stages of exploration wells -- after a series of setbacks with spill-response equipment. Shell said in September those problems would limit it to drilling top holes this year, which didn't go unnoticed by rivals.
Statoil ASA, the Norway-based oil company that is no stranger to cold waters, said it will delay plans to drill in the U.S. Arctic Ocean by at least a year due to the difficulties Shell has faced. An executive with French oil giant Total SA said the risks of an oil spill in environmentally sensitive Arctic waters are too high for companies to continue plumbing for crude there.
Still, Shell plans to resume drilling next year and believes that its patience will pay off with a huge oil find. The U.S. Geological Survey estimates the U.S. Arctic Ocean could hold as much as 42 billion barrels of recoverable oil and gas. Shell estimates the areas it is exploring could produce more than 400,000 barrels of oil a day.
Tyler Priest, a University of Iowa history professor who focuses on the energy industry, said Shell's setbacks weren't unusual for companies that have repeatedly overcome hard engineering problems and hostile environments to succeed.
"We should be careful not to minimize the risks and serious environmental concerns surrounding Shell's Arctic adventure, but nor would it be fair to magnify what are relatively minor, learning-curve mistakes that have forced Shell to curtail drilling," Mr. Priest said.
Yet it was clear from the start that Shell's Arctic project was no ordinary drilling challenge.
The Noble Discoverer and a second rig Shell hired, the Kulluk, endured a week's journey more than 1,000 miles from the nearest port at Dutch Harbor, Alaska, through the rough Bering Strait, just to set up here.
Travel to and from the rig required a 160-mile roundtrip helicopter flight from Barrow, Alaska, the northernmost city in the U.S. The Noble Discoverer appeared suddenly out of the haze, a metal splinter bobbing in the waves.
On the Disco, as the drilling ship is known to its crew, workers recently prepared to install several hundred feet of 30-inch-diameter steel casing into the hole that had been drilled in the sea floor. Once secured in place with cement, the casing would provide a guide for drilling deeper into suspected oil deposits 8,000 feet down.
The rig's 124-person crew included a half-dozen wildlife spotters. While federal environmental laws don't require such spotters, Shell brought them on board to ease concerns among the Inupiat people.
Jennifer Scott, one of the biologists on watch, said there were some signs of life amid the empty expanse: in addition to whales, a polar bear swam by the vessel one day, and a snowy owl took up temporary residence above the bridge.
The drilling crews on deck didn't have time to notice. They moved steel casing and pipes into place as the ice-slicked decks heaved with the waves, trying to make the most of the lowered drilling expectations.
In a few weeks the area will be encased in sea ice again, blocking Shell's progress for another year.
Subscribe to WSJ:
Credit: By Tom Fowler
Subject: Petroleum industry; Oil exploration; Energy industry; Offshore drilling
Location: Alaska Chukchi Sea
Company / organization: Name: Statoil ASA; NAICS: 324110, 211111; Name: Total SA; NAICS: 447190, 324110, 211111; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210
Classification: 5310: Production planning & control; 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.10
Publication year: 2012
Publication date: Nov 1, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1124697136
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1124697136?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon's Profit Slips
Author: González, Ángel; Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]01 Nov 2012: n/a.
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Abstract:
Exxon Mobil Corp. reported a 7.4% drop in third-quarter earnings on lower production and weaker prices for its natural gas, offsetting benefits from stronger margins in its refining arm.
Full text: Exxon Mobil Corp.'s third-quarter earnings fell 7.4% as it fetched lower prices for oil and gas and production fell to its lowest level in three years.
Profit in its refining segment nearly doubled, however, enabling the world's largest publicly traded oil company by market capitalization to beat Wall Street expectations.
Exxon posted a profit of $9.57 billion, or $2.09 a share, down from $10.33 billion, or $2.13 a share, a year earlier. Revenue decreased 7.7% to $115.71 billion.
Analysts polled by Thomson Reuters most recently projected earnings of $1.95 a share on revenue of $112.4 billion.
While the entire oil industry has suffered from unstable prices for crude and natural gas in recent quarters, Exxon's production woes underscore how challenging it is for the biggest oil companies to boost production in a meaningful way despite massive investments.
The Texas oil giant's output fell 7.5% to an average of about four million barrels a day, the lowest level since the third quarter of 2009. Excluding the effect of divestitures, production-sharing contracts and quotas set by the Organization of Petroleum Exporting Countries, production fell 2.9%, a number that analysts consider disappointing. Anglo-Dutch oil giant Royal Dutch Shell PLC, which also reported results Thursday, saw production fall 1% from a year earlier, even as analysts had expected a 2% increase.
"Clearly chronic production declines are not what we want to see," said Pavel Molchanov, an analyst with Raymond James.
However, some of Exxon's production decline involved relatively unprofitable U.S. natural gas, said analysts with Simmons & Co. Exxon became the largest natural-gas producer in the U.S. after its acquisition in 2010 of XTO Energy Inc. for about $26 billion.
David Rosenthal, Exxon's vice president of investor relations, said in a conference call that a decrease in U.S. production reflects in part the fact that the company has been moving drilling rigs from natural-gas-rich shale areas to more profitable oil-rich regions. In the second quarter about half of the rigs were focused on oil or so-called "liquids rich" formations, while more recently about two-thirds of the rigs were aimed at liquids, he said, adding that production in these areas is beginning to ramp up as the company is moving from studying the formations to full-fledged development.
Exxon has recently sought to boost its reserves and production, especially of more profitable crude oil, by buying assets in the prolific Bakken shale in North Dakota from Denbury Resources Inc. It also has struck ambitious joint ventures with giants like OAO Rosneft to tap massive quantities of Arctic resources, but that is an effort that could take many years.
Last month, Exxon said it agreed to buy Canadian oil and natural-gas producer Celtic Exploration Ltd. for about $2.63 billion--its largest such deal since it acquired XTO--as the company remains optimistic about long-term prospects for the sector.
Mr. Rosenthal said that Exxon's production is about 1% below its forecast, reflecting divestitures, downtime due to maintenance and higher-than-expected prices that had a negative impact on the amount of oil Exxon receives in production-sharing contracts. But he pointed to a list of big oil projects such as the Kearl oil-sands project in Canada that "are all in the process of starting up as planned," and other projects in coming years in Indonesia, Papua New Guinea and Australia that will add a significant production boost.
In the latest quarter, exploration-and-production earnings declined 29% to $5.97 billion amid lower prices for liquids and natural gas and lower production. Refining-and-marketing earnings more than doubled to $3.19 billion mainly on stronger refining margins.
Write to Ángel González at and Tom Fowler at
Credit: By Ángel González And Tom Fowler
Subject: Petroleum industry; Financial performance
Location: United States--US
Company / organization: Name: ConocoPhillips Co; NAICS: 211111; Name: Chevron Corp; NAICS: 324110, 211111; Name: Celtic Exploration Ltd; NAICS: 211111; Name: Thomson Reuters; NAICS: 511110, 511140; Name: Hess Corp; NAICS: 447110, 324110, 211111; Name: XTO Energy Inc; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 1, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1124838024
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1124838024?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Mining Canada's Oil Sands: Suddenly, Not a Sure Thing
Author: Cummins, Chip
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]01 Nov 2012: n/a.
ProQuest document link
Abstract:
FORT MCMURRAY, Alberta--Amid rising costs, gyrating prices and a burst of supply competition down south, Canadian oil companies are rethinking investment in one of North America's earliest and fastest-growing "unconventional" oil frontiers--Alberta's oil sands. Earlier this year, Syncrude Canada Ltd., a joint venture between several oil companies, officially delayed plans to significantly expand its giant mining and upgrading complex north of Fort McMurray.
Full text: FORT MCMURRAY, Alberta--Amid rising costs, gyrating prices and a burst of supply competition down south, Canadian oil companies are rethinking investment in one of North America's earliest and fastest-growing "unconventional" oil frontiers--Alberta's oil sands.
On Thursday, executives at Suncor Energy Inc., Canada's largest oil sands producer by output, said they were reviewing three multibillion-dollar mining and upgrading projects that it and its partners have been considering, and that they would delay a final decision about going ahead with any of them. The move will help Suncor slash capital spending this year by 11%, the company said.
The slowdown so far is limited, affecting only the industry's most expensive segment, which mines and upgrades bitumen into a low-sulphur, synthetic crude. Still, it underscores the extent to which today's booming North American energy-production growth remains at the mercy of market forces, which often reward higher output with lower prices. That dynamic can sap fresh investment incentives, especially in the case of the capital-intensive energy industry.
North American natural-gas producers brought on a glut of gas using new drilling and extraction technology to tap hard-to-reach reserves more easily. That has sent prices crashing, forcing some big producers to shut down some of their output and focus investment away from finding gas reserves and toward oil exploration.
More recently, big energy companies have scrambled to propose liquefied-natural-gas export terminals to ship some of that cheap gas to Asia, where prices are still high. Amid all the new plans, however, some executives and analysts now say price expectations among possible buyers have fallen, threatening the economics of some of the multibillion-dollar projects.
The new caution concerning oil sands in Canada comes amid sharply rising costs for everything from labor to construction material and contracting. These days, even the most cost-efficient oil sands producers need U.S. benchmark prices of at least $50 a barrel to justify investment in new projects, executives and analysts figure. Many of those projects--with newer technology using steam to coax bitumen to the surface--are going ahead or forecast to grow quickly.
But for operators who mine bitumen and produce synthetic crude from it, the break-even threshold can exceed $100 a barrel. U.S. crude is currently trading well under $90 a barrel.
"The economics are challenging today," said James Burkhard, head of oil-market research for oil consultancy IHS Cera.
Meanwhile, prices for synthetic crude have been buffeted by a flood of new production in the middle of the continent, especially in North Dakota. Producers there are using the same sort of drilling technology that gas producers have used to unlock fresh supplies of oil. The crude is similar in grade to Canada's synthetic oil, putting the two blends in competition with each other to find refinery buyers. At the same time, limited pipeline capacity has bottled up Canadian supplies, exacerbating price swings and threatening lower prices to come.
This is putting some big expansion plans up north on the back burner. On Thursday, Suncor Chief Executive Steven Williams told investors the company is reviewing three mining-related projects it has proposed with Total SA. Two of those projects--the Joslyn and Fort Hills mining projects-- still seem economically viable at some point, Mr. Williams said. But a third--an upgrader--now looks "challenged" because of the new oil production in the U.S., he said.
"There is an increased volume of, effectively, light sweet crude...and so it squeezes the margin on an upgrader," he said on a conference call. Total executives declined to comment.
Earlier this year, Syncrude Canada Ltd., a joint venture between several oil companies, officially delayed plans to significantly expand its giant mining and upgrading complex north of Fort McMurray. A spokeswoman for Canadian Oil Sands Ltd., Syncrude's largest owner by stake, said the expansion plans were always "early stage" and not yet "fully engineered."
Fort McMurray, the heart of the Canadian oil sands industry, has enjoyed years of frenzied growth interrupted only briefly by the global recession. At that time, many companies shelved big projects after crude prices plunged, but prices quickly rebounded.
Oil companies are expected to spend $25 billion in capital outlays this year, up from $15 billion in 2009, according to Wood Mackenzie analyst Mark Oberstoetter. By 2020, oil sands output should more than double from 2011's 1.6 million barrels a day, according to the Canadian Association of Petroleum Producers. About half of that production now comes from the more expensive mining operations.
The boom has sent companies scrambling for qualified labor and raw materials to build, run and expand remote mining and manufacturing facilities. At Syncrude's Mildred Lake mine, about 18 miles north of Fort McMurray, a fleet of one of the world's largest trucks--the Caterpillar Inc. 797--rumbles across an excavated mine pit some five miles wide.
The 400-ton capacity trucks carry loads of excavated bitumen, mixed with quartz sand, to processing facilities that use hot water to separate out the bitumen. It's then treated and upgraded into a blend of low-sulphur oil prized by many U.S. refineries.
Pay for engineers and technicians who work in the industry and related fields has been rising quickly. The average senior geoscientist here saw his base salary rise 14.5%, to as much as $231,000, this year from last, according to the Association of Professional Engineers and Geoscientists of Alberta.
Starting pay for 797 truck drivers ranges between $36 and $39 an hour, with some drivers able to make as much as $170,000 a year with overtime, according to estimates by Keyano College, a local trade school that trains drivers.
In addition to paying higher salaries, companies compete fiercely to lure and keep employees in Fort McMurray, a sprawling town surrounded by new residential communities, where the cost of living has soared. The average single-family home here hit 758,500 Canadian dollars ($766,000) in July, according to municipal figures.
Many oil companies help employees with mortgages and offer "northern allowances" to cope with the high costs and remote location. Firms have also built in amenities--including hockey rinks, baseball diamonds, gyms and full-service cafeterias--at barracks-style workers' "camps" outside town, closer to the oil operations scattered across the surrounding boreal forests.
But as costs ratchet up, prices for synthetic crudes have recently gyrated wildly because of pipeline bottlenecks and rising production of similar grades of crude, especially in North Dakota's Bakken oil fields.
In 2011, Canadian Oil Sands, the Syncrude owner, got an average annual premium for its synthetic crude of some $7 a barrel over the U.S. benchmark, says Ryan Kubik, the company's chief financial officer. This year, monthly prices have fluctuated from a $15 discount to a $15 premium, he said.
"With that incremental light oil production coming on" from Bakken producers, he says, "pipeline space coming from Canada into the U.S....has become much more tight."
More pipeline capacity is on the drawing board, including TransCanada Corp.'s Keystone XL expansion. That project was rejected by the Obama administration this year, but it's expected to be reviewed by the White House next year, regardless of who wins the election.
Until those new outlets get built, Canadian crude prices will "come under extreme downward pressure" next year and in 2014, with synthetic crude prices expected to drop to their lowest levels in years, according to a market analysis this year by consultancy Bentek Energy LLP. "This could cause a slowdown in oil sands development," the report warned.
Write to Chip Cummins at
Credit: By Chip Cummins
Subject: Oil sands; Petroleum industry; Petroleum production; Energy industry; Mining; Prices; Capital expenditures; Natural gas
Location: United States--US Canada North America
Company / organization: Name: Keyano College; NAICS: 611310
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 1, 2012
Section: World
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1125016793
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1125016793?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Mining Canada's Oil Sands: Suddenly, Not a Sure Thing
Author: Cummins, Chip
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]02 Nov 2012: B.1.
ProQuest document link
Abstract:
Earlier this year, Syncrude Canada Ltd., a joint venture between several oil companies, officially delayed plans to significantly expand its giant mining and upgrading complex north of Fort McMurray. Fort McMurray, the heart of the Canadian oil sands industry, has enjoyed years of frenzied growth interrupted only briefly by the global recession.
Full text: FORT MCMURRAY, Alberta -- Amid rising costs, gyrating prices and a burst of supply competition down south, Canadian oil companies are rethinking investment in one of North America's earliest and fastest-growing "unconventional" oil frontiers -- Alberta's oil sands.
On Thursday, executives at Suncor Energy Inc., Canada's largest oil sands producer by output, said they were reviewing three multibillion-dollar mining and upgrading projects that it and its partners have been considering, and that they would delay a final decision about going ahead with any of them. The move will help Suncor slash capital spending this year by 11%, the company said.
The slowdown so far is limited, affecting only the industry's most expensive segment, which mines and upgrades bitumen into a low-sulphur, synthetic crude. Still, it underscores the extent to which today's booming North American energy-production growth remains at the mercy of market forces, which often reward higher output with lower prices. That dynamic can sap fresh investment incentives, especially in the case of the capital-intensive energy industry.
North American natural-gas producers brought on a glut of gas using new drilling and extraction technology to tap hard-to-reach reserves more easily. That has sent prices crashing, forcing some big producers to shut down some of their output and focus investment away from finding gas reserves and toward oil exploration.
The new caution concerning oil sands in Canada comes amid sharply rising costs for everything from labor to construction material and contracting. These days, even the most cost-efficient oil sands producers need U.S. benchmark prices of at least $50 a barrel to justify investment in new projects, executives and analysts figure. Many of those projects -- with newer technology using steam to coax bitumen to the surface -- are going ahead or forecast to grow quickly.
But for operators who mine bitumen and produce synthetic crude from it, the break-even threshold can exceed $100 a barrel. U.S. crude is currently trading well under $90 a barrel.
"The economics are challenging today," said James Burkhard, head of oil-market research for oil consultancy IHS Cera.
Meanwhile, prices for synthetic crude have been buffeted by a flood of new production in the middle of the continent, especially in North Dakota. Producers there are using the same sort of drilling technology that gas producers have used to unlock fresh supplies of oil. The crude is similar in grade to Canada's synthetic oil, putting the two blends in competition with each other to find refinery buyers. At the same time, limited pipeline capacity has bottled up Canadian supplies, exacerbating price swings and threatening lower prices to come.
This is putting some big expansion plans up north on the back burner. On Thursday, Suncor Chief Executive Steven Williams told investors the company is reviewing three mining-related projects it has proposed with Total SA. Two of those projects still seem economically viable at some point, Mr. Williams said. But a third -- an upgrader -- now looks "challenged" because of the new oil production in the U.S., he said.
"There is an increased volume of, effectively, light sweet crude . . . and so it squeezes the margin on an upgrader," he said on a conference call. Total executives declined to comment.
Earlier this year, Syncrude Canada Ltd., a joint venture between several oil companies, officially delayed plans to significantly expand its giant mining and upgrading complex north of Fort McMurray. A spokeswoman for Canadian Oil Sands Ltd., Syncrude's largest owner by stake, said the expansion plans were always "early stage" and not yet "fully engineered."
Fort McMurray, the heart of the Canadian oil sands industry, has enjoyed years of frenzied growth interrupted only briefly by the global recession. At that time, many companies shelved big projects after crude prices plunged, but prices quickly rebounded.
Oil companies are expected to spend $25 billion in capital outlays this year, up from $15 billion in 2009, according to Wood Mackenzie analyst Mark Oberstoetter. By 2020, oil sands output should more than double from 2011's 1.6 million barrels a day, according to the Canadian Association of Petroleum Producers. About half of that production now comes from the more expensive mining operations.
The boom has sent companies scrambling for qualified labor and raw materials to build, run and expand remote mining and manufacturing facilities. At Syncrude's Mildred Lake mine, about 18 miles north of Fort McMurray, a fleet of one of the world's largest trucks -- the Caterpillar Inc. 797 -- rumbles across an excavated mine pit some five miles wide.
The 400-ton capacity trucks carry loads of excavated bitumen, mixed with quartz sand, to processing facilities that use hot water to separate out the bitumen. It's then treated and upgraded into a blend of low-sulphur oil prized by many U.S. refineries.
Pay for engineers and technicians who work in the industry and related fields has been rising quickly. The average senior geoscientist here saw his base salary rise 14.5%, to as much as $231,000, this year from last, according to the Association of Professional Engineers and Geoscientists of Alberta.
Starting pay for 797 truck drivers ranges between $36 and $39 an hour, with some drivers able to make as much as $170,000 a year with overtime, according to estimates by Keyano College, a local trade school that trains drivers.
In addition to paying higher salaries, companies compete fiercely to lure and keep employees in Fort McMurray, a sprawling town surrounded by new residential communities, where the cost of living has soared. The average single-family home here hit 758,500 Canadian dollars ($766,000) in July, according to municipal figures.
Many oil companies help employees with mortgages and offer "northern allowances" to cope with the high costs and remote location. Firms have also built in amenities -- including hockey rinks, baseball diamonds, gyms and full-service cafeterias -- at barracks-style workers' "camps" outside town, closer to the oil operations scattered across the surrounding boreal forests.
But as costs ratchet up, prices for synthetic crudes have recently gyrated wildly because of pipeline bottlenecks and rising production of similar grades of crude, especially in North Dakota's Bakken oil fields.
In 2011, Canadian Oil Sands, the Syncrude owner, got an average annual premium for its synthetic crude of some $7 a barrel over the U.S. benchmark, says Ryan Kubik, the company's chief financial officer. This year, monthly prices have fluctuated from a $15 discount to a $15 premium, he said.
"With that incremental light oil production coming on" from Bakken producers, he says, "pipeline space coming from Canada into the U.S. . . . has become much more tight."
More pipeline capacity is on the drawing board, including TransCanada Corp.'s Keystone XL expansion. That project was rejected by the Obama administration this year, but it's expected to be reviewed by the White House next year, regardless of who wins the election.
Until those new outlets get built, Canadian crude prices will "come under extreme downward pressure" next year and in 2014, with synthetic crude prices expected to drop to their lowest levels in years, according to a market analysis this year by consultancy Bentek Energy LLP. "This could cause a slowdown in oil sands development," the report warned.
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Credit: By Chip Cummins
Subject: Petroleum industry; Prices; Capital expenditures; Investments; Oil sands
Location: United States--US North America Canada
Company / organization: Name: Suncor Energy Inc; NAICS: 211111, 213112
Classification: 9172: Canada; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.1
Publication year: 2012
Publication date: Nov 2, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1125266256
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1125266256?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Exxon Profit Slips As Production Falls
Author: Gonzalez, Angel; Fowler, Tom
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]02 Nov 2012: B.7.
ProQuest document link
Abstract:
While the entire oil industry has suffered from unstable prices for crude oil and natural gas in recent quarters, Exxon's production woes underscore how challenging it is for the biggest oil companies to boost production in a meaningful way despite massive investments.
Full text: Exxon Mobil Corp.'s third-quarter earnings fell 7.4% as it fetched lower prices for oil and gas and production fell to its lowest level in three years.
Profit in its refining segment nearly doubled, however, enabling the world's largest publicly traded oil company by market capitalization to beat Wall Street expectations.
Exxon posted a profit of $9.57 billion, or $2.09 a share, down from $10.33 billion, or $2.13 a share, a year earlier. Revenue decreased 7.7% to $115.71 billion.
While the entire oil industry has suffered from unstable prices for crude oil and natural gas in recent quarters, Exxon's production woes underscore how challenging it is for the biggest oil companies to boost production in a meaningful way despite massive investments.
The Texas oil giant's output fell 7.5% to an average of about four million barrels a day, the lowest level since the third quarter of 2009. Excluding the effect of divestitures, production-sharing contracts and quotas set by the Organization of Petroleum Exporting Countries, production fell 2.9%, a number that analysts consider disappointing. Anglo-Dutch oil giant Royal Dutch Shell PLC, which also reported results Thursday, said production fall 1% from a year earlier.
David Rosenthal, Exxon's vice president of investor relations, said in a conference call that a decrease in U.S. production reflects in part the fact that the company has been moving drilling rigs from natural-gas-rich shale areas to more-profitable oil-rich regions. In the second quarter about half of the rigs were focused on oil or so-called "liquids rich" formations, while more recently about two-thirds of the rigs were aimed at liquids, he said, adding that production in these areas is beginning to increase as the company is moving from studying the formations to full-fledged development.
Exploration-and-production earnings declined 29% to $5.97 billion amid lower prices for liquids and natural gas and lower production. Refining-and-marketing earnings more than doubled to $3.19 billion, mainly on stronger margins.
Separately, Shell said it was shifting the focus of its energy production in North America toward oil as weak prices from the shale-gas glut hurt its earnings.
Shell said profit on the basis of clean current cost of supplies -- a figure that strips gains or losses from inventories and other nonoperating items out of net profit -- fell to $6.56 billion in the third quarter, down 6.3%.
Including a $1.01 billion gain on the value of inventories and a $432 million impairment, mainly on the value of U.S. natural-gas assets, and U.K. tax changes, Shell's net profit for the quarter was $7.14 billion, up 2.3%. Revenue fell 8.4%.to $115.43 billion.
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Credit: By Angel Gonzalez and Tom Fowler
Subject: Petroleum industry; Financial performance; Corporate profits
Location: United States--US
Company / organization: Name: Exxon Mobil Corp; NAICS: 211111, 447110
Classification: 9190: United States; 8510: Petroleum industry; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.7
Publication year: 2012
Publication date: Nov 2, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1125266866
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1125266866?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distrib ution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
INTERVIEW; Norway Oil Fund CEO: Cutting Share of European Stocks to Take Years
Author: Hovland, Kjetil Malkenes
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 Nov 2012: n/a.
ProQuest document link
Abstract:
[...]of this strategy, the fund's plan to lower its share of European equities "will take many years," said Mr. Slyngstad.
Full text: OSLO--It will take years for Norway's $653 billion oil fund to reduce the share of European stocks that it holds, said Yngve Slyngstad, the fund's chief executive, adding that it had already shifted some fixed-income investments away from Europe, but hardly any equities.
"We're half-way through with this, but in reality, we've done the fixed-income part," Mr. Slyngstad told Dow Jones Newswires in an interview Friday. "We're not half-way with equities, we've only adjusted it a bit. Primarily, we are going to use the transfer of new funds to buy shares outside of Europe, rather than selling in Europe."
As a result of this strategy, the fund's plan to lower its share of European equities "will take many years," said Mr. Slyngstad. He said the fund shouldn't be expected to actually cut its investments in European stocks, where it has tied up about half of its $400 billion in equity investments.
"It is just that we'll increase faster elsewhere," he said.
The Norwegian government has allowed the fund to reduce its holdings of European equities and fixed-income investments to 41% of the fund's value from 54% previously, in a bid to shift holdings to areas which offer higher returns.
The fund's European share of total assets was about 47% at the end of the third quarter, said Mr. Slyngstad, after it had reduced its holdings of French and Spanish government debt, and boosted its holdings of U.S. and Japanese government bonds. It also increased its holdings of government bonds in emerging markets such as South Korea, Russia and Mexico.
In an effort to reduce risk, the fund also dropped 449 companies from its portfolio in the third quarter, particularly in emerging markets. It is likely to reduce that number further, Mr. Slyngstad said, due to the challenges faced by minority shareholders and the frequent listing and delisting of companies.
The oil fund, formally called the Government Pension Fund Global, held stocks in 7,354 companies at the end of the third quarter, down from 7,803 companies three months earlier. If this trend continues, the fund's portfolio may soon hold less than 7,000 companies.
"That may happen, but it is not a target in itself," Mr. Slyngstad said, adding that the fund aims to lower its exposure to risk in emerging markets by increasing its ownership in companies considered less risky, instead of owning smaller stakes across many companies.
"Our strategy in most countries is to find local managers to handle our funds. Naturally, they won't own part of all companies in the country, but choose a few," he said.
The Norwegian sovereign wealth fund's investments grew 4.7% in the third quarter, or NOK167 billion ($29.3 billion), Norges Bank Investment Management said earlier Friday.
Write to Kjetil Malkenes Hovland at
Credit: By Kjetil Malkenes Hovland
Subject: Investment policy; Mutual funds; Stocks; Emerging markets
Location: Norway Europe
Company / organization: Name: Dow Jones Newswires; NAICS: 519110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 2, 2012
column: DJ FX Trader
Section: Forex
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1125360502
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1125360502?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Gasoline, Oil Futures Retreat
Author: Biers, John M
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 Nov 2012: n/a.
ProQuest document link
Abstract:
The drop in crude also reflected concerns about demand lost in the Northeast because of Hurricane Sandy. Besides the Jones Act waiver, New York Gov. Andrew Cuomo waived a tax on tankers docking in storm-battered New York harbor.
Full text: Gasoline futures retreated Friday as government officials enacted measures to ease a fuel crunch in the Northeast and as some petroleum infrastructure came back on line.
Gasoline futures settled at $2.574 a gallon, down six cents, or 2.3%.
John Kilduff, a trader with Again Capital, said the gasoline retreat reflected news that the U.S. government has waived the Jones Act to enable foreign-flagged tankers to deliver more fuel to the Northeast.
"There was a strong reaction to that waiver because it opens up so many vessels that could service New York Harbor," Mr. Kilduff said.
Separately, front-month crude futures for December delivery settled at $84.86 per barrel, down $2.23, or 2.6%. Brent futures were trading at $105.64 per barrel, down $2.53. The drop in crude prices came as the dollar strengthened after a U.S. jobs report came in better than expected. The drop in crude also reflected concerns about demand lost in the Northeast because of Hurricane Sandy.
Besides the Jones Act waiver, New York Gov. Andrew Cuomo waived a tax on tankers docking in storm-battered New York harbor. "There should be a real change" in the supply shortages, Gov. Cuomo said at a news conference in Manhattan. "People should see it quickly."
The Northeast region, especially New Jersey and parts of New York, has suffered from a gasoline crunch since Hurricane Sandy hit, with numerous filling stations out of commission because of power outages and the remaining stations overwhelmed with a glut of customers. Power industry officials have said it could take a week or more to restore power throughout the region.
But over the past 24 hours, some of the region's petroleum infrastructure has started to resume operations. The most closely watched piece of infrastructure, the Colonial Pipeline, resumed deliveries on its pipeline that brings Gulf Coast gasoline and diesel to New Jersey. About 700,000 barrels a day of fuel is being delivered to Colonial's facilities in Linden, N.J., after power outages brought about by Hurricane Sandy caused shipments to stop Monday.
The Colonial pipeline had been delivering fuel into south New Jersey as of Thursday evening, the company said. Fuel deliveries to terminals near the company's Linden facility will expand throughout Friday, the company added. The company said portable generators would be sufficient to power operations until commercial electricity is fully restored, which it expects to happen within days.
Also over the past 24 hours, NuStar Energy LP and Hess Corp. have resumed operations at truck rack sites whereby wholesalers can retrieve product at sites in Linden and Pennsauken, N.J., respectively.
"You're seeing more power being restored and more terminals being reopened," said Jeff Lenard, a spokesman for the National Association of Convenience Stores. Mr. Lenard said the remaining challenges are "getting power, getting supply and being able to sell it affordably within the constraints of prices."
State restrictions bar gasoline marketers from raising prices excessively due to an emergency. In New Jersey, for example, gasoline stations can't raise prices more than 10% from the level right before a State of Emergency.
Greg Priddy, an analyst at Eurasia Group, said the Colonial Pipeline resumption was especially critical in bolstering supply to the Northeast. Still, Mr. Priddy said the storm as a whole would lead to downward pressure on petroleum because of lost demand.
Rose Marton-Vitale and Ben Lefebvre contributed to this article.
Credit: By John M. Biers
Subject: Gasoline; Energy economics; Infrastructure; Futures; Pipelines
Location: United States--US New York Harbor New Jersey
People: Cuomo, Andrew M
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 2, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1125360515
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1125360515?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Industry Targets Senators in Alaska Oil-Tax Fight
Author: Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]02 Nov 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: ANCHORAGE, Alaska--The energy industry is making a concerted push to defeat state senators in Alaska who have blocked a $2 billion tax cut favored by oil producers.
Through television and radio ads and direct mail, industry-linked advocacy groups are spending hundreds of thousands of dollars to urge Alaska's 506,000 voters to cast their ballots for "oil tax reform." That would entail ousting a bipartisan group of 16 state senators in the 20-member chamber, all but one of whom are up for re-election this year, political experts say.
The big three energy companies--Exxon Mobil Corp., ConocoPhillips, and BP PLC--can't legally make direct donations to campaigns. But oil-company-employee political-action committees have made contributions, energy executives have held fundraisers and two Republican senate candidates work for the industry.
"We're proud that we've been part of the Alaska family of companies that has brought this wealth to its people," said Bob Bell, a Republican Senate candidate from Anchorage whose engineering firm did nearly $1 million in work for BP last year and who favors the tax cut.
But the targeted senators raised and spent more than their challengers according to the latest campaign-spending reports, although a last-minute surge of spending could change that balance. They have received backing in part from government-employee unions, which have grown along with government payrolls because of an influx of oil taxes. The taxes and other oil-related payments account for 90% of state revenue.
Joe Paskvan, a Democratic senator from Fairbanks, says cutting oil taxes wouldn't help the state return to the days when it was the second-largest U.S. oil producer--today that is North Dakota--but he does support some tweaks to the system. Texas is the top producer.
"Production isn't declining here because of tax policy but because of geology and the scientific reality of North Slope oil processing," Mr. Paskvan said.
It isn't unusual for energy-related businesses to take positions on public issues, but the emphasis on oil taxes is bigger than ever before, said Jerry McBeath, a political-science professor at the University of Alaska, Fairbanks.
Alaska's current oil-production taxes, enacted in 2007 when Sarah Palin was governor and West Coast oil cost averaged $65 a barrel, were meant to let the state take in more revenue when oil prices and company profits rose. West Coast crude closed at $87.09 on Thursday.
The changes helped Alaska rack up a $16 billion surplus. But with Alaskan oil production on the decline since 1988, energy companies say the sliding marginal tax rate--about 87% before a range of credits, which cuts it to less than 50% when oil is about $100 a barrel--discourages them from undertaking new exploration projects in Alaska.
The big three companies have been pressing Gov. Sean Parnell, a Republican who was once head of government relations for Conoco in Alaska, and lawmakers to reduce the tax rate.
The companies declined to comment on the election but maintain that changing the tax system would increase oil production, create jobs and add to state revenue.
Last year, the House passed a tax-cut bill backed by the governor, but the Senate refused to go along and also effectively blocked the measure in a special session this year.
That has prompted an effort by advocacy groups to sway Alaskans; more than 53% of voters register as independent or with no party affiliation, though the state tends to swing for Republicans in national races. The energy sector is the largest employer in the state, where residents still receive dividend checks ($878 this year) from an oil-royalty fund.
A group formed by oil-field-support companies, including drillers and engineering and transportation firms, said it will spend as much as $500,000--a big sum in Alaska--to run ads that encourage residents to "vote for more oil." The Make Alaska Competitive Coalition--which doesn't accept funds from oil producers, according to spokesman Jason Moore--contends that states like North Dakota and Texas are pulling jobs and investment dollars away from Alaska with lower taxes.
While that group can't target individual candidates, a political action-committee representing Alaska's energy-heavy business community aside from oil producers has raised $100,000 and is running ads against the Democratic senators who didn't support the tax cut.
ConocoPhillips has run TV ads calling for changes in the state's oil taxes, though recently the company switched to more general ads touting the benefits of the oil industry. Company executives, along with the head of BP's Alaska operations, John Mingé, have hosted fundraisers for some of the challengers.
Two of the Republican members of the bipartisan senate coalition were defeated in the party primary. One of the winners, ConocoPhillips employee Peter Micciche of Soldotna, has no Democratic challenger.
The outcomes of the Senate elections are hard to predict, said observers. Some Alaskans aren't all that unhappy about workers moving to other states, said Andrew Halcro, a former state lawmaker who also ran unsuccessfully for governor as a Republican and supports the tax cuts.
"When they talk about Alaskan workers packing it up for jobs in North Dakota," he said, "some people think 'Good, that's one less person to stand behind in line at Costco.' "
Write to Tom Fowler at
Credit: By Tom Fowler
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 2, 2012
Section: US
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1125397343
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1125397343?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Baghdad Luxury at $300 a Night; Amid an oil boom, an Iraqi hotelier must deal with corruption, inexperience--and warring wedding parties
Author: Dagher, Sam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]03 Nov 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Iraqi troops and a military Humvee stand outside Baghdad's Coral Boutique Hotel, a gleaming aluminum-and-blue-glass building that recently rose up here. At the door, muscled security guards wear bright blue T-shirts that read, in English, "Let us impress you."
Ugandan bellboys in maroon caftans greet guests. Dreamy lounge music wafts through a marble-and-wood lobby. Upstairs, a satin-curtained suite runs as high as $300 a night.
The luxury hotel, which opened in August, is the first of its kind in Baghdad, where lodging choices are mostly limited to family-run motels and government-owned hulks from the 1970s and '80s. Opening a place like this would take, by definition, a risk-taker--in this instance, Emad al-Yasiry, who said that his past forays have included smuggling oil in defiance of United Nations sanctions in the 1990s.
Baghdad is hobbled by political gridlock, corruption, shoddy infrastructure and concerns about security in a newly inflamed region. But it's also in the midst of what Mr. Yasiry and others see as the first stage of a boom, as the capital of the oil-rich land becomes a magnet for foreign companies and deal-makers. In August, Iraq overtook neighboring Iran as the second-largest oil producer in the Organization of the Petroleum Exporting Countries. In September, the government unveiled plans for infrastructure projects worth almost $42 billion. Last week, it approved an annual budget of about $119 billion.
The enormous potential for profit makes the risks increasingly worth taking, say Mr. Yasiry and others. "It's an experiment," he said.
Other Iraqis seem to share his out-sized ambitions: Down the road, the Central Bank of Iraq has commissioned the world-renowned (and Iraqi-born) architect Zaha Hadid to build new headquarters. Across the Tigris, a new $100 million shopping mall is on the rise close to the Mansour neighborhood, where fast-food restaurants with décor bordering on garish and names verging on familiar--Florida Fried Chicken, Pizza Hat--do brisk business.
Mr. Yasiry, a 43-year-old scion of a Shiite clerical family who favors jeans and Italian dress shirts over turbans and caftans, is also a shareholder and board member in Pepsi Baghdad. He distributes French luxury cigarettes and Saudi dairy products as well.
But building and operating the hotel, he said, has been an enterprise like no other in his career. He's contended with hurdles and extra costs that continue to stymie all private initiative in Iraq.
Mr. Yasiry had to pay bribes to layers of government functionaries to keep the project going and to import quality materials and experts, he said, echoing other entrepreneurs' accounts of what they say is a fact of business here. The project lasted nearly two years and cost $13 million, he said. He describes a shouting match he had earlier this year with Baghdad municipal inspectors who wanted to pour gravel or concrete over the hotel's newly manicured garden, citing obscure rules. The dispute ended with a call to the mayor.
Saber al-Issawi--the mayor at the time, who has been dogged by corruption charges and submitted his resignation in September--couldn't be reached for comment. The head of municipal public relations, Hakim Abdel-Zahra, conceded that corruption remains a problem but said that the city government is trying hard to weed it out, especially in big projects. "We cannot control 14,000 employees," he said, an argument similar to one made by the central government.
In a report to Congress this past Tuesday, the U.S. government's Special Inspector General for Iraq Construction said that corruption remained one of the main obstacles to democratic progress in the country, citing a senior Iraqi official as saying that $800 million is illegally siphoned out of the country every week.
Corruption and shoddy work plagued a $300 million project to renovate a handful of state-owned Baghdad hotels for an Arab summit held in the Iraqi capital earlier this year. The result was partial or patchy upgrades in some instances, rooms decked out with cheap, glitzy Chinese- and Turkish-made fixtures and furniture in others. And service sometimes left a lot to be desired, with most of the staff lacking some of the most basic skills to handle guest needs. So Mr. Yasiry personally supervised the entire building process of his hotel. He hired Emirati, French and Omani companies to custom-make everything from the hotel finishing to the fine wood furniture and carvings and the bedding and pillows. To ensure continuous power for the 82-room hotel, Mr. Yasiry said he has to rent a vacant plot nearby to house three generators.
Mr. Yasiry also has grappled with entrenched cultural traditions that don't intrude on the operations of most luxury hotels. His main clients are foreign business executives, and the hotel's Mood Café was packed on a recent morning with Americans, Germans, Iranians, Italians, Turks and Syrians. But on weekends, the place is overrun by young Iraqi newlyweds with rising means.
According to Iraqi custom, families accompany newlyweds to their hotel room in a hail of ululation, singing and clapping. A family member then waits in the lobby for the groom to produce proof of the bride's virginity. One such event went wrong, said Mr. Yasiry, leading the groom's brother to announce that if he didn't receive the necessary evidence, he would "go up and slaughter the bride." Parents and siblings of the couple hurled accusations at each other in the hotel reception area, and security guards led them outside, where a scuffle broke out. Despite the family's plea, Mr. Yasiry refused to let the newlyweds back in.
Staffing and maintenance also pose problems, according to Mr. Yasiry. While almost 25% of Iraqis are unemployed, it's hard to find sufficiently skilled and motivated workers locally, he said. To avoid the convoluted visa and work-permit procedures required to bring in foreign staff, Mr. Yasiry said that he hired some Bangladeshi and Indian nationals who lost their work at U.S. bases when the U.S. military mission in Iraq ended in December.
Even so, he said, it took more than a month to bring in a technician from Saudi Arabia to reprogram the hotel's electronic locks. The front desk was left to explain to some guests why they were being locked out of their rooms for hours at a time.
If the Coral takes off, Mr. Yasiry said, his next target is the renovation of the city's Babylon Hotel, in which he recently acquired a major stake. A government-sponsored $32 million renovation of the ziggurat-style building has produced few results so far.
"The government is the biggest obstacle," said Mr. Yasiry.
Write to Sam Dagher at
Credit: By Sam Dagher
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 3, 2012
Section: Life and Style
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1125424117
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1125424117?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
REVIEW --- Baghdad Luxury at $300 a Night --- Amid an oil boom, an Iraqi hotelier must deal with corruption, inexperience -- and warring wedding parties
Author: Dagher, Sam
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]03 Nov 2012: C.3.
ProQuest document link
Abstract:
Iraqi troops and a military Humvee stand outside Baghdad's Coral Boutique Hotel, a gleaming aluminum-and-blue-glass building that recently rose up here. Across the Tigris, a new $100 million shopping mall is on the rise close to the Mansour neighborhood, where fast-food restaurants with decor bordering on garish and names verging on familiar --
Full text: Iraqi troops and a military Humvee stand outside Baghdad's Coral Boutique Hotel, a gleaming aluminum-and-blue-glass building that recently rose up here. At the door, muscled security guards wear bright blue T-shirts that read, in English, "Let us impress you."
Ugandan bellboys in maroon caftans greet guests. Dreamy lounge music wafts through a marble-and-wood lobby. Upstairs, a satin-curtained suite runs as high as $300 a night.
The luxury hotel, which opened in August, is the first of its kind in Baghdad, where lodging choices are mostly limited to family-run motels and government-owned hulks from the 1970s and '80s. Opening a place like this would take, by definition, a risk-taker -- in this instance, Emad al-Yasiry, who said that his past forays have included smuggling oil in defiance of United Nations sanctions in the 1990s.
Baghdad is hobbled by political gridlock, corruption, shoddy infrastructure and concerns about security in a newly inflamed region. But it's also in the midst of what Mr. Yasiry and others see as the first stage of a boom, as the capital of the oil-rich land becomes a magnet for foreign companies and deal-makers. In August, Iraq overtook neighboring Iran as the second-largest oil producer in the Organization of the Petroleum Exporting Countries. In September, the government unveiled plans for infrastructure projects worth almost $42 billion. Last week, it approved an annual budget of about $119 billion.
The enormous potential for profit makes the risks increasingly worth taking, say Mr. Yasiry and others. "It's an experiment," he said.
Other Iraqis seem to share his out-sized ambitions: Down the road, the Central Bank of Iraq has commissioned the world-renowned (and Iraqi-born) architect Zaha Hadid to build new headquarters. Across the Tigris, a new $100 million shopping mall is on the rise close to the Mansour neighborhood, where fast-food restaurants with decor bordering on garish and names verging on familiar -- Florida Fried Chicken, Pizza Hat -- do brisk business.
Mr. Yasiry, a 43-year-old scion of a Shiite clerical family who favors jeans and Italian dress shirts over turbans and caftans, is also a shareholder and board member in Pepsi Baghdad. He distributes French luxury cigarettes and Saudi dairy products as well.
But building and operating the hotel, he said, has been an enterprise like no other in his career. He's contended with hurdles and extra costs that continue to stymie all private initiative in Iraq.
Mr. Yasiry had to pay bribes to layers of government functionaries to keep the project going and to import quality materials and experts, he said, echoing other entrepreneurs' accounts of what they say is a fact of business here. The project lasted nearly two years and cost $13 million, he said. He describes a shouting match he had earlier this year with Baghdad municipal inspectors who wanted to pour gravel or concrete over the hotel's newly manicured garden, citing obscure rules. The dispute ended with a call to the mayor.
Saber al-Issawi -- the mayor at the time, who has been dogged by corruption charges and submitted his resignation in September -- couldn't be reached for comment. The head of municipal public relations, Hakim Abdel-Zahra, conceded that corruption remains a problem but said that the city government is trying hard to weed it out, especially in big projects. "We cannot control 14,000 employees," he said, an argument similar to one made by the central government.
In a report to Congress this past Tuesday, the U.S. government's Special Inspector General for Iraq Reconstruction said that corruption remained one of the main obstacles to democratic progress in the country, citing a senior Iraqi official as saying that $800 million is illegally siphoned out of the country every week.
Corruption and shoddy work plagued a $300 million project to renovate a handful of state-owned Baghdad hotels for an Arab summit held in the Iraqi capital earlier this year. The result was partial or patchy upgrades in some instances, rooms decked out with cheap, glitzy Chinese- and Turkish-made fixtures and furniture in others. And service sometimes left a lot to be desired, with most of the staff lacking some of the most basic skills to handle guest needs. So Mr. Yasiry personally supervised the entire building process of his hotel. He hired Emirati, French and Omani companies to custom-make everything from the hotel finishing to the fine wood furniture and carvings and the bedding and pillows. To ensure continuous power for the 82-room hotel, Mr. Yasiry said he has to rent a vacant plot nearby to house three generators.
Mr. Yasiry also has grappled with entrenched cultural traditions that don't intrude on the operations of most luxury hotels. His main clients are foreign business executives, and the hotel's Mood Cafe was packed on a recent morning with Americans, Germans, Iranians, Italians, Turks and Syrians. But on weekends, the place is overrun by young Iraqi newlyweds with rising means.
According to Iraqi custom, families accompany newlyweds to their hotel room in a hail of ululation, singing and clapping. A family member then waits in the lobby for the groom to produce proof of the bride's virginity. One such event went wrong, said Mr. Yasiry, leading the groom's brother to announce that if he didn't receive the necessary evidence, he would "go up and slaughter the bride." Parents and siblings of the couple hurled accusations at each other in the hotel reception area, and security guards led them outside, where a scuffle broke out. Despite the family's plea, Mr. Yasiry refused to let the newlyweds back in.
Staffing and maintenance also pose problems, according to Mr. Yasiry. While almost 25% of Iraqis are unemployed, it's hard to find sufficiently skilled and motivated workers locally, he said. To avoid the convoluted visa and work-permit procedures required to bring in foreign staff, Mr. Yasiry said that he hired some Bangladeshi and Indian nationals who lost their work at U.S. bases when the U.S. military mission in Iraq ended in December.
Even so, he said, it took more than a month to bring in a technician from Saudi Arabia to reprogram the hotel's electronic locks. The front desk was left to explain to some guests why they were being locked out of their rooms for hours at a time.
If the Coral takes off, Mr. Yasiry said, his next target is the renovation of the city's Babylon Hotel, in which he recently acquired a major stake. A government-sponsored $32 million renovation of the ziggurat-style building has produced few results so far.
"The government is the biggest obstacle," said Mr. Yasiry.
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Credit: By Sam Dagher
Subject: Corruption; Weddings; Traditions; Hotels & motels
Location: Iraq
People: Hadid, Zaha
Company / organization: Name: Coral Boutique Hotel; NAICS: 721110
Classification: 8350: Transportation & travel industry; 9178: Middle East
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.3
Publication year: 2012
Publication date: Nov 3, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: Feature
ProQuest document ID: 1125519220
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1125519220?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
With Russian Oil, Size Isn't Everything
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]04 Nov 2012: n/a.
ProQuest document link
Abstract:
The stocks of Rosneft and its natural-gas counterpart Gazprom trade at persistent discounts to those of their Western and emerging-markets peers on price/earnings multiples, despite the companies' vast reserves. [...]as a vibrant ecosystem of minnows and majors in much of the rest of the world demonstrates, the biggest companies aren't always the best tools for the job.
Full text: The arrival of a new heavyweight usually unsettles smaller rivals--but not always.
Assuming Rosneft's $56 billion acquisition of TNK-BP happens, it would become the world's largest publicly traded oil-and-gas company by reserves and output. Its oil reserves and output will roughly match those of Exxon Mobil and BP combined.
But unlike diversified Western majors, the Russian state-controlled company's assets are concentrated in its own country. It hasn't competed aggressively for foreign oil assets in the way other national oil companies such as PetroChina have.
Nor is it likely to soon. Besides taking on more debt to buy TNK-BP, there is too much to do at home. While a decade of rising oil output and prices fueled the resurgence of the Russian economy and the Kremlin, a tougher future beckons. The International Energy Agency forecasts a slight decline in Russian oil output for the next two decades.
Even achieving this will require a step up in capital expenditure: $740 billion between 2011 and 2035. Russia's western Siberian fields--60% of the country's current output--are a declining Soviet legacy. Offsetting this with new fields in areas like the Arctic offshore will be challenging and, hence, expensive.
Lower exports and rising costs point to smaller margins for oil companies--and a smaller take for a state whose dependence on energy revenue has increased. Unless Russia can crack modernization and diversification for its economy, this represents a crisis in the making.
So a heavy burden rests on Russia's national oil champion to lead the charge in developing the country's next generation of resources. This was why Rosneft signed the original Arctic partnership with BP in 2011 that led to the TNK-BP deal. Indeed, for BP, the potential opportunity arising from Rosneft's need for foreign expertise is one rationale for selling its stake. Rosneft's need also lies behind other recent development deals with the likes of Exxon.
Bigger scale should help Rosneft take on some of these projects, especially in terms of getting financing in place and infrastructure built.
But further concentration of Russia's oil assets in large, state-backed firms raises concerns about efficiency. The stocks of Rosneft and its natural-gas counterpart Gazprom trade at persistent discounts to those of their Western and emerging-markets peers on price/earnings multiples, despite the companies' vast reserves.
Moreover, as a vibrant ecosystem of minnows and majors in much of the rest of the world demonstrates, the biggest companies aren't always the best tools for the job.
This is especially true because of Russia's need to enhance production from its older fields while also striking out for new frontiers. Elsewhere, it is often the smaller, nimbler companies that take on the mature fields from majors--who have bigger fish to fry--and squeeze more out of them. This has been the experience in older areas like the North Sea.
Smaller companies also have been at the forefront of America's shale boom. Unfortunately, Russia's longstanding tendency toward gigantism and state control saw larger oil firms swallow up smaller rivals over much of the past 15 years. Indeed, in "Wheel of Fortune," his new history of the post-Soviet oil industry, Thane Gustafson writes that small companies produce less than 5% of Russia's oil, and that share is declining.
Rosneft has partnered with Exxon to develop Siberian shale, but it remains to be seen whether two big integrated companies can replicate the success of the smaller U.S. exploration and production firms.
Rosneft's bigger scale is in some ways emblematic of the structural challenges faced by Russia's oil sector and economy. Far from being a threat, this latest shift in the landscape may represent an opportunity for western majors.
Write to Liam Denning at
Credit: By Liam Denning
Subject: Oil reserves; Petroleum industry
Location: Arctic region Russia
Company / organization: Name: OAO Gazprom; NAICS: 211111, 221210; Name: OAO Rosneft; NAICS: 324110; Name: TNK-BP; NAICS: 211111; Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 4, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1125779318
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1125779318?accountid=7117
Copyright: (c) 2012 Dow J ones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
With Russian Oil, Size Isn't Everything
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 Nov 2012: n/a.
ProQuest document link
Abstract:
The stocks of Rosneft and its natural-gas counterpart Gazprom trade at persistent discounts to those of their Western and emerging-markets peers on price/earnings multiples, despite the companies' vast reserves. [...]as a vibrant ecosystem of minnows and majors in much of the rest of the world demonstrates, the biggest companies aren't always the best tools for the job.
Full text: The arrival of a new heavyweight usually unsettles smaller rivals--but not always.
Assuming Rosneft's $56 billion acquisition of TNK-BP happens, it would become the world's largest publicly traded oil-and-gas company by reserves and output. Its oil reserves and output will roughly match those of Exxon Mobil and BP combined.
But unlike diversified Western majors, the Russian state-controlled company's assets are concentrated in its own country. It hasn't competed aggressively for foreign oil assets in the way other national oil companies such as PetroChina have.
Nor is it likely to soon. Besides taking on more debt to buy TNK-BP, there is too much to do at home. While a decade of rising oil output and prices fueled the resurgence of the Russian economy and the Kremlin, a tougher future beckons. The International Energy Agency forecasts a slight decline in Russian oil output for the next two decades.
Even achieving this will require a step up in capital expenditure: $740 billion between 2011 and 2035. Russia's western Siberian fields--60% of the country's current output--are a declining Soviet legacy. Offsetting this with new fields in areas like the Arctic offshore will be challenging and, hence, expensive.
Lower exports and rising costs point to smaller margins for oil companies--and a smaller take for a state whose dependence on energy revenue has increased. Unless Russia can crack modernization and diversification for its economy, this represents a crisis in the making.
So a heavy burden rests on Russia's national oil champion to lead the charge in developing the country's next generation of resources. This was why Rosneft signed the original Arctic partnership with BP in 2011 that led to the TNK-BP deal. Indeed, for BP, the potential opportunity arising from Rosneft's need for foreign expertise is one rationale for selling its stake. Rosneft's need also lies behind other recent development deals with the likes of Exxon.
Bigger scale should help Rosneft take on some of these projects, especially in terms of getting financing in place and infrastructure built.
But further concentration of Russia's oil assets in large, state-backed firms raises concerns about efficiency. The stocks of Rosneft and its natural-gas counterpart Gazprom trade at persistent discounts to those of their Western and emerging-markets peers on price/earnings multiples, despite the companies' vast reserves.
Moreover, as a vibrant ecosystem of minnows and majors in much of the rest of the world demonstrates, the biggest companies aren't always the best tools for the job.
This is especially true because of Russia's need to enhance production from its older fields while also striking out for new frontiers. Elsewhere, it is often the smaller, nimbler companies that take on the mature fields from majors--who have bigger fish to fry--and squeeze more out of them. This has been the experience in older areas like the North Sea.
Smaller companies also have been at the forefront of America's shale boom. Unfortunately, Russia's longstanding tendency toward gigantism and state control saw larger oil firms swallow up smaller rivals over much of the past 15 years. Indeed, in "Wheel of Fortune," his new history of the post-Soviet oil industry, Thane Gustafson writes that small companies produce less than 5% of Russia's oil, and that share is declining.
Rosneft has partnered with Exxon to develop Siberian shale, but it remains to be seen whether two big integrated companies can replicate the success of the smaller U.S. exploration and production firms.
Rosneft's bigger scale is in some ways emblematic of the structural challenges faced by Russia's oil sector and economy. Far from being a threat, this latest shift in the landscape may represent an opportunity for western majors.
Write to Liam Denning at
Credit: By Liam Denning
Subject: Oil reserves; Petroleum industry
Location: Arctic region Russia
Company / organization: Name: OAO Gazprom; NAICS: 211111, 221210; Name: OAO Rosneft; NAICS: 324110; Name: TNK-BP; NAICS: 211111; Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 5, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1127717895
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1127717895?accountid=7117
Copyright: (c) 2012 Dow J ones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
South Sudan to Resume Oil Exports
Author: Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]05 Nov 2012: n/a.
ProQuest document link
Abstract:
[...]January, South Sudan shipped as much as 350,000 barrels a day of crude, with exports accounting for up to 98% of its foreign revenues.
Full text: South Sudan will resume oil exports in the next four weeks following the transit deal it signed with former civil-war foe Sudan, the country's information minister said Monday, restarting the young country's oil shipments ahead of schedule after a halt of nearly a year.
Preparations at major oil fields in the Unity and Upper Nile states are on schedule to begin pumping as much as 200,000 barrels of oil a day before the end of November, Barnaba Benjamin said by telephone from Juba, South Sudan's capital.
When South Sudan became independent from Sudan in July 2011, it retained 75% of the former country's oil fields. But South Sudan has to rely on pipelines, ports and refineries in its northern neighbor to reach world markets. South Sudan's independence came without an agreement between the two countries on how much the south should pay to use the export infrastructure and disagreements quickly broke out. South Sudan shut down its northern oil exports in January.
In September, the two sides bowed to international pressure and signed a fragile peace accord, paving the way for the resumption of oil shipments. Exports were initially expected to resume over three to six months.
But South Sudan is working closely with oil companies and the Sudanese government to ensure that crude shipments restart as soon as possible, Mr. Benjamin said.
"Within the next four weeks, oil will be flowing again," Mr. Benjamin said. "We should be able to bring production to pre-closure levels in a few months."
That will be a major relief for South Sudan, whose economy has been battered hard by the shutdown. Until January, South Sudan shipped as much as 350,000 barrels a day of crude, with exports accounting for up to 98% of its foreign revenues.
For world oil markets, the largely unexpected addition of more than 200,000 barrels a day of South Sudan's crude would also be a small but not insignificant supply bump, said Philippe de Pontet, an analyst with Eurasia Group. This extra supply is equivalent to about 0.2% of expected world oil consumption in the fourth quarter, according to International Energy Agency forecasts.
The country plans to bring even more wells into production in the oil-rich Unity state, to enable it surpass its pre-closure output by about 30,000 barrels a day within one or two years, Mr. Benjamin said.
The resumption of crude flows will mark the first step in implementing the deal, previously viewed by many observers as uncertain because of a history of past broken accords.
Sudanese government spokesman Rabie Abdelety confirmed the development, adding that Sudan is committed to implementing all components of the peace accords signed in Ethiopia in September. The accords include deals on cross-border trade and citizenship as well as a road map for resolving a number of disputed areas along the common border, including the oil-rich region of Abyei.
"Very soon our President [Omar Al Bashir] will visit Juba to reinforce the peace message," Mr. Abdelaty said.
Defense officials from the two countries are also meeting in Juba under the mediation of the African Union as they seek to resolve outstanding security issues along their oil-rich but poorly marked common border.
Under terms of the three-year oil-transit deal agreed in September, South Sudan will pay $8.40 a barrel for using the pipeline operated by Greater Nile Petroleum Operating Co. and $6.50 a barrel for using the pipeline operated by a Chinese-led pipeline consortium known as Petrodar.
Landlocked South Sudan is also seeking investors for an alternative pipeline that would allow it to export oil through Kenya.
Credit: By Nicholas Bariyo
Subject: Petroleum industry; Pipelines; Exports; International trade
Location: Sudan South Sudan
Company / organization: Name: International Energy Agency; NAICS: 928120; Name: Eurasia Group; NAICS: 523930
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 5, 2012
Section: World
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1129387350
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1129387350?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The Coming Oil Glut; The real forces shaping the market point to a significant downturn of oil prices.
Author: Maugeri, Leonardo
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 Nov 2012: n/a.
ProQuest document link
Abstract:
[...]we see countless analyses about future Saudi oil exports drying up, the probable implosion of the Libyan oil sector, the impossibility of Iraq achieving its ambitious oil targets, the impending decline of Russian oil output and so on.
Full text: The price of oil continues to be set by fear, not by supply and demand. World-wide oil production is growing quickly. By the end of the year, it will probably surpass 92 million barrels per day, with additional spare capacity of more than 3.5 million barrels. Thanks to the shale oil revolution, U.S. crude production could exceed 6.5 million barrels per day by the end of the year: around one million more barrels than the U.S. Energy Information Administration predicted in January.
Meanwhile, oil demand is growing sluggishly, a consequence of the troubled global economic situation. China's slowdown, the unsolved problems of the euro zone and energy-efficiency legislation in the U.S., Europe and some Asian countries will probably prevent demand this year from exceeding 89 million barrels per day.
At the same time, the exploration and production spending spree of the oil and gas industry continues, and in 2012, it will set a new record: more than $600 billion. High oil prices and the need of most companies to replace their reserves are the major factors driving this unprecedented investment, which will have particularly strong consequences on new production in the next few years.
Once again, Saudi Arabia has shown its huge potential by increasing and decreasing its own oil supply to meet market needs and political ends. Contrary to the expectations of most analysts, the Kingdom has the power to make up even bigger reductions in Iranian oil exports.
Yet most observers and expert continue to point to dire scenarios shaped by fear. By far the most important source of fear is the unfolding Iranian situation and the dire prospect of some kind of military escalation in the Persian Gulf, along with recurring violence in several Arab countries, which threatens the stability of the entire Middle East.
Another factor that tends to put a floor under current oil prices is a distorted perception of the current and future availability of oil. Perhaps fearing that we will soon reach "peak oil," most analysts seem convinced that oil will remain in tight supply in the future, and that new supplies will be too expensive to allow for a decline of oil prices.
To make matters worse, articles and comments about any oil issue often tend to be negative, betraying a mind-set trapped by Murphy's Law--if something may go wrong, surely it will go wrong. This mind-set exaggerates and thus misrepresents reality. Thus, we see countless analyses about future Saudi oil exports drying up, the probable implosion of the Libyan oil sector, the impossibility of Iraq achieving its ambitious oil targets, the impending decline of Russian oil output and so on. The same is true for the U.S. shale oil boom, which several observers continue to label a "temporary bubble"--as they did for shale gas years before.
With these negative blinders on, no one anticipated the very fast recovery of Libyan oil production, the limited impact of falling Iranian oil exports, the astonishing growth of U.S. shale and tight oil production, or the new records of Russian and Iraqi oil production. In other words, while most focused on the problems and presented only the negative possibilities, only a few looked at the reality.
Even fewer observers ask why global oil production continues to grow while pundits tell us that there is no room for such growth, because of the rapid depletion of oil resources. Nor do they ask how all this is possible even as Iranian exports decline?
In this context, short of a real crisis--open war in the Persian Gulf, for instance, or simultaneous disruption of oil supplies from several producing countries--the real forces shaping the oil market point to a significant downturn of oil prices. Yet market psychology may not recognize these forces and may continue to act as if oil prices are apodictically bound to increase. This could support oil prices into the future.
Clearly, the foundations of this psychologically based price support are questionable, which leaves the oil market prey to volatility and masks the risk of an oil price downturn hiding silently around the corner.
Mr. Maugeri is a Roi Family fellow at the Harvard Kennedy School. He previously served as a top executive at the Italian energy company Eni.
Credit: By Leonardo Maugeri
Subject: Petroleum production; Petroleum industry; Oil shale
Location: China United States--US Europe
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 6, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1138684039
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1138684039?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S., Russian Oil Production Threatens OPEC Dominance
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 Nov 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: U.S. politicians have long been fixated on the sway the Organization of the Petroleum Exporting Countries has on oil markets, and this year's presidential election has been no exception. But an oil boom in America, coupled with a boost in Russian production, is undermining the cartel's influence, making it likely the group will cut crude production to support prices.
Both President Barack Obama and challenger Mitt Romney claimed during the campaign that their approach would help America make do with less oil from OPEC. Yet change is already afoot in the U.S. oil market and this time it looks as if OPEC has more to worry about than do American motorists.
After three decades of decline--with easy-to-drill fields becoming depleted--oil production in the U.S. is rebounding. That is because higher crude prices and technological advances have enabled extraction from tight rock formations such as so-called shale reservoirs.
According to the U.S. Energy Information Administration, U.S. output--including other petroleum such as liquid natural gas--is expected rise to about 11.7 million barrels a day by the end of 2013, up 8.5% from the third quarter of this year. That would be close to the 12 million barrels a day of crude Saudi Arabia has the capacity to produce and above the Gulf state's current output of about 10 million barrels a day.
Already, oil production from North Dakota alone--at just above 700,000 barrels a day--has surpassed Ecuador's 500,000 barrels a day and is about to overtake Qatar's output of 750,000 barrels a day. Ecuador and Qatar are OPEC members.
As a result, imports are expected to account for less than 40% of U.S. oil consumption next year for the first time since 1991, according to the EIA, an authoritative source on global oil markets.
Some experts say OPEC crude is likely to be first to feel the squeeze. "This flood of U.S. crude is likely to put oil prices and OPEC output under downward pressure next year," Leo Drollas, chief economist of the U.K.-based Centre for Global Energy Studies, or CGES, wrote in a note last month.
As an example, the U.S. is the largest oil-export destination for OPEC member Nigeria, accounting for one-third of its foreign sales, according to the EIA.
The EIA sees a small drop of 490,000 barrels a day in OPEC supply next year, as it cuts output to support prices, while the CGES estimates that the resurgence in U.S. output will reduce global demand for OPEC's crude next year by about 670,000 barrels a day--about 2% of its current crude production of about 31 million barrels a day.
A drop in U.S. imports could also spark an effort to woo new buyers, putting pressure on prices.
Brent crude prices are currently at about $111 a barrel, while light, sweet crude on the New York Mercantile Exchange has been trading below $90 a barrel.
Moreover, it isn't just waning U.S. appetite for foreign oil that OPEC has to fear. Russia's production is also rising to levels not seen since the 1980s' Soviet era, thanks to an intensive drilling program supported by the Kremlin. Last month, production reached 10.46 million barrels a day, up 2% from last year's average and half a million barrels a day more than Saudi Arabia.
While Russia has pledged closer ties with OPEC, it would be unlikely to coordinate production cuts with the group to support prices.
"For us to join in production cuts, OPEC would have to offer us something very attractive that would compensate all the risks. I haven't seen any such offers," Igor Sechin, chief executive of OAO Rosneft--Russia's largest oil producer by volume--told The Wall Street Journal last month.
Some Middle Eastern experts say OPEC can partly mitigate the lost market share by taking advantage of an increase in its production flexibility. Unlike the U.S. and Russia, which produce every barrel they can, OPEC members intentionally leave some capacity idle, which they can use to try to influence prices.
"The importance of Arab oil-producing countries does not lie in its massive reserves alone but also in the spare productive capacity," wrote consultant Walid Khadduri in Saudi-owned newspaper al-Hayat Sunday.
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 6, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1138684099
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1138684099?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Futures Jump 3.6%
Author: Biers, John M
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]06 Nov 2012: n/a.
ProQuest document link
Abstract:
A bullish case could be made for markets regardless of whether the U.S. presidential election is won by Barack Obama or Mitt Romney, Mr. McGillian said.
Full text: Fueled by a strong Election Day jump in equity markets, crude futures surged 3.6% higher Tuesday.
Analysts said there were no crude-specific headlines during the trading day that accounted for the oil rally, which was accompanied by a 3% rise in gasoline futures. The increase in oil also was joined by a 0.8% rally in the S&P 500, which typically gets a boost on Election Day.
Front-month crude for December delivery on Nymex jumped $3.06 to settle at $88.71 per barrel. Brent futures settled at $111.07, up $3.34 or 3.1%.
When crude opened Tuesday, market participants cited recent headlines about Middle Eastern tensions and greater optimism about the economic stimulus from rebuilding in the Northeast as factors behind the increase.
But as the trading day progressed, oil continued to rally despite no significant oil-specific news.
"We're chasing price," said Tim Evans, an analyst at Citi Futures, who said some buyers were engaging in bargain-hunting after a recent drop in oil prices. Oil prices had dropped 13.5% between Sept. 14 and Monday.
Mr. Evans said there may have been some speculation that weekly petroleum inventories could support prices. On Wednesday, the U.S. Department of Energy is scheduled to release its weekly inventory report.
"I have not seen anything change for the underlying fundamentals for crude," said Gene McGillian, an analyst at Tradition Energy.
Mr. McGillian said the trading on Monday helped explain Tuesday's rally. When the market couldn't sustain an oil price on Monday below $85 a barrel, there was technical pressure for the commodity to go higher, he said.
A bullish case could be made for markets regardless of whether the U.S. presidential election is won by Barack Obama or Mitt Romney, Mr. McGillian said. But markets should get a lift either way.
"Whoever wins, the market is going to get a boost because the uncertainty is going to disappear," he said.
Front-month reformulated gasoline blendstock, or RBOB, settled at $2.699 a gallon, up 7.87 cents. Heating oil settled at $3.053 per gallon, up seven cents.
Write to John M. Biers at
Credit: By John M. Biers
Subject: Energy economics; Futures; Stock prices; Presidential elections; Petroleum industry
People: Obama, Barack Romney, W Mitt
Company / organization: Name: Standard & Poors Corp; NAICS: 541519, 511120, 523999, 561450; Name: Department of Energy; NAICS: 926130
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 6, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1138687362
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1138687362?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The New Haven for Investors; Short-Term Bonds of Exxon and J&J Offer Lower Yields Than Similar Treasurys
Author: McGee, Patrick; Burne, Katy
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Nov 2012: n/a.
ProQuest document link
Abstract:
Mr. Bianco recalled a few similar instances in the past 30 years but none lasted long. Since the turn of the 20th century, Treasurys have formed the benchmark for fixed-rate U.S. company debt. "Every day the debt and credit profile of the U.S. gets worse, yet you have corporate America that is lean and mean," said Jason Graybill, senior managing director at Carret, who oversees a $1.2 billion bond portfolio and sold Treasurys 18 months ago to pile into more corporate debt.
Full text: Treasurys have a new rival for safe-haven status: U.S. companies.
Bonds of Exxon Mobil and Johnson & Johnson are trading with yields below those of comparable Treasurys, a sign that investors perceive them as a safer bet. It is a rare phenomenon that some market observers said could be the beginning of a new era for debt markets. It could ultimately mean some companies will borrow at lower rates than the U.S. government.
For now, just a handful of relatively short-term bonds yield less than comparable Treasury bonds. But some market observers said some fundamental changes in the financial health of U.S. companies relative to the government, including the fact that some corporations are more highly rated than Uncle Sam, suggest it could become a longer-lasting trend.
"If it grows to be more like dozens of issues, then it stops becoming an anomaly and it becomes a big deal," said James Bianco, founder of Bianco Research in Chicago. Mr. Bianco recalled a few similar instances in the past 30 years but none lasted long.
Since the turn of the 20th century, Treasurys have formed the benchmark for fixed-rate U.S. company debt. Companies and investors measure corporate borrowing rates relative to what the government pays. But several forces are combining to upend that market convention.
Money is pouring into highly rated U.S. corporate bonds at an even faster pace than Treasury debt, according to fund-tracker Lipper, as buyers clamor for investments perceived as safe that typically also yield a bit more than Treasurys. A shrinking supply of top-rated debt is also driving investors toward the highest-rated U.S. companies. That demand has driven up bond prices and pushed down yields.
The soaring demand has enabled companies of all sizes to raise $1.2 trillion from issuing debt this year, already the busiest year on record, according to data provider Dealogic. U.S. corporations, now sitting on $1.73 trillion of cash and borrowing at the lowest rates in history, are arguably in the best shape ever.
Should the economy continue to pick up steam, U.S. companies will become even healthier, some argue. By contrast, the Treasury is burdened with more debt than ever, and government deficits are likely to keep increasing for the foreseeable future.
The prospect of further upheaval, as Congress battles whether to extend a raft of tax cuts and clip spending, is adding to the uncertainty. Some investors worry that the country could face a second credit-rating downgrade, following Standard & Poor's cut below triple-A last year.
"Every day the debt and credit profile of the U.S. gets worse, yet you have corporate America that is lean and mean," said Jason Graybill, senior managing director at Carret, who oversees a $1.2 billion bond portfolio and sold Treasurys 18 months ago to pile into more corporate debt. "It's only a matter of time" before companies offer new debt below Treasury yields, he said.
Still, some observers argue that yields on corporate bonds could soon rise. They said the bonds of Exxon and Johnson & Johnson are short-term bonds that are inherently volatile. And others said U.S. government debt is still widely seen as the safest debt available. The market is larger and much more active, making it more attractive than corporate debt to some investors.
"The Treasury has an unlimited printing press and there will always be demand," said Kam Poon, portfolio manager of short-term fixed-income strategies at Aberdeen Asset Management in Philadelphia. Mr. Poon, who oversees $1.1 billion of bonds, has sold corporate bonds in which the yields have been close to Treasurys, as well as securities whose yields have dipped below Treasurys.
The phenomenon has been seen in what is known as the secondary bond market, in which bonds are traded after they are first issued.
Bonds of Exxon coming due in 13 months were quoted on Tuesday at 0.01 percentage point less than the comparable Treasury, according to Benchmark Solutions, a pricing service. Bonds of Johnson & Johnson due in May 2014 also recently traded at 0.01 percentage point less than Treasurys. Both are rated triple-A by S&P. Representatives for Exxon and Johnson & Johnson declined to comment.
In the new-issue market, companies continue to set records. Microsoft Corp. on Friday sold five-year bonds at a yield of just 0.27 percentage point above comparable Treasurys, the narrowest premium on such debt going back to 1994, according to Dealogic.
People familiar with the sale said Microsoft wanted to take advantage of low rates. Microsoft will put the $2.25 billion it raised toward early repayment of similar debt the company issued in February 2011; its new five-year debt Friday priced to yield 0.875% compared with 2.5% last year.
"These are truly unprecedented conditions for blue-chip companies in the debt markets," said Brent Callinicos, treasurer of Internet-search firm Google Inc. Google bonds due in 2014 yield just 0.02 percentage point over Treasurys.
The phenomenon could become more widespread as investors continue to search among a shrinking pool of highly rated bonds. According to Credit Suisse, the share of world-wide government debt rated triple-A has fallen to 39% of the total from 58% in early 2010.
Corporate bonds "are definitely the new safe havens in this world," said Fer Koch, director of U.S. credit strategy at Credit Suisse.
Write to Patrick McGee at and Katy Burne at
Credit: By Patrick McGee and Katy Burne
Subject: Treasuries; Corporate debt; Investment policy; Bond markets; Bond issues
Location: United States--US
Company / organization: Name: Congress; NAICS: 921120; Name: Microsoft Corp; NAICS: 334611, 511210; Name: Standard & Poors Corp; NAICS: 541519, 511120, 523999, 561450
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 7, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1139208157
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1139208157?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
The New Haven for Investors --- Short-Term Bonds of Exxon and J&J Offer Lower Yields Than Similar Treasurys
Author: McGee, Patrick; Burne, Katy
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]07 Nov 2012: C.1. [Duplicate]
ProQuest document link
Abstract:
Mr. Bianco recalled a few similar instances in the past 30 years but none lasted long. Since the turn of the 20th century, Treasurys have formed the benchmark for fixed-rate U.S. company debt. "Every day the debt and credit profile of the U.S. gets worse, yet you have corporate America that is lean and mean," said Jason Graybill, senior managing director at Carret, who oversees a $1.2 billion bond portfolio and sold Treasurys 18 months ago to pile into more corporate debt.
Full text: Treasurys have a new rival for safe-haven status: U.S. companies.
Bonds of Exxon Mobil and Johnson & Johnson are trading with yields below those of comparable Treasurys, a sign that investors perceive them as a safer bet. It is a rare phenomenon that some market observers said could be the beginning of a new era for debt markets. It could ultimately mean some companies will borrow at lower rates than the U.S. government.
For now, just a handful of relatively short-term bonds yield less than comparable Treasury bonds. But some market observers said some fundamental changes in the financial health of U.S. companies relative to the government, including the fact that some corporations are more highly rated than Uncle Sam, suggest it could become a longer-lasting trend.
"If it grows to be more like dozens of issues, then it stops becoming an anomaly and it becomes a big deal," said James Bianco, founder of Bianco Research in Chicago. Mr. Bianco recalled a few similar instances in the past 30 years but none lasted long.
Since the turn of the 20th century, Treasurys have formed the benchmark for fixed-rate U.S. company debt. Companies and investors measure corporate borrowing rates relative to what the government pays. But several forces are combining to upend that market convention.
Money is pouring into highly rated U.S. corporate bonds at an even faster pace than Treasury debt, according to fund-tracker Lipper, as buyers clamor for investments perceived as safe that typically also yield a bit more than Treasurys. A shrinking supply of top-rated debt is also driving investors toward the highest-rated U.S. companies. That demand has driven up bond prices and pushed down yields.
The soaring demand has enabled companies of all sizes to raise $1.2 trillion from issuing debt this year, already the busiest year on record, according to data provider Dealogic. U.S. corporations, now sitting on $1.73 trillion of cash and borrowing at the lowest rates in history, are arguably in the best shape ever.
Should the economy continue to pick up steam, U.S. companies will become even healthier, some argue. By contrast, the Treasury is burdened with more debt than ever, and government deficits are likely to keep increasing for the foreseeable future.
The prospect of further upheaval, as Congress battles whether to extend a raft of tax cuts and clip spending, is adding to the uncertainty. Some investors worry that the country could face a second credit-rating downgrade, following Standard & Poor's cut below triple-A last year.
"Every day the debt and credit profile of the U.S. gets worse, yet you have corporate America that is lean and mean," said Jason Graybill, senior managing director at Carret, who oversees a $1.2 billion bond portfolio and sold Treasurys 18 months ago to pile into more corporate debt. "It's only a matter of time" before companies offer new debt below Treasury yields, he said.
Still, some observers argue that yields on corporate bonds could soon rise. They said the bonds of Exxon and Johnson & Johnson are short-term bonds that are inherently volatile. And others said U.S. government debt is still widely seen as the safest debt available. The market is larger and much more active, making it more attractive than corporate debt to some investors.
"The Treasury has an unlimited printing press and there will always be demand," said Kam Poon, portfolio manager of short-term fixed-income strategies at Aberdeen Asset Management in Philadelphia. Mr. Poon, who oversees $1.1 billion of bonds, has sold corporate bonds in which the yields have been close to Treasurys, as well as securities whose yields have dipped below Treasurys.
The phenomenon has been seen in what is known as the secondary bond market, in which bonds are traded after they are first issued.
Bonds of Exxon coming due in 13 months were quoted on Tuesday at 0.01 percentage point less than the comparable Treasury, according to Benchmark Solutions, a pricing service. Bonds of Johnson & Johnson due in May 2014 also recently traded at 0.01 percentage point less than Treasurys. Both are rated triple-A by S&P. Representatives for Exxon and Johnson & Johnson declined to comment.
In the new-issue market, companies continue to set records. Microsoft Corp. on Friday sold five-year bonds at a yield of just 0.27 percentage point above comparable Treasurys, the narrowest premium on such debt going back to 1994, according to Dealogic.
People familiar with the sale said Microsoft wanted to take advantage of low rates. Microsoft will put the $2.25 billion it raised toward early repayment of similar debt the company issued in February 2011; its new five-year debt Friday priced to yield 0.875% compared with 2.5% last year.
"These are truly unprecedented conditions for blue-chip companies in the debt markets," said Brent Callinicos, treasurer of Internet-search firm Google Inc. Google bonds due in 2014 yield just 0.02 percentage point over Treasurys.
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Credit: By Patrick McGee and Katy Burne
Subject: Treasuries; Bond markets; Credit markets (wsj)
Location: United States--US
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.1
Publication year: 2012
Publication date: Nov 7, 2012
column: Credit Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1139457594
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1139457594?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
India's Gulf Oil to Buy Houghton International
Author: Joshi, Ashutosh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Nov 2012: n/a.
ProQuest document link
Abstract:
Houghton, a maker of metal working fluids used for metal processing applications including metal cutting and stamping, has 12 manufacturing facilities in 10 countries and reported sales of $858 million for the year ended September, and adjusted earnings of $132 million before interest, tax, depreciation and amortization, the statement said.
Full text: MUMBAI--India's Gulf Oil Corp. (506480.BY) said Wednesday that its U.K. unit will acquire U.S.-based specialty chemicals maker Houghton International Inc. for about $1.05 billion.
Gulf Oil, part of the Hinduja Group, said in a statement that it will purchase a 100% stake in Houghton from a U.S.-based private equity fund, which it didn't name.
Houghton, a maker of metal working fluids used for metal processing applications including metal cutting and stamping, has 12 manufacturing facilities in 10 countries and reported sales of $858 million for the year ended September, and adjusted earnings of $132 million before interest, tax, depreciation and amortization, the statement said.
The deal is subject to certain conditions and Houghton will operate as a separate company, Gulf Oil said.
Write to Ashutosh Joshi at
Credit: By Ashutosh Joshi
Subject: Entrepreneurs
Location: India United States--US United Kingdom--UK
Company / organization: Name: Houghton International Inc; NAICS: 325910; Name: Hinduja Group; NAICS: 522110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 7, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1139468001
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1139468001?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Vietnam Moves on Oil Refinery and Nuclear Plant
Author: Vu, Trong Khanh; Gronholt-Pedersen, Jacob
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Nov 2012: n/a.
ProQuest document link
Abstract:
Vietnam said it agreed with foreign investors to begin construction of a long-delayed oil refinery, while also stepping up plans to build the country's first nuclear-power plant jointly with Russia. [...]recently the developing Asian nation was favored by global investors, but they're increasingly uneasy as confidence is undermined by surging inflation, corruption scandals and a banking sector threatened by bad debts, mostly owed by the vast state-owned sector.
Full text: Vietnam said it agreed with foreign investors to begin construction of a long-delayed oil refinery, while also stepping up plans to build the country's first nuclear-power plant jointly with Russia.
Until recently the developing Asian nation was favored by global investors, but they're increasingly uneasy as confidence is undermined by surging inflation, corruption scandals and a banking sector threatened by bad debts, mostly owed by the vast state-owned sector. Economic growth is expected to slow this year to 5.2%, the weakest in 13 years.
Plans to build Vietnam's second oil refinery, with a price tag of $8 billion to $10 billion, have been held up for years by financing issues between the Vietnamese government and the two main partners, Japan's Idemitsu Kosan Co. and Kuwait Petroleum Corp. Banks had been unwilling to lend without underwriting from the Vietnamese government; talks intensified after the government agreed in August to help underwrite some of the project.
"We have completed talks and all the remaining issues have been solved," Phung Dinh Thuc, chairman of state-run Vietnam Oil and Gas Group, or PetroVietnam, said Wednesday. An Idemitsu Kosan spokesman confirmed the deal. Kuwait Petroleum wasn't immediately able to comment.
The Asian-Pacific region is experiencing a refining boom to satisfy growing demand for oil products. Asia is seen as the main driver of global growth in oil consumption in coming years, and is set to receive more crude from the Middle East and Africa as demand slows in Europe and North America becomes less dependent on imports.
The 200,000 barrel-a-day Nghi Son refinery will mainly process crude supplied by Kuwait Petroleum. Vietnam's sole existing refinery, Dung Quat, processes mainly domestic crude. It has a capacity of 130,000 barrels a day but has been suffering operational problems and unexpected shutdowns.
Operations at the Nghi Son refinery, to be built 180 kilometers south of Hanoi, were initially planned to begin in 2014. Under a new plan, Mr. Thuc said, the partners will sign a deal with foreign contractors in December with operations slated to begin in the second quarter of 2016.
Idemitsu Kosan and Kuwait Petroleum each hold a 35.1% stake in the planned refinery, while PetroVietnam and Mitsui Chemicals Inc. own 25.1% and 4.7%, respectively.
Mr. Thuc declined to say which companies had contracts to build the project, though local media earlier quoted Dinh La Thang, then chairman of PetroVietnam, naming a consortium of three foreign companies and PetroVietnam Construction JSC.
In separate news, Vietnam and Russia will begin negotiating a free-trade agreement early next year and will encourage more joint investment among the countries' energy companies, Russian Prime Minister Dmitry Medvedev said Wednesday. The two countries also agreed to speed up construction of Vietnam's first nuclear power plant.
Vietnam last year signed a deal to borrow $8 billion from Russia for the Ninh Thuan 1 plant, to be built by Russian utility and atomic-energy company Rosatom. Construction is slated to begin in 2014 and operations in 2020.
Relations between the two Soviet-era allies have warmed over the past decade, since they upgraded relations to strategic from diplomatic in 2001. Russia mainly exports oil products and machinery to Vietnam, and imports mainly farm produce, seafood, clothing and electronic products.
Bilateral trade is likely to reach $7 billion by 2015, said Mr. Medvedev after meeting with his Vietnamese counterpart Nguyen Tan Dung in Hanoi, during a two-day visit to the country. Vietnamese estimates put trade at $3.5 billion to $3.7 billion for 2012, and $3 billion in 2011.
Write to Vu Trong Khanh at
Credit: By Vu Trong Khanh And Jacob Gronholt-Pedersen
Subject: Petroleum refineries; Foreign investment; Petroleum industry; Construction
Location: Vietnam Russia
People: Dung, Nguyen Tan
Company / organization: Name: Zarubezhneft; NAICS: 211111; Name: Vietnam Oil & Gas Group; NAICS: 211111; Name: Rosatom; NAICS: 221113
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 7, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1139788334
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1139788334?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Tumbles Below $85 a Barrel
Author: DiColo, Jerry A
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Nov 2012: n/a.
ProQuest document link
Abstract:
Oil and fuel products fell along with stock markets, copper and other assets dependent on a continued economic recovery in the wake of the U.S. election Tuesday.
Full text: Crude oil tumbled 4.8% as swelling fuel supplies and weak demand due to superstorm Sandy weighed on a market already pressured by a postelection selloff.
U.S. stockpiles of oil and gasoline jumped last week as Sandy derailed shipments of fuel into the East Coast and forced refineries to shut down, according to data released Wednesday by the Department of Energy.
The report helped confirm that Sandy has had a bigger effect on demand than supply despite long gas lines across New York and New Jersey. Gasoline stockpiles rose by 2.9 million barrels, while East Coast demand for gasoline and other fuels fell 6% last week, the data showed.
"The market was surprised by the gasoline build," said Gene McGillian, a broker at Tradition Energy. "There's ample supply."
Light, sweet crude for December delivery fell $4.27, to settle at $84.44 a barrel on the New York Mercantile Exchange, the lowest settlement level since July and the largest one-day drop in nearly a year. Brent crude oil on the ICE Futures Europe exchange dropped $4.25, or 3.8%, to $106.82 a barrel.
Front-month December reformulated gasoline blendstock, or RBOB, declined 11 cents, or 4.1%, to $2.5889 a gallon. December heating oil dropped 9.08 cents, or 3%, to $2.9621 a gallon.
Oil and fuel products fell along with stock markets, copper and other assets dependent on a continued economic recovery in the wake of the U.S. election Tuesday.
Investors said President Barack Obama's victory paves the way for a partisan battle over what is known as the "fiscal cliff," a series of automatic tax increases and spending cuts that take effect Jan. 1, which could damp economic growth or possibly lead to a recession.
Political brinkmanship likely will continue to weigh on financial markets, said Jason Schenker, president of Prestige Economics, a forecasting firm. "We're going to get more of this 'kick the can down the road' sort of thing," he said.
Oil prices have been on a steady decline since peaking at $99 a barrel in mid-September. Rising supplies from the U.S. and other regions have come amid falling demand as the global economy has appeared to weaken. The increase in U.S. gasoline stockpiles, after analysts had expected a drop, was due to a large inventory increase along the Gulf Coast.
The Colonial Pipeline, which sends fuel to the Northeast from Gulf refineries, was closed for several days last week after the storm flooded gasoline-distribution centers around New York Harbor. And traders and analysts said a nor'easter hitting the New York area Wednesday and Thursday could lead to another dip in demand as drivers stay off roads.
Sandy "was a shock to the system, and the storm we're getting today is going to roll us again," said Mike Guido, head of energy hedge-fund sales at Macquarie in New York.
In other commodities markets:
WHEAT: Prices rose to a one-month settlement high, buoyed by concerns about unfavorable weather for crops growing in the U.S. and abroad.
Traders cited concerns ranging from dry weather in the central U.S. to too much rain in Europe and Argentina.
December wheat on the Chicago Board of Trade rose 17 cents, or 1.9%, to settle at $8.94 a bushel. Kansas City Board of Trade December wheat settled up 12 cents, or 1.3%, at $9.3150 a bushel.
Credit: By Jerry A. DiColo
Subject: Petroleum refineries; Petroleum industry; Recessions; Crude oil prices
Location: United States--US New Jersey New York Harbor
People: Obama, Barack
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210; Name: Department of Energy; NAICS: 926130
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 7, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1140113873
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1140113873?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iraq Says Exxon in Talks to Sell Stake in Field
Author: Hassan Hafidh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]07 Nov 2012: n/a.
ProQuest document link
Abstract:
Iraq has qualified some 46 companies to take part in its licensing auctions, including Royal Dutch Shell PLC, BP PLC, Eni SpA, OAO Lukoil Holdings, Occidental Corp. and China National Petroleum Corp., or CNPC.
Full text: BAGHDAD--U.S. energy giant Exxon Mobil Corp. has begun talks with other international oil companies to sell its stake in Iraq's West Qurna-1 oil field in southern Iraq, a senior Iraqi oil official said Wednesday.
"There is a letter from Exxon to [Iraqi national oil company] South Oil Co. in which it said that it has started discussions with some parties, companies to sell its stake in West Qurna-1," Abdul Mahdy al-Ameedi told reporters in Baghdad.
Exxon needs to sell its stake to one of the companies that were previously prequalified by the oil ministry to acquire Iraqi oil and gas projects, Mr. al-Ameedi told reporters in Baghdad.
Iraq has qualified some 46 companies to take part in its licensing auctions, including Royal Dutch Shell PLC, BP PLC, Eni SpA, OAO Lukoil Holdings, Occidental Corp. and China National Petroleum Corp., or CNPC.
Mr. al-Ameedi, however, didn't say which companies Exxon Mobil is talking to in order to sell its stake.
Exxon declined to comment.
The Texas-based company signed an agreement with the Kurdish Regional Government in northern Iraq in 2011 to explore for oil there, in defiance of Baghdad, which says only the central government has the right to grant such licenses. The central government has previously said Exxon Mobil must choose whether it wants to continue operating in southern Iraq, or move to Kurdistan, but that it can't do both.
After promising to freeze its operations in Kurdistan over the summer, The Wall Street Journal reported last month that Exxon Mobil is planning to start exploratory drilling there in early 2013.
At West Qurna-1, Exxon and minority partner Shell have raised output to nearly 400,000 barrels a day from 244,000 barrels a day when the pair signed up for the project in early 2010. The contract targets eventual output of 2.825 million barrels a day.
The venture will get some $1.90 for each extra barrel of oil produced above the 244,000 barrel-a-day baseline.
Tom Fowler contributed to this article.
Credit: By Hassan Hafidh
Subject: Petroleum industry; Petroleum production; Iraq War-2003
Location: United States--US Kurdistan Iraq
Company / organization: Name: Occidental Corp; NAICS: 211111; Name: South Oil Co; NAICS: 211111; Name: BP PLC; NAICS: 447110, 324110, 211111; Name: Eni SpA; NAICS: 324110, 211111; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Exxon Mobil Corp; NAICS: 447110, 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 7, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1140374484
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Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
After Sandy, No One Lined Up for Wind Turbines; The greens want to go 'beyond oil,' but without it we'd freeze in the dark.
Author: Bryce, Robert
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 Nov 2012: n/a.
ProQuest document link
Abstract:
In the wake of Hurricane Sandy, all of the critical pieces of equipment were burning gasoline or diesel fuel: the pumps removing water from flooded basements and subway tunnels, the generators providing electricity to hospitals and businesses, and the cars, trucks and aircraft providing mobility. [...]those batteries are useful only if they have been charged by some other energy source.) Combine diesel fuel's miraculous energy density with the power density and durability of a modern diesel engine--which can run for weeks at a time with little or no maintenance--and the size, speed, and cost advantages become apparent.
Full text: Last year, New York Mayor Michael Bloomberg pledged $50 million to the Sierra Club for its "beyond coal" campaign. But the mayor hasn't--and won't--be directing any cash to the club's parallel "beyond oil" campaign.
That is because oil--and, more specifically, diesel fuel and gasoline--are proving to be the most important commodities in the wake of the huge storm that recently pummeled the East Coast.
In the wake of Hurricane Sandy, all of the critical pieces of equipment were burning gasoline or diesel fuel: the pumps removing water from flooded basements and subway tunnels, the generators providing electricity to hospitals and businesses, and the cars, trucks and aircraft providing mobility.
The Sierra Club and its allies on the green left will doubtless continue their decades-long war on the oil and gas industry, but the Sandy disaster-response efforts are showing again that there is no substitute for oil. One of the first things that New Jersey Gov. Chris Christie requested from the federal government after the storm was quick delivery of motor-fuel supplies. The Department of Defense responded with 250,000 gallons of gasoline and 500,000 gallons of diesel.
Petroleum is essential to modern society not because of some conspiracy cooked up by Exxon Mobil and its brethren. Instead, it is due to simple physics and basic math.
If oil didn't exist, we would have to invent it. No other substance comes close when it comes to energy density (the amount of energy contained in a given unit of volume or mass), ease of handling or flexibility. A single kilogram of diesel fuel contains about 13,000 watt-hours of energy. That is about twice the energy density of coal, six times that of wood, and about 300 times that of lead-acid batteries. (And those batteries are useful only if they have been charged by some other energy source.)
Combine diesel fuel's miraculous energy density with the power density and durability of a modern diesel engine--which can run for weeks at a time with little or no maintenance--and the size, speed, and cost advantages become apparent.
The Sierra Club, Greenpeace and other groups claim that we can run our economies solely on renewable-energy sources such as wind. But if you are trying to pump water out of your rapidly molding basement, would you prefer a wind turbine that operates at full power about one-third of the time, or a greasy, diesel-fueled V-8?
Let's consider what a wind-powered hospital in New York might look like. NYU's Langone Medical Center lost power shortly after Sandy hit. The hospital had diesel-fired emergency generators, but basement flooding caused them to fail. That required the evacuation of hundreds of patients.
Assume the hospital needs one megawatt of emergency electricity-generation capacity. Lives are at stake. It needs power immediately. That capability could easily be provided by a single, trailer-mounted diesel generator, which would occupy a small corner of the hospital's garage (and be safely removed from any flooding threat). By contrast, providing that much wind-generation capacity would require about 5.6 million square feet of land--an area of nearly 100 football fields. And all of that assumes that the land is available, the wind is blowing, and there are enough transmission lines to carry those wind-generated electrons from the countryside into Lower Manhattan.
This year, some 222 million engines will be manufactured around the world, according to Dennis Huibregtse of Power Systems Research. Those engines will power everything from hedge trimmers to supertankers, water pumps to generators. Every one of them will run on refined oil products.
Sandy left millions of East Coast residents in the cold and dark. If any of them have been demanding "green" energy, I haven't heard about it. In the storm's aftermath, the most hopeful sound of recovery is the joyous racket that comes from an internal-combustion engine burning fossil fuels.
Mr. Bryce, a senior fellow at the Manhattan Institute, is the author, most recently, of "Power Hungry: The Myths of 'Green' Energy and the Real Fuels of the Future" (PublicAffairs, 2010).
Credit: By Robert Bryce
Subject: Floods; Diesel fuels; Gasoline; Generators
Location: New York
People: Christie, Christopher J Bloomberg, Michael
Company / organization: Name: Greenpeace; NAICS: 813312, 813940; Name: Exxon Mobil Corp; NAICS: 44711 0, 211111; Name: Sierra Club; NAICS: 813312; Name: Department of Defense; NAICS: 928110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 8, 2012
Section: Opinion
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1140651705
Document URL: https://login.ezproxy.u ta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1140651705?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Crude Oil Tumbles Below $85
Author: DiColo, Jerry A
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]08 Nov 2012: C.4.
ProQuest document link
Abstract:
Investors said President Barack Obama's victory paves the way for a partisan battle over what is known as the "fiscal cliff," a series of automatic tax increases and spending cuts that take effect Jan. 1, which could damp economic growth or possibly lead to a recession.
Full text: Crude oil tumbled 4.8% as swelling fuel supplies and weak demand due to superstorm Sandy weighed on a market already pressured by a postelection selloff.
U.S. stockpiles of oil and gasoline jumped last week as Sandy derailed shipments of fuel into the East Coast and forced refineries to shut down, according to data released Wednesday by the Department of Energy.
The report helped confirm that Sandy has had a bigger effect on demand than supply despite long gas lines across New York and New Jersey. Gasoline stockpiles rose by 2.9 million barrels, while East Coast demand for gasoline and other fuels fell 6% last week, the data showed.
"The market was surprised by the gasoline build," said Gene McGillian, a broker at Tradition Energy. "There's ample supply."
Light, sweet crude for December delivery fell $4.27, to settle at $84.44 a barrel on the New York Mercantile Exchange, the lowest settlement level since July and the largest one-day drop in nearly a year. Brent crude oil on the ICE Futures Europe exchange dropped $4.25, or 3.8%, to $106.82 a barrel.
Front-month December reformulated gasoline blendstock, or RBOB, declined 11 cents, or 4.1%, to $2.5889 a gallon. December heating oil dropped 9.08 cents, or 3%, to $2.9621 a gallon.
Oil and fuel products fell along with stock markets, copper and other assets dependent on a continued economic recovery in the wake of the election.
Investors said President Barack Obama's victory paves the way for a partisan battle over what is known as the "fiscal cliff," a series of automatic tax increases and spending cuts that take effect Jan. 1, which could damp economic growth or possibly lead to a recession.
Oil prices have been on a steady decline since peaking at $99 a barrel in mid-September. Rising supplies from the U.S. and other regions have come amid falling demand as the global economy has appeared to weaken. The increase in U.S. gasoline stockpiles, after analysts had expected a drop, was due to a large inventory increase along the Gulf Coast.
The Colonial Pipeline, which sends fuel to the Northeast from Gulf refineries, was closed for several days last week after the storm flooded gasoline-distribution centers around New York Harbor. And traders and analysts said a nor'easter hitting the New York area Wednesday and Thursday could lead to another dip in demand as drivers stay off roads.
In other commodities markets:
WHEAT: Prices rose to a one-month settlement high, buoyed by concerns about unfavorable weather for crops growing in the U.S. and abroad. Traders cited concerns ranging from dry weather in the central U.S. to too much rain in Europe and Argentina. December wheat on the Chicago Board of Trade rose 17 cents, or 1.9%, to settle at $8.94 a bushel.
Subscribe to WSJ:
Credit: By Jerry A. DiColo
Subject: Crude oil; Commodity prices
Location: United States--US
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Nov 8, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1140995422
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1140995422?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
U.S. Reliance on OPEC Oil Seen Falling
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 Nov 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: LONDON--A boom in domestic energy output in the coming years will significantly cut U.S. reliance on crude oil from the Organization of the Petroleum Exporting Countries, but prices will remain elevated mostly because of the high cost of producing these unconventional reserves, according to forecasts from OPEC on Thursday.
These conclusions suggest that even if rising production of U.S. shale oil and Canadian oil sands fulfills one of the most prominent pledges of the recent presidential campaign--North American energy independence--U.S. motorists may not see significantly cheaper prices at the pump.
In its annual World Oil Outlook, OPEC acknowledged that rising domestic oil production would gradually diminish its members' role in the U.S. market as oil imports there fall by almost three-quarters, or 5 million barrels a day, between 2011 and 2035. This decline is 1 million barrels a day larger than last year's estimate.
The report said this will result in sharp cuts in purchases from African and Middle-Eastern oil producers--most of them OPEC members.
But much of this oil will be more expensive than previously expected, because the increased production will come mostly from more costly North American reservoirs, it said. Both U.S. shale oil and Canadian oil sands have higher production costs than most OPEC crude oil because they require a greater effort to extract from the ground.
OPEC expects the average price of a basket of the group's main export crudes, which has always been closely linked to international oil benchmarks such as Brent, to stay "at an average of $100 a barrel over the medium term before rising with inflation to reach $120 a barrel by 2025," and to $155 a barrel 10 years later, the group said.
The assumptions, without being official predictions, constitute a sharp upgrade from last year's report, which envisioned $85 to $95 a barrel through 2020 and $133 a barrel by 2035.
On Nov. 7, the OPEC basket price was $106.87 a barrel. It has averaged almost $110 a barrel this year.
The organization didn't provide any specific price guidance for the U.S. oil benchmark West Texas Intermediate, which has recently traded at a discount to the OPEC basket price. OPEC's report did say that the WTI discount should narrow over time with the alleviation of pipeline bottlenecks that have caused a temporary Midwest oil-supply glut.
The producers' group, which supplies roughly one in three barrels of oil consumed in the world each day, has long been a bête noire of U.S. politicians, some of whom have alleged that money used to buy oil from members in the Middle East ends up financing autocrats or terrorists.
As such, the goal of reducing the reliance on oil produced by OPEC featured prominently in the U.S. presidential campaign. Republican candidate Mitt Romney pointed directly to increased domestic oil production as a way to end "our expensive and dangerous dependence on OPEC."
President Barack Obama claimed that his fuel-efficiency program could save "as much as half of the oil we import from OPEC each day."
OPEC's data now suggest the U.S. is already on track to achieve this goal, following a large increase in its production forecast. OPEC sees the U.S. and Canada's 2015 oil production 2 million barrels a day higher than it forecast last year--the single largest upward revision in its report.
It now sees a rise of 14% to 11.2 million barrels a day in U.S. and Canadian production from 2011 to 2016, instead of a previously forecast decline. Almost all of Canada's oil exports go to the U.S.
OPEC cut its global oil demand forecast by more than 1 million barrels a day to 92.9 million barrels a day by 2016. Though that is still an increase of 4.6% compared with this year, the downgrade reflects lingering concerns over global economic growth and tepid consumption in industrialized nations.
Despite the weaker demand outlook, OPEC said its members still plan to invest about $270 billion in oil projects between 2012 and 2016, adding 5 million barrels a day in liquids-production capacity.
As it plays less of a role in North America, OPEC expects to redirect the bulk of its shipments to Asia.
Write to Benoit Faucon at
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 8, 2012
Section: World
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1143006504
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1143006504?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iraq Says Exxon Seeks Bids on Oil-Field Stake
Author: Hassan Hafidh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 Nov 2012: n/a.
ProQuest document link
Abstract:
BAGHDAD--U.S. energy company Exxon Mobil Corp. has asked interested oil companies to submit offers in December to buy its stake in a multibillion-dollar project in southern Iraq, Iraq's deputy prime minister for energy affairs said Thursday.
Full text: BAGHDAD--U.S. energy company Exxon Mobil Corp. has asked interested oil companies to submit offers in December to buy its stake in a multibillion-dollar project in southern Iraq, Iraq's deputy prime minister for energy affairs said Thursday.
Exxon, which upset Baghdad by signing a deal last year to explore for oil in Iraq's semiautonomous Kurdish region, has informed Iraq of its wish to sell its 60% stake in the West Qurna-1 project, Hussein al-Shahristani said in an interview.
"Exxon has started negotiations with companies, and it has set December to receive bids from them," Mr. Shahristani said.
"We are expecting the sale to be finalized by the end of this year," he said.
Exxon declined to comment.
Exxon can only sell its stake to the firms that the Iraqi Oil Ministry has prequalified to win oil and gas contracts in Iraq. "The buyer should be qualified in accordance with the criteria we have set up and Exxon needs to secure the Iraqi government's approval of the buyer before it sells its stake," Mr. Shahristani said.
Earlier in the day, the head of the largest Iraqi oil-production company, the South Oil Co., said Exxon wanted to share data on West Qurna-1 with companies like BP PLC, Eni SpA, Lukoil Holdings and other frms in order to sell part of its stake. The deputy prime minister, however, said Exxon would sell all of its stake.
At West Qurna-1, Exxon and minority partner Royal Dutch Shell PLC have raised output to nearly 400,000 barrels a day from 244,000 barrels a day when the pair signed up for the project in early 2010. The contract targets eventual output of 2.8 million barrels a day.
The venture gets some $1.90 for each extra barrel of oil produced above the 244,000 barrel-a-day baseline.
The withdrawal of Exxon from the gigantic West Qurna-1 oil field wouldn't affect Iraq's plans to increase production, Mr. Shahristani said. "Exxon's departure from West Qurna-1 won't have any effect on our production targets and all [oil] contracting companies working in Iraq are working at high efficiency to up output," he said.
Mr. Shahristani said Iraq's crude-oil production is expected to hit 3.6 million barrels a day in 2013, from above three million barrels a day now. He said Iraq is planning to export some 2.9 million barrels a day in 2013, up from the current 2.6 million barrels a day.
In November last year, Exxon Mobil provoked protest from Baghdad when it became the first major international oil company to sign petroleum contracts with the Kurdistan Regional Government, or KRG, despite Baghdad's threats to expel it from the contract in southern Iraq. Exxon signed a deal to develop six blocks with the KRG, which is locked in a feud with the Arab-dominated central government over land and oil rights.
Earlier this year, U.S. oil company Chevron Corp., France's Total SA and the oil-producing arm of Russia's Gazprom all followed Exxon Mobil's lead by striking their own deals in Kurdistan.
Write to Hassan Hafidh at
Credit: By Hassan Hafidh
Subject: Petroleum production; Petroleum industry; Prime ministers
Location: United States--US Iraq
Company / organization: Name: South Oil Co; NAICS: 211111; Name: Eni SpA; NAICS: 324110, 211111; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: BP PLC; NAICS: 447110, 324110, 211111; Name: Exxon Mobil Corp; NAICS: 447110, 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 8, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1143425089
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1143425089?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Iraq Says Exxon Asked To Discuss Field Sale With Other Firms
Author: Hassan Hafidh
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 Nov 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: LONDON--Exxon Mobil Corp. has asked for permission to share data about the West Qurna 1 oil field project in Iraq with BP PLC, Eni SpA, Lukoil Holdings and a number of other companies, with the aim of selling part of its stake in the project, the head of Iraq's Southern Oil Company, Dhiaa Jafar, said Thursday.
Exxon signed an agreement with the Kurdish Regional Government in 2011 to explore for oil there, in defiance of Baghdad, which says only the central Iraqi government has the right to grant such licenses.
Exxon Mobil also operates the West Qurna 1 project, which is boosting production by applying the latest technology to an old oil field neglected during many years of conflict and sanctions. It has raised output to nearly 400,000 barrels a day from 244,000 barrels a day. The contract targets eventual output of 2.825 million barrels a day.
The government has agreed to pay Exxon Mobil $1.90 for each additional barrel of oil pumped from the field. The fees would barely be enough to cover the companies' costs, and industry analysts say Exxon Mobil's exploration opportunities in Kurdistan look much more attractive.
Credit: By Hassan Hafidh
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 8, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1143429891
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1143429891?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Ex-Oil Man to Be NamedAnglicans' Global Leader
Author: Whalen, Jeanne; Colchester, Max
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]08 Nov 2012: n/a.
ProQuest document link
Abstract:
LONDON--A former oil executive is widely expected to be named the new Archbishop of Canterbury on Friday, people familiar with the matter said, an appointment that would hand him the reins of the global Anglican Communion as it struggles to overcome internal disputes and declining membership.
Full text: LONDON--A former oil executive is widely expected to be named the new Archbishop of Canterbury on Friday, people familiar with the matter said, an appointment that would hand him the reins of the global Anglican Communion as it struggles to overcome internal disputes and declining membership.
The appointment of the Right Rev. Justin Welby to the top job would cap the rapid rise of a man who just last year became the bishop of Durham, a diocese in England's north. Priests and bishops on Thursday spoke about the appointment as a done deal.
A spokesman for the Archbishop of Canterbury's office said a new archbishop would be announced Friday, but declined to comment further. A spokesman for Bishop Welby didn't respond to requests to comment.
The archbishop of Canterbury--a role that has existed for more than 1,400 years--is the head of the Church of England and the spiritual leader of Anglican churches world-wide, including the U.S. Episcopalian church. Anglicans are the third largest Christian group globally, after Roman Catholics and Eastern Orthodox believers.
The Church of England is the country's official, state-sanctioned religion. The Queen is the church's supreme governor, and appoints its archbishops and bishops on the advice of the Prime Minister, who considers candidates proposed by church leaders.
A committee of church leaders chooses a candidate for the job, whom the Queen must endorse. The prime minister's office, which declined to comment, then announces the new archbishop.
The current archbishop of Canterbury, Rowan Williams, this year said he planned to step down after 10 years in the job. His tenure was hampered by fractious debates between conservative and liberal wings of the church about the role of women and gay clergy, and the rights of gay parishioners to marry. Like most Christian faiths, the Anglican Communion, an international association of churches, is also wrestling with declining membership amid an increasingly secular Western world.
Bishop Welby is an unorthodox choice for the church's top job. He studied law and history at Cambridge before spending 11 years in the old industry, working both in Paris for French oil company Elf Aquitaine and London as a specialist in West African and North Sea projects. In 1984 he became group treasurer of oil exploration company Enterprise Oil PLC.
He quit the oil industry in 1987, when he says he heard a calling to become a priest. "I had a sense of getting called by God to get ordained and being unable to escape that," he said in an interview with The Wall Street Journal in September. "I thought I would just be a vicar running parish churches," he said at the time, adding that he had visited Canterbury only once in his life.
Bishop Welby has attracted attention in recent months as a member of a parliamentary committee grilling top bankers about ethics and standards. The inquiry was established in July on the heels of news that several banks allegedly sought to rig interest rates such as the London interbank lending rate, known as Libor.
His questioning has at times been sharp, such as when he quizzed Barclays incoming chairman, David Walker, about issues ranging from risk to accounting principles. "Whose risk appetite are you talking about?" the bishop asked. "The country's? Society's? The central bank? Or the shareholders?"
Church of England leaders said Thursday that Bishop Welby is known for supporting women priests becoming bishops--something that has long been possible in the U.S. Episcopalian church but isn't yet allowed in the Church of England. The Church of England's governing body, the general synod, is expected to update its position on women bishops this month, after it meets in London.
British media said Bishop Welby opposes gay marriage. The Church of England supports civil partnerships for gay couples but opposes marriage. Some priests defy this position and perform marriage ceremonies in private homes. Bishop Welby's spokesman didn't respond to requests to clarify his position on the issue.
Alan Wilson, the bishop of Buckingham and a public supporter of gay marriage and women bishops, said in an interview Thursday that the church needs to stop "faffing about" with these questions and bring itself into the modern era. "Society has moved on incredibly in the last 10 years," he said. "Most people find it surreal that any serious grown-up body is talking about whether women can be in leadership these days."
Bishop Welby studied at the exclusive private school Eton College and at Cambridge University. One Church of England priest known for his antiestablishment views, Giles Fraser, scoffed at the bishop's privileged background in a Twitter post Thursday.
"So now the Prime Minister, the Mayor of London and the Archbishop of Canterbury all went to Eton," he wrote.
Cassell Bryan-Low contributed to this article.
Credit: By Jeanne Whalen And Max Colchester
Subject: Anglican churches; Clergy; Job openings; LIBOR
Location: England
People: Welby, Justin (Bishop of Durham)
Company / organization: Name: Enterprise Oil PLC; NAICS: 211111; Name: Anglican Communion; NAICS: 813110; Name: Church of England; NAICS: 813110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 8, 2012
Section: Europe
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1143446182
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1143446182?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Ex-Oil Man and Scholar Is Seen as Anglicans' Next Leader
Author: Whalen, Jeanne; Colchester, Max
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 Nov 2012: n/a.
ProQuest document link
Abstract:
LONDON--A former oil executive is widely expected to be named the new Archbishop of Canterbury on Friday, people familiar with the matter said, an appointment that would hand him the reins of the global Anglican Communion as it struggles to overcome internal disputes and declining membership.
Full text: LONDON--A former oil executive is widely expected to be named the new Archbishop of Canterbury on Friday, people familiar with the matter said, an appointment that would hand him the reins of the global Anglican Communion as it struggles to overcome internal disputes and declining membership.
The appointment of the Right Rev. Justin Welby to the top job would cap the rapid rise of a man who just last year became the bishop of Durham, a diocese in England's north. Priests and bishops Thursday spoke about the appointment as a done deal.
A spokesman for the Archbishop of Canterbury's office said a new archbishop would be announced Friday, but declined to comment further. A spokesman for Bishop Welby didn't respond to requests to comment.
The archbishop of Canterbury--a role that has existed for more than 1,400 years--is the head of the Church of England and the spiritual leader of Anglican churches world-wide, including the U.S. Episcopalian church. Anglicans are the third largest Christian group globally, after Roman Catholics and Eastern Orthodox believers. The Church of England is the country's official, state-sanctioned religion.
The Queen is the church's supreme governor, and appoints its archbishops and bishops on the advice of the prime minister, who considers candidates proposed by church leaders. The prime minister's office declined to comment.
The current archbishop of Canterbury, Rowan Williams, this year said he planned to step down after 10 years in the job.
His tenure was hampered by fractious debates between conservative and liberal wings of the church about the role of women and gay clergy, and the rights of gay parishioners to marry. Like most Christian faiths, the Anglican Communion, an international association of churches, is also wrestling with falling membership amid an increasingly secular Western world.
Bishop Welby is an unorthodox choice for the church's top job. He studied law and history at Cambridge before spending 11 years working both in Paris for French oil company Elf Aquitaine and London as a specialist in West African and North Sea projects. In 1984 he became group treasurer of oil exploration company Enterprise Oil PLC.
He quit the oil industry in 1987, when he says he heard a calling to become a priest. "I had a sense of getting called by God to get ordained and being unable to escape that," he said in an interview with The Wall Street Journal in September. "I thought I would just be a vicar running parish churches," he said at the time, adding that he had visited Canterbury only once in his life.
Bishop Welby has attracted attention in recent months as a member of a parliamentary committee grilling top bankers about ethics and standards. The inquiry was established in July on the heels of news that several banks allegedly sought to rig interest rates such as the London interbank lending rate, known as Libor.
His questioning has at times been sharp, such as when he quizzed Barclays incoming chairman, David Walker, about issues ranging from risk to accounting principles. "Whose risk appetite are you talking about?" the bishop asked. "The country's? Society's? The central bank? Or the shareholders?"
Church of England leaders said Thursday that Bishop Welby is known for supporting women priests becoming bishops--something that has long been possible in the U.S. Episcopalian church but isn't yet allowed in the Church of England. The Church of England's governing body, the general synod, is expected to update its position on women bishops this month, after it meets in London.
British media said Bishop Welby opposes gay marriage. The Church of England supports civil partnerships for gay couples but opposes marriage. Some priests defy this position and perform marriage ceremonies in private homes. Bishop Welby's spokesman didn't respond to requests to clarify his position on the issue.
Alan Wilson, the bishop of Buckingham and a public supporter of gay marriage and women bishops, said in an interview Thursday that the church needs to stop "faffing about" with these questions and bring itself into the modern era. "Society has moved on incredibly in the last 10 years," he said. "Most people find it surreal that any serious grown-up body is talking about whether women can be in leadership these days."
Bishop Welby studied at the exclusive private school Eton College and at Cambridge University. One Church of England priest known for his antiestablishment views, Giles Fraser, scoffed at the bishop's privileged background in a Twitter post Thursday.
"So now the Prime Minister, the Mayor of London and the Archbishop of Canterbury all went to Eton," he wrote.
Cassell Bryan-Low contributed to this article.
Write to Jeanne Whalen at and Max Colchester at
Credit: By Jeanne Whalen and Max Colchester
Subject: Anglican churches; Clergy; LIBOR
Location: England
Company / organization: Name: Enterprise Oil PLC; NAICS: 211111; Name: Anglican Communion; NAICS: 813110; Name: Church of England; NAICS: 813110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 9, 2012
Section: Europe
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1143602460
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1143602460?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
World News: Ex-Oil Man and Scholar Is Seen as Anglicans' Next Leader
Author: Whalen, Jeanne; Colchester, Max
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]09 Nov 2012: A.14. [Duplicate]
ProQuest document link
Abstract:
A former oil executive is widely expected to be named the new Archbishop of Canterbury on Friday, people familiar with the matter said, an appointment that would hand him the reins of the global Anglican Communion as it struggles to overcome internal disputes and declining membership.
Full text: LONDON -- A former oil executive is widely expected to be named the new Archbishop of Canterbury on Friday, people familiar with the matter said, an appointment that would hand him the reins of the global Anglican Communion as it struggles to overcome internal disputes and declining membership.
The appointment of the Right Rev. Justin Welby to the top job would cap the rapid rise of a man who just last year became the bishop of Durham, a diocese in England's north. Priests and bishops Thursday spoke about the appointment as a done deal.
A spokesman for the Archbishop of Canterbury's office said a new archbishop would be announced Friday, but declined to comment further. A spokesman for Bishop Welby didn't respond to requests to comment.
The archbishop of Canterbury -- a role that has existed for more than 1,400 years -- is the head of the Church of England and the spiritual leader of Anglican churches world-wide, including the U.S. Episcopalian church. Anglicans are the third-largest Christian group globally, after Roman Catholics and Eastern Orthodox believers. The Church of England is the country's official, state-sanctioned religion.
A panel of church leaders pick a candidate for the job, whom the queen must endorse. The prime minister's office, which declined to comment, then announces the new archbishop.
The current archbishop of Canterbury, Rowan Williams, this year said he planned to step down after 10 years in the job.
His tenure was hampered by fractious debates between conservative and liberal wings of the church about the role of women and gay clergy, and the rights of gay parishioners to marry. Like most Christian faiths, the Anglican Communion, an international association of churches, is also wrestling with falling membership amid an increasingly secular Western world.
Bishop Welby is an unorthodox choice for the church's top job. He studied law and history at Cambridge before spending 11 years working both in Paris for French oil company Elf Aquitaine and London as a specialist in West African and North Sea projects. In 1984 he became group treasurer of oil exploration company Enterprise Oil PLC.
He quit the oil industry in 1987, when he says he heard a calling to become a priest. "I had a sense of getting called by God to get ordained and being unable to escape that," he said in an interview with The Wall Street Journal in September. "I thought I would just be a vicar running parish churches."
Bishop Welby has attracted attention in recent months as a member of a parliamentary committee grilling top bankers about ethics and standards.
His questioning has at times been sharp, such as when he quizzed Barclays incoming chairman, David Walker, about issues ranging from risk to accounting principles. "Whose risk appetite are you talking about?" the bishop asked. "The country's? Society's? The central bank? Or the shareholders?"
Church of England leaders said Thursday that Bishop Welby is known for supporting women priests becoming bishops-- something that has long been possible in the U.S. Episcopalian church but isn't yet allowed in the Church of England.
British media said Bishop Welby opposes gay marriage. The Church of England supports civil partnerships for gay couples but opposes marriage. Bishop Welby's spokesman didn't respond to requests to comment.
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Credit: By Jeanne Whalen and Max Colchester
Subject: Anglican churches; Civil unions; Clergy
Location: England
People: Williams, Rowan Welby, Justin (Bishop of Durham)
Company / organization: Name: Enterprise Oil PLC; NAICS: 211111; Name: Church of England; NAICS: 813110; Name: Societe Nationale Elf Aquitaine; NAICS: 211111; Name: Anglican Communion; NAICS: 813110
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.14
Publication year: 2012
Publication date: Nov 9, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1143841756
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1143841756?accountid=7 117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Chris Keesee; An Oil Man's Contemporary Finds
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]09 Nov 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: From antique stamps and Russian paintings to Brett Weston photographs and contemporary conceptual art, the collecting of New York-based banker and oil man Chris Keesee, age 50, has whipsawed over the years.
Mr. Keesee's latest move is Marfa Contemporary, an art space he opened last month in a former gas station in the remote West Texas town. The Marfa area has become an art-world pilgrimage spot ever since sculptor Donald Judd put down roots there three decades ago. Recently, Mr. Keesee discussed his collection. Below, an edited transcript.
Kelly Crow
If I drop dead tomorrow, I don't want someone to say, "Oh, he had a standard collection--he had a Picasso." My collection should be about me and my family and the artists who have had an influence on us over several generations. It's not the 10 greatest hits of Western civilization.
The thing is, I can go to a local arts festival and pay $5,000 for a totally unknown artist--but I can also go to an auction house and get a Rembrandt etching for around that much. If I could do it all over again, I probably would write more $5,000 checks to buy Rembrandt etchings than art-festival Sunday painter pieces, but you want a balance.
The artist I'm most proud to own right now is Tomás Saraceno. He's a conceptual installation artist from Argentina. I first saw his work in 2007 at the Venice Biennale, where he stretched these black spider-web-like strings all over this room. His dealer kept telling me, "Oh, he has no time." Then suddenly this year the gallery called to see if I wanted to buy one of his biggest works. I jumped into action; he was a good risk. And later I lent that piece, "Cloud City," to the Metropolitan Museum of Art, and they put it on their roof. Eventually I want to take "Cloud City" to Marfa, but it can't be a permanent piece there--the last thing I want to see is it blowing away in a dust storm, tumbling across the desert.
I keep an "Artists of Interest" file at home, and another artist in it is Jason Hackenwerth. Jason travels the world doing these amazing installations with balloons. I own some prints of his past projects. Now, the fantasy artist in my file is Richard Serra--he's my dream sculptor. I love the color his steel sculptures turn to, the gracefulness of his works' arcs.
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 9, 2012
Section: Life and Style
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1147259478
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1147259478?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Cost of Exxon LNG Project Jumps Again
Author: Ross, Kelly
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 Nov 2012: n/a.
ProQuest document link
Abstract:
The increase illustrates the intensifying cost pressures global oil companies such as Exxon, Chevron Corp. and Royal Dutch Shell PLC face as they seek to tap Asia's growing demand for cleaner-burning fuels by building LNG export terminals in places such as Australia and Papua New Guinea.
Full text: SYDNEY--Exxon Mobil Corp. said Monday that the cost of building a liquefied-natural-gas project in Papua New Guinea had jumped about 20% to US$19 billion due to exchange-rate movements, disputes with landowners and torrential rain.
The increase illustrates the intensifying cost pressures global oil companies such as Exxon, Chevron Corp. and Royal Dutch Shell PLC face as they seek to tap Asia's growing demand for cleaner-burning fuels by building LNG export terminals in places such as Australia and Papua New Guinea.
Chevron said this year that it was reviewing costs at the 43 billion Australian dollar (US$45 billion) Gorgon LNG project in Western Australia state, citing a 20% rise in the Australian dollar since construction started in 2009. Exxon and Shell are also large investors in Gorgon.
The cost of Exxon's LNG project in Papua New Guinea is now expected to rise by $3.3 billion from the previous estimate, the company said in a written statement. The facility was 70%-completed and on track to ship the first cargoes to China, Japan and Taiwan in 2014, Exxon said.
Exxon said the cost overrun would be offset by higher output capacity of 6.9 million metric tons a year, up from 6.6 million tons, as well as a 30% rise in the price of LNG since construction of the project began in 2009.
"Despite the cost increase, it's still the most profitable project under construction in the region," said Matthew Howell, an analyst at energy-industry consultancy Wood Mackenzie. "We don't see the increase affecting its commercial viability."
The price tag for the project has been revised previously. Last year, Exxon raised its estimate to US$15.7 billion from an initial US$15 billion.
The increases underscore the unique challenges companies face in Papua New Guinea, an impoverished Pacific nation better known for its jungles and lawlessness than its energy industry.
Exxon operates and owns 33.2% of PNG LNG, as the project is known. Australia's Oil Search Ltd. and Santos Ltd. own 29% and 13.5%, respectively. The balance is split mostly among the local government and dozens of landowning tribes that frequently stage protests--and violent attacks--against what they say is an unfair distribution of benefits from the project.
Papua New Guinea presents logistical challenges, including that of moving gas from the highlands to the coast via a 190-mile pipeline that traverses rugged terrain at as much as 650 feet above sea level. From the shore, the gas must be transported by a 250-mile underwater pipeline to a processing terminal.
Foreign-exchange accounted for US$1.4 billion of the latest cost increase, Oil Search said. Work stoppages and land-access disputes added US$1.2 billion, it said. An additional US$700 million was pinned on adverse logistics and weather conditions, including rainfall that Exxon said exceeded historic norms for most of the past two years.
Both Oil Search and Santos said they had ample liquidity to cover the additional funding requirements. Their shares fell 3.4% and 2.2%, respectively, in Sydney.
Write to Ross Kelly at
Credit: By Ross Kelly
Subject: Petroleum industry; LNG; Natural gas
Location: Asia United States--US Papua New Guinea Western Australia Australia
Company / organization: Name: Chevron Corp; NAICS: 324110, 211111; Name: Exxon Mobil Corp; NAICS: 447110, 211111; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 12, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1151023956
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1151023956?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
IEA Pegs U.S. as Top Oil Producer by 2020
Author: Faucon, Benoît; Kent, Sarah
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]12 Nov 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: A shale-oil boom will thrust the U.S. ahead of Saudi Arabia as the world's largest oil producer by 2020, a radical shift that could profoundly transform not just the world's energy supplies but also its geopolitics, the International Energy Agency said.
In its closely watched annual World Energy Outlook, the IEA, which advises industrialized nations on their energy policies, said the global energy map "is being redrawn by the resurgence in oil and gas production in the United States."
The assessment, released Monday, contrasts with last year, when it envisioned Russia and Saudi Arabia vying for the top position.
"By around 2020, the United States is projected to become the largest global oil producer" and to overtake Saudi Arabia for a time, the agency said. "The result is a continued fall in U.S. oil imports [currently at 20% of its needs] to the extent that North America becomes a net oil exporter around 2030."
This shift will be driven primarily by the faster-than-expected development of hydrocarbon resources locked in shale and other tight rock formations that have just started to be unlocked by a new combination of two technologies: hydraulic fracturing and horizontal drilling.
The IEA's projections show U.S. oil production peaking in 2020 at 11.1 million barrels a day, up from 8.1 million barrels a day in 2011.
Within a decade, the IEA forecasts that U.S. oil imports will drop by more than half to just four million barrels a day, from 10 million barrels a day currently. Much of this decline will be because of higher domestic production, but efforts to improve energy efficiency in the transport sector will also prove significant, the IEA said.
The IEA's conclusions are partly backed by the Organization of the Petroleum Exporting Countries, which acknowledged for the first time last week that shale oil would significantly diminish its share of the U.S. market.
OPEC said the U.S. would import less than two million barrels a day in 2035, almost three-quarters less than it does today.
That isn't to say OPEC's role will be marginalized globally. The organization's share of global production will increase to 50% in 2035 from 42% today, with much of it going to Asia, according to the IEA.
It said the U.S. need for oil imports from the Middle East will fall to almost zero in the next 10 years, while almost 90% of Middle Eastern oil exports will go to Asia by 2035, creating a new trade axis. The IEA hinted that U.S. energy independence could redefine military alliances, with Asian nations replacing the U.S. in securing oil shipping lanes from the Persian Gulf.
"Asian countries should have much greater interest in the stability and security of their suppliers in the Middle East," said Richard Jones, deputy executive director at the IEA.
Some in the U.S. are already questioning the reasons for keeping U.S. warships in the Persian Gulf. "It's insane that we have the Fifth Fleet of the U.S. Navy tied up there to protect oil that ends up in China and Europe," T. Boone Pickens, chief executive of energy-focused hedge fund BP Capital Management, was quoted as saying last week in the U.S. magazine Parade.
The IEA said, however, that U.S. primacy in world oil production could prove short-lived.
"If no new [U.S.] resources are discovered and if the [oil] prices are not as high as today, then we may see Saudi Arabia coming back as the first producer again," said Faith Birol, chief economist and director of global energy economics at IEA.
The IEA warned that the emergence of shale gas as a game changer in global energy has a downside risk, in that it will contribute to increased competition for water resources needed for energy projects.
Shale oil and gas are extracted by pumping water, sand and chemicals into the ground at high pressure to crack rocks open, a process known as hydraulic fracturing, or "fracking."
But the intensive use of water, "will increasingly impose additional costs," and could "threaten the viability of projects" for shale oil and gas, and also biofuels, the agency said.
Write to Sarah Kent at
Credit: By Benoît Faucon And Sarah Kent
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 12, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1151057563
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1151057563?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. Redraws World Oil Map; Shale Boom Puts America on Track to Surpass Saudi Arabia in Production by 2020
Author: Faucon, Benoît; Johnson, Keith
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Nov 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: A shale-oil boom will help the U.S. overtake Saudi Arabia as the world's largest oil producer by 2020, according to the International Energy Agency, a shift that could transform not just energy supplies but also U.S. politics and diplomacy.
The Paris-based agency, which advises industrialized nations on their energy policies, said the global energy map "is being redrawn by the resurgence in oil and gas production in the United States."
The assessment--a stark contrast from last year, when Russia and Saudi Arabia were seen vying for the top position--comes a week after the end of a presidential campaign in which energy was a prime topic, and it shows how different President Barack Obama's second term will be from his first on energy policy.
Four years ago, the perception of energy scarcity and rising concern about global warming led Mr. Obama to push for legislation capping greenhouse-gas emissions and to pump billions of federal dollars into green-energy companies. Both policies caused grief for the president, as the greenhouse-gas bill died in the Senate and Republicans attacked him over the bankruptcy of solar-panel maker Solyndra LLC.
In Mr. Obama's second term, Republican control of the House makes any big climate-change legislation unlikely, and budget deficits will limit any effort to spend billions more on green-energy projects.
But the surge in U.S. oil production, to a projected 11.1 million barrels a day in 2020, has given the White House a chance to make peace with Republicans and energy executives, at least on some fronts. Like Republicans, Mr. Obama has said that growing energy extraction in the U.S. can create jobs and boost the economy. Also, the rising use of natural gas in place of coal to generate electricity helps reduce carbon-dioxide emissions without legislation.
The IEA, an authoritative source of information on global oil markets, is joining other forecasters such as the Organization of the Petroleum Exporting Countries and the U.S. Energy Information Administration in predicting the sharp rise in U.S. oil production in the coming years.
The IEA also said natural gas will displace oil as the largest single fuel in the U.S. energy mix by 2030. U.S. carbon-dioxide emissions from energy consumption were down 5.3% in the first seven months of 2012, compared to the same period a year earlier, according to U.S. government figures. That came as natural gas accounted for 31% of U.S. electricity generation in the first eight months of this year, up from 24% a year earlier.
"The entire energy policy of the U.S. has been about scarcity, derived from the 1970s supply shocks," said Kevin Book, managing director at Clearview Energy Partners LLC. "Now, we have a different reality--the age of energy adequacy."
Higher U.S. oil production doesn't necessarily mean lower prices at the gasoline pump, because oil prices are set on the global market, and U.S. oil is expensive to extract. Next-month oil futures traded around $85.62 a barrel late Monday, down from nearly $100 a barrel in September. U.S. and Iraqi production have helped keep a lid on prices, but a bigger factor may be Europe's economic woes and weaker global demand.
U.S. oil consumption last year also dropped to 18.9 million barrels a day, down 8.4% from 2006, and the IEA projected continued declines in coming decades.
For U.S. businesses, the energy shifts bring opportunities. The glut of inexpensive natural gas from widespread use of hydraulic fracturing, or fracking, has driven down energy costs for industrial consumers, helping large manufacturers, as well as the fertilizer and chemical firms.
But the changes can take industry players off guard. Some U.S. refiners spent billions upgrading their refineries to process heavier crude oil found outside the U.S. in places such as Venezuela's Orinoco belt or in Canada's tar sands. If the IEA's predictions come true, the U.S. could soon be awash in easier-to-process domestic crude oil--with no way to get rid of the excess supply, because U.S. law generally bans crude-oil exports. That would force new investment in refining capacity for lighter, sweeter grades of oil.
The made-in-USA oil is already displacing imports of similar crude from West Africa, and the market for it could be saturated as early as 2013, said analysts with Raymond James. "The question is: will federal regulators allow these exports to materialize?" the analysts asked in a research note, adding that allowing exports could be politically tricky. The crude export ban was designed to ensure U.S. energy security following the Arab oil embargo in 1973.
Within a decade, the IEA forecasts U.S. oil imports will fall by more than half, to just four million barrels a day from 10 million barrels a day currently. It credited tougher gas-mileage standards for cars, mandated in Mr. Obama's first term, in addition to the higher domestic oil output.
The IEA suggested that newly found U.S. energy independence could redefine military commitments. OPEC will continue to be the powerhouse of global production, the agency said, but a growing portion of its output will go to nations like China and India instead of North America.
"It accelerates the switch in direction of international oil trade toward Asia, putting a focus on the security of the strategic routes that bring Middle East oil to Asian markets," it said.
China already receives half of its oil imports from the Persian Gulf, while the U.S. receives less than 20% of its imports from the region. U.S. military protection of Middle East sea lanes has for decades been a core mission of the Navy's Fifth Fleet, at an estimated cost of between $60 billion and $80 billion a year. Given the high U.S. budget deficit, looming defense cuts and what many perceive as an overstretched Navy, that mission could come into question.
However, no other navy could ensure global freedom of navigation on the high seas, a task the British Navy carried out during the 19th and early 20th century and which the U.S. Navy has handled since World War II.
The recent increase in U.S. oil and gas drilling has led to a backlash that is particularly strong among people who supported Mr. Obama. Environmental groups have expressed concern about the risk to groundwater from fracking, a technology that uses pressurized water and chemicals to break open rocks to access more oil and natural gas.
The intensive use of water "will increasingly impose additional costs" and could "threaten the viability of projects" for shale oil and gas, the IEA said.
Delighting environmental activists, Mr. Obama blocked the Keystone XL pipeline from Canada through the central U.S., expressing concern about risks to an important aquifer in Nebraska along the pipeline's route. Republicans and the energy industry claimed the decision was evidence the administration was hostile to traditional energy sources.
Mr. Obama must also decide how quickly he wants to push the transition to natural gas from coal for generating electricity. Following a 2007 Supreme Court ruling, the Environmental Protection Agency is soon set to complete emissions rules for new power plants, which could be so strict as to make new coal-fired plants prohibitively expensive.
Mr. Obama backed an "all of the above" energy policy in the campaign, saying he supports oil, gas and clean coal, as well as renewable sources.
Meanwhile, after Hurricane Sandy and other weather events revived fears about global warming, the administration is hearing new calls for a carbon tax, designed to stimulate alternative energy by making oil, gas and coal more expensive. The idea has gained traction even among Republican economists, and a leading conservative think tank, the American Enterprise Institute, is debating the issue Tuesday. But House Republicans are loath to raise taxes.
Ángel González, Russell Gold and Sarah Kent contributed to this article.
Write to Keith Johnson at
Credit: By Benoît Faucon And Keith Johnson
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 13, 2012
Section: World
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1151138289
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1151138289?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Blackstone in $1.2 Billion Venture With Gulf Oil Producer
Author: Dezember, Ryan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Nov 2012: n/a.
ProQuest document link
Abstract:
Like the rest of the U.S. oil patch, the Gulf of Mexico has seen an influx of private-equity investment this year, bolstering small operations that many had feared would struggle to survive in the Gulf after the BP PLC oil spill in 2010.
Full text: Blackstone Group LP has agreed to a multibillion-dollar partnership with one of the largest closely held offshore oil producers in the U.S., in a tie-up that extends private equity's dive into the Gulf of Mexico.
Blackstone and LLOG Exploration Company LLC said they have formed a joint venture that will develop the Covington, La., company's recent offshore discoveries and a portfolio of deep-water ocean-bottom prospects, investing a combined $1.2 billion to start.
"This is a real vote of confidence in the Gulf," said Angelo Acconcia, a Blackstone managing director.
Deep-water drilling is a high-risk, high-reward business. Such wells are drilled miles beneath the ocean's surface and can cost more than $100 million apiece, and their success rate hovers around 50%. But if drilling hits its target, such wells can yield hundreds of millions of barrels of oil.
LLOG and Blackstone envision future equity investments in the joint venture, which also will be able to tap debt markets for future funding.
Blackstone along with other private-equity firms have focused on energy, pumping cash into the capital-hungry domestic-energy industry. "Energy is our single-best industry sector in private equity," Blackstone President Hamilton "Tony" James told investors last month. "We've never had a loss in energy. Our average realization is six times our money."
Founded in 1977, LLOG's average daily output is nearly equal to 30,000 barrels of oil. Though the oil-and-gas producer has some onshore properties in Louisiana and Texas, its primary assets are its interests in about 150 Gulf of Mexico drilling blocks.
LLOG wells that already produce oil and gas will remain with the company, but all of its undeveloped assets, including a pair of deep-water discoveries made this summer, will be owned by and funded by the partnership. In all, the company touts 90 undeveloped prospects in the Gulf.
In August LLOG said it and five partners discovered oil and gas more than three miles below the ocean floor in the Mississippi Canyon, an underwater geologic formation that lies south of Louisiana. Completing those wells and building an offshore production facility capable of processing 80,000 barrels of oil a day will be among the partnership's first priorities, said LLOG Chief Executive Scott Gutterman.
Nearly every well in the Gulf is owned by multiple parties in order to spread drilling costs and risks. Mr. Gutterman said that having Blackstone as a permanent financial partner will allow LLOG to reduce the resources it traditionally uses to find partners for each well it drills.
Like the rest of the U.S. oil patch, the Gulf of Mexico has seen an influx of private-equity investment this year, bolstering small operations that many had feared would struggle to survive in the Gulf after the BP PLC oil spill in 2010.
Earlier this year Warburg Pincus LLC, along with partners that include Singapore's state investment firm Temasek Holdings, pledged $1.125 billion to help Brian Reinsborough, the former head of Canadian energy explorer Nexen Inc.'s U.S. unit, launch deep-water explorer Venari Resources LLC. Meanwhile Apollo Global Management LLC and Riverstone Holdings LLC teamed up to invest $600 million in offshore exploration startup Talos Energy LLC.
Write to Ryan Dezember at
Credit: By Ryan Dezember
Subject: Petroleum industry; Drilling; Acquisitions & mergers; Joint ventures; Energy industry; Private equity
Location: United States--US Louisiana
Company / organization: Name: Blackstone Group LP; NAICS: 523110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 13, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1151176036
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1151176036?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Corporate News: Blackstone Forms Big Oil Venture
Author: Dezember, Ryan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]13 Nov 2012: B.7.
ProQuest document link
Abstract:
Blackstone and LLOG Exploration Company LLC said they have formed a joint venture that will develop the Covington, La., company's recent offshore discoveries and a portfolio of deep-water ocean-bottom prospects, investing a combined $1.2 billion to start.
Full text: Blackstone Group LP has agreed to a multibillion-dollar partnership with one of the largest closely held offshore oil producers in the U.S., in a tie-up that extends private equity's dive into the Gulf of Mexico.
Blackstone and LLOG Exploration Company LLC said they have formed a joint venture that will develop the Covington, La., company's recent offshore discoveries and a portfolio of deep-water ocean-bottom prospects, investing a combined $1.2 billion to start.
"This is a real vote of confidence in the Gulf," said Angelo Acconcia, a Blackstone managing director.
Deep-water drilling is a high-risk, high-reward business. Such wells are drilled miles beneath the ocean's surface and can cost more than $100 million apiece, and their success rate hovers around 50%. But if drilling hits its target, such wells can yield hundreds of millions of barrels of oil.
LLOG and Blackstone envision future equity investments in the joint venture, which also will be able to tap debt markets for future funding.
Blackstone along with other private-equity firms have focused on energy, pumping cash into the capital-hungry domestic-energy industry.
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Credit: By Ryan Dezember
Subject: Petroleum industry; Joint ventures; Private equity; Offshore oil exploration & development
Location: United States--US
Company / organization: Name: Blackstone Group LP; NAICS: 523110; Name: Llog Exploration Co; NAICS: 213112
Classification: 8130: Investment services; 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.7
Publication year: 2012
Publication date: Nov 13, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1151265708
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1151265708?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. Redraws World Oil Map --- Shale Boom Puts America on Track to Surpass Saudi Arabia in Production by 2020
Author: Faucon, Benoit; Johnson, Keith
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]13 Nov 2012: A.1. [Duplicate]
ProQuest document link
Abstract:
The IEA, an authoritative source of information on global oil markets, is joining other forecasters such as the Organization of the Petroleum Exporting Countries and the U.S. Energy Information Administration in predicting the sharp rise in U.S. oil production in the coming years.
Full text: A shale-oil boom will help the U.S. overtake Saudi Arabia as the world's largest oil producer by 2020, according to the International Energy Agency, a shift that could transform not just energy supplies but also U.S. politics and diplomacy.
The Paris-based agency, which advises industrialized nations on their energy policies, said the global energy map "is being redrawn by the resurgence in oil and gas production in the United States."
The assessment -- a stark contrast from last year, when Russia and Saudi Arabia were seen vying for the top position -- comes a week after the end of a presidential campaign in which energy was a prime topic, and it shows how different President Barack Obama's second term will be from his first on energy policy.
Four years ago, the perception of energy scarcity and rising concern about global warming led Mr. Obama to push for legislation capping greenhouse-gas emissions and to pump billions of federal dollars into green-energy companies. Both policies caused grief for the president, as the greenhouse-gas bill died in the Senate and Republicans attacked him over the bankruptcy of solar-panel maker Solyndra LLC.
In Mr. Obama's second term, Republican control of the House makes any big climate-change legislation unlikely, and budget deficits will limit any effort to spend billions more on green-energy projects.
But the surge in U.S. oil production, to a projected 11.1 million barrels a day in 2020, has given the White House a chance to make peace with Republicans and energy executives, at least on some fronts. Like Republicans, Mr. Obama has said that growing energy extraction in the U.S. can create jobs and boost the economy. Also, the rising use of natural gas in place of coal to generate electricity helps reduce carbon-dioxide emissions without legislation.
The IEA, an authoritative source of information on global oil markets, is joining other forecasters such as the Organization of the Petroleum Exporting Countries and the U.S. Energy Information Administration in predicting the sharp rise in U.S. oil production in the coming years.
The IEA also said natural gas will displace oil as the largest single fuel in the U.S. energy mix by 2030. U.S. carbon-dioxide emissions from energy consumption were down 5.3% in the first seven months of 2012, compared to a year earlier, according to U.S. figures. That came as natural gas accounted for 31% of U.S. electricity generation in the first eight months of this year, up from 24% a year earlier.
"The entire energy policy of the U.S. has been about scarcity, derived from the 1970s supply shocks," said Kevin Book, managing director at Clearview Energy Partners LLC. "Now, we have a different reality -- the age of energy adequacy."
Higher U.S. oil production doesn't necessarily mean lower prices at the gasoline pump, because oil prices are set on the global market, and U.S. oil is expensive to extract. Next-month oil futures traded around $85.62 a barrel late Monday, down from nearly $100 a barrel in September. U.S. and Iraqi production have helped keep a lid on prices, but a bigger factor may be Europe's economic woes and weaker global demand.
U.S. oil consumption last year also dropped to 18.9 million barrels a day, down 8.4% from 2006, and the IEA projected continued declines in coming decades.
For U.S. businesses, the energy shifts bring opportunities. The glut of inexpensive natural gas from widespread use of hydraulic fracturing, or fracking, has driven down energy costs for industrial consumers, helping large manufacturers, as well as the fertilizer and chemical firms.
But the changes can take industry players off guard. Some U.S. refiners spent billions upgrading their refineries to process heavier crude oil found outside the U.S. in places such as Venezuela's Orinoco belt or in Canada's tar sands. If the IEA's predictions come true, the U.S. could soon be awash in easier-to-process domestic crude oil -- with no way to get rid of the excess supply, because U.S. law generally bans crude-oil exports. That would force new investment in refining capacity for lighter, sweeter grades of oil.
The made-in-USA oil is already displacing imports of similar crude from West Africa, and the market for it could be saturated as early as 2013, said analysts with Raymond James. "The question is: will federal regulators allow these exports to materialize?" the analysts asked in a research note, adding that allowing exports could be politically tricky. The crude export ban was designed to ensure U.S. energy security following the Arab oil embargo in 1973.
Within a decade, the IEA forecasts U.S. oil imports will fall by more than half, to just four million barrels a day from 10 million barrels a day currently. It credited tougher gas-mileage standards for cars, mandated in Mr. Obama's first term, in addition to the higher domestic oil output.
The IEA suggested that newly found U.S. energy independence could redefine military commitments. OPEC will continue to be the powerhouse of global production, the agency said, but a growing portion of its output will go to nations like China and India instead of North America.
"It accelerates the switch in direction of international oil trade toward Asia, putting a focus on the security of the strategic routes that bring Middle East oil to Asian markets," it said.
China already receives half of its oil imports from the Persian Gulf, while the U.S. receives less than 20% of its imports from the region. U.S. military protection of Middle East sea lanes has for decades been a core mission of the Navy's Fifth Fleet, at an estimated cost of between $60 billion and $80 billion a year. Given the high U.S. budget deficit, looming defense cuts and what many perceive as an overstretched Navy, that mission could come into question.
The recent increase in U.S. drilling has led to a backlash that is strong among people who supported Mr. Obama. Environmental groups have expressed concern about the risk to groundwater from fracking, a technology that uses pressurized water to break open rocks to access more oil and natural gas.
The intensive use of water "will increasingly impose additional costs" and could "threaten the viability of projects" for shale oil and gas, the IEA said.
Delighting environmental activists, Mr. Obama blocked the Keystone XL pipeline from Canada through the central U.S., expressing concern about risks to an aquifer in Nebraska along the pipeline's route. Republicans and the energy industry claimed the decision was evidence the administration was hostile to traditional energy sources.
Mr. Obama must also decide how quickly he wants to push the transition to natural gas from coal for generating electricity.
---
Angel Gonzalez, Russell Gold and Sarah Kent contributed to this article.
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Credit: By Benoit Faucon and Keith Johnson
Subject: Natural gas; Emissions; Petroleum industry; Energy policy; Petroleum production
Location: Saudi Arabia
People: Obama, Barack
Company / organization: Name: Solyndra Inc; NAICS: 334413; Name: International Energy Agency; NAICS: 928120
Classification: 1520: Energy policy; 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.1
Publication year: 2012
Publication date: Nov 13, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1151273177
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1151273177?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
IEA Cuts Oil Demand Forecast
Author: Kent, Sarah
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Nov 2012: n/a.
ProQuest document link
Abstract:
In its monthly market report, the Paris-based agency, which represents major energy-consuming nations, reduced its forecast for global oil demand in the final three months of 2012 by nearly 300,000 barrels a day to 90.1 million barrels a day as a result of economic weakness in Europe and the fallout from Hurricane Sandy in the U.S. For 2012 as a whole, the IEA now estimates average daily demand at 89.6 million barrels, slightly higher than 88.9 million barrels in 2011.
Full text: The International Energy Agency Tuesday cut its forecast for oil demand during the last quarter of this year and said the state of the global economy will limit consumption expansion in 2013.
In its monthly market report, the Paris-based agency, which represents major energy-consuming nations, reduced its forecast for global oil demand in the final three months of 2012 by nearly 300,000 barrels a day to 90.1 million barrels a day as a result of economic weakness in Europe and the fallout from Hurricane Sandy in the U.S.
For 2012 as a whole, the IEA now estimates average daily demand at 89.6 million barrels, slightly higher than 88.9 million barrels in 2011.
The projection highlights how the global economic slowdown has limited oil demand while also helping consumer nations get through supply disruptions, including Western sanctions on Iran. Earlier in November, oil prices slumped to their lowest in four months amid mounting concern over the economic outlook for China and the U.S. as well as the debt crisis in Europe.
The Organization of the Petroleum Exporting Countries last week trimmed its demand forecast for next year by about 20,000 barrels a day to 89.57 million barrels a day, saying that "the economy is placing a considerable amount of uncertainty on the world oil demand forecast."
With Tuesday's adjustment, over the past five months the IEA has cut its estimates for fourth-quarter demand by 850,000 barrels a day.
The agency left its estimate for 2013 unchanged at 800,000 barrels a day growth in demand for oil, but said it was concerned about the economies of industrialized nations, particularly the U.S. because of the impasse on managing the so-called fiscal cliff.
The weak demand picture has meant that the world hasn't experienced a significant supply shortfall this year despite frequent disruptions to production. The growth of shale oil in the U.S., record Russian output and a surge in Saudi and Iraqi supplies this year also helped blunt the impact of disruptions, the IEA said.
In its longer-term report, the World Energy Outlook published Monday, the IEA said that the boom in shale oil production in the U.S. would help the country overtake Saudi Arabia as the world's largest producer by 2020.
Despite current ample oil supplies, political risks may continue to influence prices, Antoine Halff, head of the oil industry and markets division at the IEA, said Tuesday. "The market is concerned about disruptions and political instability in the Middle East," he said.
Growing reliance on international trade for oil supplies will leave consumers in all regions more exposed to local disruptions, especially in times of a higher demand relative to supply, the agency said.
The IEA said that supply from OPEC fell to its lowest level in nine months in October, mainly as a result of flooding and other supply disruptions in Nigeria, where output tumbled to two-and-a-half year lows. However, the group of oil producers continued to supply sufficient oil to meet its customers' demand, the agency said..
Iranian output rose 70,000 barrels to 2.7 million barrels a day. Exports increased by 300,000 barrels to 1.3 million barrels a day, the IEA said. China and South Korea increased imports of oil from Iran, it said.
"We're not expecting a continued increase in [Iran's] production and exports," the IEA's Mr. Halff said. "The most Iran can hope to achieve in the next few months is to keep exports at these levels."
Write to Sarah Kent at
Credit: By Sarah Kent
Subject: Petroleum industry; Oil consumption; Cartels; Petroleum production; Supplies; Oil shale
Location: United States--US China Iran Europe
Company / organization: Name: International Energy Agency; NAICS: 928120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 13, 2012
Section: World
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1151406131
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1151406131?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Chesapeake Sees Dimming Oil Prospects in Ohio
Author: Gilbert, Daniel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]13 Nov 2012: n/a.
ProQuest document link
Abstract:
Chesapeake Energy Corp.'s prospects of coaxing crude oil from Ohio's rust belt have dimmed, the company's chief executive said Tuesday, though he maintained the region remains key to the natural-gas giant's future.
Full text: Chesapeake Energy Corp.'s prospects of coaxing crude oil from Ohio's rust belt have dimmed, the company's chief executive said Tuesday, though he maintained the region remains key to the natural-gas giant's future.
Chesapeake, the country's second-biggest gas producer after Exxon Mobil Corp., is seeking to transform itself into a major producer of oil, which is more profitable than natural gas. The Oklahoma City-based company has nearly doubled its oil output in the last year, with the biggest increase coming from its holdings in South Texas.
In Ohio, Chesapeake executives had expressed optimism about producing oil from the Utica Shale, a deeply buried layer of petroleum-rich rock. Chesapeake owns drilling rights to 1.2 million acres in the Utica, and roughly a third of them lie in a zone it has described as rich in oil, though the company has focused its drilling in an area known to yield wet natural gases, like ethane and propane.
Aubrey McClendon, Chesapeake's co-founder and CEO, said in May he was confident the company would report good results from oil production.
But on Tuesday, he said the Utica was unlikely to drive a major increase in its oil production. It is not a place "where we are going to probably see a huge amount of oil production growth," Mr. McClendon said at an investor conference. "And to the extent the oil works, it will be with some other companies."
Still, Mr. McClendon said the company is pleased with its results in the Utica, calling it "one of our foundational plays for decades to come."
A Chesapeake spokesman said Tuesday, "For the time being, we are pleased to let other companies commit their capital to the oil window" of the Utica.
Analysts said they weren't surprised by Mr. McClendon's assessment, noting the company's focus on producing wet gas, which is more profitable than regular "dry" gas. A surge in natural-gas production from shale, led by Chesapeake and its rivals, has glutted the market and caused prices to collapse earlier this year to depths not seen in more than a decade.
In response, Chesapeake has spent heavily to acquire drilling rights to areas where it could extract higher-margin fuels, including large swaths of Colorado and the border between Kansas and Oklahoma. But prices for natural-gas liquids have also been dented recently by overproduction.
When oil's share of production declines, profits suffer, said Tim Rezvan, an analyst at Sterne Agee. But he pointed out that Chesapeake, and other companies like Gulfport Energy Corp. have reported prolific volumes of both wet and dry natural gas in the Utica. "The numbers are just staggering," he said.
Chesapeake shares were up about 1% at $17.39 in 4 p.m. composite trading Tuesday on the New York Stock Exchange.
Write to Daniel Gilbert at
Credit: By Daniel Gilbert
Subject: Petroleum production; Petroleum industry; Gases; Natural gas
Location: Ohio Oklahoma
People: Gilbert, Daniel
Company / organization: Name: Gulfport Energy Corp; NAICS: 211111; Name: Exxon Mobil Corp; NAICS: 447110, 211111; Name: Chesapeake Energy Corp; NAICS: 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 13, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1151509787
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1151509787?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Corporate News: Chesapeake Energy Says Oil Prospects Dim in Ohio
Author: Gilbert, Daniel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]14 Nov 2012: B.3.
ProQuest document link
Abstract:
Chesapeake Energy Corp.'s prospects of coaxing crude oil from Ohio's rust belt have dimmed, the company's chief executive said Tuesday, though he maintained the region remains key to the natural-gas giant's future.
Full text: Chesapeake Energy Corp.'s prospects of coaxing crude oil from Ohio's rust belt have dimmed, the company's chief executive said Tuesday, though he maintained the region remains key to the natural-gas giant's future.
Chesapeake, the country's second-biggest gas producer after Exxon Mobil Corp., is seeking to transform itself into a major producer of oil, which is more profitable than natural gas. The Oklahoma City-based company has nearly doubled its oil output in the last year, with the biggest increase coming from its holdings in South Texas.
In Ohio, Chesapeake executives had expressed optimism about producing oil from the Utica Shale, a deeply buried layer of petroleum-rich rock. Chesapeake owns drilling rights to 1.2 million acres in the Utica, and roughly a third of them lie in a zone it has described as rich in oil, though the company has focused its drilling in an area known to yield wet natural gases, like ethane and propane.
Aubrey McClendon, Chesapeake's co-founder and CEO, said in May he was confident the company would report good results from oil production.
But on Tuesday, he said the Utica was unlikely to drive a major increase in its oil production. It is not a place "where we are going to probably see a huge amount of oil production growth," Mr. McClendon said at an investor conference. "And to the extent the oil works, it will be with some other companies."
Still, Mr. McClendon said the company is pleased with its results in the Utica, calling it "one of our foundational plays for decades to come."
A Chesapeake spokesman said Tuesday, "For the time being, we are pleased to let other companies commit their capital to the oil window" of the Utica.
Analysts weren't surprised by Mr. McClendon's assessment, noting the company's focus on producing wet gas, which is more profitable than regular "dry" gas. A surge in natural-gas production from shale, led by Chesapeake and its rivals, has glutted the market and caused prices to collapse earlier this year to depths not seen in more than a decade.
In response, Chesapeake has spent heavily to acquire drilling rights to areas where it could extract higher-margin fuels, including large swaths of Colorado and the border between Kansas and Oklahoma. But prices for natural-gas liquids have also been dented by overproduction.
When oil's share of production declines, profits suffer, said Tim Rezvan, an analyst at Sterne Agee. But he pointed out that Chesapeake, and other companies like Gulfport Energy Corp., have reported prolific volumes of wet and dry natural gas in the Utica.
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Credit: By Daniel Gilbert
Subject: Petroleum industry; Natural gas; Crude oil; Petroleum production
Location: Ohio Oklahoma
People: McClendon, Aubrey
Company / organization: Name: Gulfport Energy Corp; NAICS: 211111; Name: Exxon Mobil Corp; NAICS: 447110, 211111; Name: Chesapeake Energy Corp; NAICS: 211111
Classification: 2120: Chief executive officers; 8510: Petroleum industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.3
Publication year: 2012
Publication date: Nov 14, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1151688598
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1151688598?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Where Oil and Water Mix; In booming Oslo, buyers find a safe harbor from Europe's turmoil and a haven for adventurous design.
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 Nov 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Two decades of growing wealth and a tidal wave of immigration have helped make Oslo one of Europe's most dynamic cities. Developers are bringing ambitious housing and office projects to the city's vast waterfront, pictured here.
Across Norway, residential real-estate prices have tripled over the past 15 years, and every sector, aside from vacation homes, is seeing higher demand. In Oslo, centrally located historical houses like those pictured above, remain especially desirable.
Tjuvholmen, a former dockland area in the heart of Oslo, has become a mixed-use neighborhood built around the new contemporary-art museum, the Astrup Fearnley Museet, designed by Italian architect Renzo Piano. The area is set to include 935 apartments, ranging from about 1,000 to nearly 11,000 square feet. Statoil, Norway's government-controlled energy behemoth, has acquired apartments for foreign staff relocating to Oslo.
Two-thirds of Tjuvholmen's units have been finished and are fully sold. The rest are due to be finished by 2014. The light-filled apartments come with Scandinavian design elements, like pale wood floors, as seen in this apartment.
The new Sørenga development, on Oslo's inner fjord, has units averaging about 840 square feet. Residents will have access to a new marina, as well as dramatic vistas taking in Oslo's new urban landmarks, including a planned replacement for the city's much-visited Munch Museum, to be designed by Spanish firm Herreros Arquitectos
Building at Sørenga started in 2010 and is expected to finish in 2015. More than 500 apartments, finished and unfinished, have been put on the market; 90% have been sold.
Attic conversions--like the one pictured above, designed by Oslo architecture firm Space Group--are helping to upgrade and expand traditional apartment buildings. 'Fewer and fewer people are building houses in Oslo,' says Gary Bates, Space Group's American co-founder. 'The real business is keeping what you have and restoring it.'
The Oslo Opera House, designed by local star architecture firm Snøhetta, opened in 2008. It has become a symbol of the rebranded city and acts as a catalyst for high-end waterfront development.
The Astrup Fearnley Museet, an Oslo contemporary art museum, completed its relocation to Tjuvholmen, where it acts as an anchor for development of the onetime docklands area. The museum complex, featuring three structures and a sculpture park, has a collection of works by American artists, including sculptor Jeff Koons and photographer Cindy Sherman.
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 15, 2012
Section: Real Estate
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 115201904 6
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1152019046?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Houston Lawyers Ride New Gusher; Energy Deals Fuel Surge in Hiring and Recruitment for Attorneys With Credentials in the Oil Patch
Author: González, Ángel; Dezember, Ryan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]15 Nov 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: HOUSTON--On his first afternoon at a new law firm, with his Oriental rug still unrolled and files still in boxes, Scott Schwind took an unexpected call. On the other line: a recruiter, asking if Mr. Schwind would be interested in moving to a rival firm that hoped to open a Houston office.
"I don't know how they knew I was here," says Mr. Schwind, a 41-year-old who specializes in international energy deals. He had just jumped to Jones Day from a smaller, Texas-based firm, and so rebuffed the recruiter's approach in August. "I'd love to be flattered by it, but frankly it's a reflection of what's going on in this market."
The mergers-and-acquisitions field has been sluggish since the financial crisis. But thanks to high oil prices and a boom in U.S. drilling over the past decade, energy deals have been a steady bright spot. Oil and gas deals have accounted for about 13.5% of mergers-and-acquisitions volume this year compared with 5.3% a decade ago, according to Dealogic.
That means boom times for Houston attorneys with oil-patch credentials and clients. Some of the nation's largest firms are opening Houston outposts, jostling with entrenched local giants for lawyers, even as deal advisers in many other areas remain on the hunt for business.
The Bayou City's lure stretches across the pond: on Wednesday storied Houston-based firm Fulbright & Jaworski LLP merged with British legal behemoth Norton Rose to form one of the world's largest firms. Norton Rose pointed to Fulbright's energy practice as one of the attractions.
Energy deals have created "a steady fee pool and a tight market for talent the last three years," says Dan Ryan, who runs the corporate and investment banking practice at Wall Street recruiter Heidrick & Struggles.
Robin Fredrickson and Jeff Muñoz were longtime colleagues at Texas stalwart Vinson & Elkins LLP when they were lured earlier this year to the Houston office of Latham & Watkins LLP, one of the nation's largest law firms. "Twenty-five years ago, when I started, you'd have never changed firms" within Houston because the relatively small number of firms with big energy practices presented little incentive for lateral moves, says Ms. Fredrickson, a mergers-and-acquisitions partner.
Mark Kelly, chairman of Vinson & Elkins, which was founded in 1917 at the dawn of the city's oil era, says firms entering Houston "naturally look first to Vinson & Elkins for talent." He says the large majority of partners who have received competing offers have elected to stay.
Ms. Frederickson and Mr. Muñoz--the duo is also a couple--joined a team that now has about 64 lawyers, including 17 partners, that Latham has recruited or moved to Houston since it opened an office in early 2010. Michael Dillard, the partner who heads the office, says it is the fastest-growing and busiest outpost of the Los Angeles-based firm. "The closest analogue is Silicon Valley," Mr. Dillard says.
Among other recently arrived big firms are Paul Hastings LLP and Sidley Austin LLP, which set up new offices in Houston this year, drawing talent from local firms. New York-based Simpson Thacher & Bartlett LLP arrived last year, plucking a partner from Vinson & Elkins.
To be sure, in this boom-and-bust town--where fortunes often track oil prices--it is possible that firms will eventually come to regret their expansionist efforts. In the mid-1980s the price of oil plummeted below $15 a barrel, idling thousands of drilling rigs around the world as well as many Houston lawyers.
Even in recent years some firms have found Houston a hard market to crack. Chadbourne & Parke LLP opened a Houston office in 2002 and closed it seven years later. A firm spokesman for the firm said that the market it aimed to serve had changed.
"Many new firms come to Houston. Lots of times they have come and gone," says Maria Wyckoff Boyce, the partner who heads the Houston office of Baker Botts, a firm founded in 1840, when Texas was still a young nation.
Baker Botts lost "half a handful" of mergers-and-acquisitions partners to newcomers, according to managing partner Andrew Baker, but it is gaining lawyers as its energy practice expands.
Recruiters and lawyers say firms are offering multiyear contracts of $2 million in annual compensation to partners, a 50% bump or more for some local lawyers. Pay guarantees are offered as enticements.
Experienced associates--who can earn about $240,000 in total compensation including bonuses--are generally seeing a 10% to 20% raise for switching firms, these people say, a significant boost in an industry typically with regimented pay scales.
Sidley Austin recently added its 25th lawyer in Houston, most of whom have been local hires. Mark Metts, a longtime Houston lawyer who moved to Sidley from Jones Day, says, "It's a tough market to get right from the outside."
Write to Ryan Dezember at
Corrections & Amplifications Most of the lawyers in the Houston office of Sidley Austin LLP are local hires. An earlier version of this article incorrectly said about half were local hires.
Credit: By Ángel González And Ryan Dezember
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 15, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1152032403
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Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
BP Slapped With Record Fine; Oil Giant to Pay $4.5 Billion, Plead Guilty to Criminal Charges in 2010 Gulf Spill
Author: Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 Nov 2012: n/a.
ProQuest document link
Abstract:
Under Thursday's agreement, BP will also plead guilty to misdemeanor counts under each of the Clean Water Act and the Migratory Bird Treaty Act, and pay $2.394 billion to the National Fish & Wildlife Foundation over five years and $350 million to the National Academy of Sciences over five years.
Full text: BP PLC agreed to accept criminal responsibility for the 2010 Deepwater Horizon disaster that killed 11 workers and to pay $4.5 billion in fines and restitution, the biggest penalty ever levied by the U.S. Justice Department.
But the oil producer still faces an even costlier battle with the government over civil penalties for the pollution unleashed when the drilling rig exploded in the Gulf of Mexico and caused the worst offshore oil spill in U.S. history.
The oil damaged the region's important seafood and tourism industries, resulting in billions of dollars in lost revenue. For weeks, repeated efforts to stop the gushing crude failed, as underwater cameras sent the live images to TV viewers. Finally, almost three months later, the well was capped.
Under the agreement, BP said it will plead guilty to 11 felony counts of "seaman's manslaughter" relating to the deaths aboard the drilling rig, admitting that its workers were negligent when they misinterpreted a key well safety test.
The company also will plead guilty to one felony count of obstruction of Congress stemming from false information it gave about the rate that oil was leaking from the well.
In addition to the settlement Thursday, three former BP employees were charged by a federal grand jury with felonies in the incident, two of them for allegedly failing to carry out a critical safety test properly.
Acting Associate Attorney General Tony West said the government will continue to vigorously pursue its civil claims that BP committed "gross negligence" when it allowed nearly five million barrels of crude to escape from the deep-water well.
If that allegation is proven, BP could face up to $20 billion in fines under the Clean Water Act, about four times more than if the company is found simply to have been negligent. The final sum likely will be smaller after negotiations, perhaps in the $10 billion range, said Tom Claps, an analyst with Susquehanna Financial Group.
Gross negligence involves "conscious and voluntary disregard," and in the case of the Clean Water Act could mean fines per barrel of oil spilled could rise from a base of $1,100 to as much as $4,300.
BP and the Justice Department have tried to settle the civil case, which is set to go before a federal judge in New Orleans in February. U.S. Attorney General Eric Holder said Thursday that negotiations continue, but "we have not reached a number that we considered satisfactory."
The London-based company, which remains the largest oil producer in the Gulf, said the settlement of the criminal case is consistent with its stance that it isn't grossly negligent and that it is prepared to fight such claims in civil proceedings.
The settlement was announced after the New York Stock Exchange began trading. Shares of BP rose 14 cents, ending the regular session on the exchange at $40.30.
Under Thursday's agreement, BP will also plead guilty to misdemeanor counts under each of the Clean Water Act and the Migratory Bird Treaty Act, and pay $2.394 billion to the National Fish & Wildlife Foundation over five years and $350 million to the National Academy of Sciences over five years. The academy said the payments will fund studies into protecting the environment and improving drilling safety in the Gulf and other coastal waters. BP won't be involved in decisions related to the program, the academy said.
BP said it also agreed to pay $525 million in civil penalties over three years to settle claims by the Securities and Exchange Commission that its false statements about the oil-flow rate in the two weeks after April 20, 2010, accident misled investors.
BP cannot deduct any of the payments from its taxes, according to federal officials, and the payments cannot be used to offset future civil payments.
Under the settlement, two monitors will oversee the safety of BP's Gulf drilling operations and its compliance with a code of conduct for four years.
The deal must be approved by a judge before it becomes final.
"It is good that someone is being held accountable," said Stephen Stone, who was working on the doomed drilling rig on the day it exploded and lost some of his hearing. But "I hope they don't let the middle-management guys take the fall and then don't change the safety culture."
BP previously took a $38.1 billion charge for what it estimated was the maximum cost it would face from the accident, but with Thursday's settlement it will add a $3.85 billion charge. To offset these costs BP has raised about $35 billion though asset sales, including the recent $2.5 billion sale of its Texas City, Texas, refinery--the scene of a 2005 accident that killed 15.
BP has spent about $14 billion on spill response and cleanup and paid out more than $9 billion in claims to businesses and individuals. It also has entered into a settlement agreement with thousands of other businesses and individuals that will cost BP an estimated $7.8 billion, although that figure could climb. A federal judge is expected to give final approval to that settlement in coming weeks.
The Deepwater Horizon disaster prompted an overhaul of the regulatory agency that leased drilling rights in the Gulf of Mexico, approved drilling plans and monitored safety offshore. The agency has since been split so those functions are separated.
In the year immediately after the accident, the massive environmental damage many expected to see didn't materialize since much of the spilled oil degraded naturally. But environmental experts, including federally funded researchers, are continuing to study possible long-term damage.
The oil industry rebounded quickly from the accident in spite of a six-month deepwater drilling moratorium and a spate of new regulations. Thirty months after the spill, offshore oil and gas operations in the Gulf have all but returned to their pre-accident levels. The latest rig count shows 47 offshore rigs in the gulf, a 30% jump from last year and just shy of the level right before the accident.
U.S. officials also unveiled the indictments of three men who worked for BP at the time of the explosion. Don Vidrine, 65, and Robert Kaluza, 63, who were stationed on the rig when the blowout occurred, each was charged with 11 counts of "seaman's manslaughter," 11 counts of involuntary manslaughter and one violation of the Clean Water Act.
The charges stem from their alleged misinterpretation of safety tests. They could face up to 10 years in prison for each seaman's manslaughter count, eight years for each involuntary manslaughter count and one year for the Clean Water Act count.
Lawyers for Mr. Kaluza said their client was innocent and that the government was making him a scapegoat. An attorney for Mr. Vidrine couldn't be reached.
Also charged was David Rainey, BP's former head of Gulf of Mexico exploration, who took a lead role in the spill response. He was charged with obstruction of Congress and making false statements to a law enforcement officer for allegedly lying about how much crude was spewing from the well.
Mr. Rainey could face up to five years in prison for each charge. His lawyers said he is innocent and will fight the charges.
Angel Gonzalez, Keith Johnson, Russell Gold and Daniel Gilbert contributed to this article.
Write to Tom Fowler at
Credit: By Tom Fowler
Subject: Fines & penalties; Petroleum industry; Litigation; Energy economics; Oil spills
Location: United States--US
People: Holder, Eric H Jr
Company / organization: Name: Congress; NAICS: 921120
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 16, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1152032437
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1152032437?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
MANSION --- Foreign Correspondent: Where Oil and Water Mix --- In booming Oslo, buyers find a safe harbor from Europe's turmoil and a haven for adventurous design
Author: Marcus, J S
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]16 Nov 2012: M.6.
ProQuest document link
Abstract:
The centerpiece is the Barcode Project, a mixed-use development near the opera house boasting a dozen daringly designed towers, from 9 to 17 stories, lined up like vertical stripes. Tjuvholmen, a former dockland area in the heart of Oslo, has already become a mixed-use neighborhood built around the new contemporary-art museum, the Astrup Fearnley Museet, designed by Italian architect Renzo Piano.
Full text: Blessed with wooded mountains and a pristine fjord, Oslo is an outdoor-sports paradise. But judging by the pulse of the city's real-estate market, it's the indoor sport of house hunting that has locals breathless.
Two decades of growing wealth and immigration have helped make Oslo one of Europe's fastest-growing cities. Developers are bringing ambitious housing and office projects to the city's vast waterfront. And buyers are "lining up" at showings, says Hedda K. Ulvness, managing director of Eie Eiendomsmegling, an Oslo-based nationwide realty network. A typical listing now sells in two weeks, Ms. Ulvness says, compared with a month or more a few years ago.
Across Norway, residential real-estate prices have tripled over the past 15 years, and every sector, aside from vacation homes, is seeing higher demand. In 1997, the average home cost around $147 per square foot, according to the Norwegian Association of Real Estate Agents. By 2002, that figure had risen to $240, and this year, it approached $500.
Situated outside the European Union and the precarious euro zone, oil-rich Norway has all but escaped the dark cloud hanging over much of the continent's economy. The oil industry, led by state-controlled giant Statoil ASA, has made the nation a magnet for a range of foreign professionals, while many more come to fill growing demand for everything from doctors to cabdrivers.
The real-estate boom is especially strong in the western city of Stavanger, Norway's energy hub. But it's most visible in greater Oslo, home to a third of the country's five million people and a budding creative scene that's establishing the capital as an exporter of cutting-edge architecture and design.
Professionals are drawn to Oslo's amenable work atmosphere, including high salaries paid in a stable currency and generous time off. Others see a chance at a fresh start: For German doctors, Swedish fitness trainers and Polish maintenance workers, Oslo represents the kind of opportunities that are drying up at home.
"Oslo has been in a transformation," says Gunnar B. Kvaran, Iceland-born director of a rehoused contemporary-art museum, who has lived in Oslo for over a decade. "It's gone from being introverted to becoming a new kind of cosmopolitan, extroverted city."
The biggest change in recent years has been the emergence of large-scale developments along Oslo's inner waterfront, part of a broad municipal plan to reinvent a vast stretch of harbor areas and shipyards. Often anchored by major new architectural works -- such as the Oslo Opera House, opened in 2008 -- these projects will add thousands of new housing units, with easy access to the city center, once they're finished.
The centerpiece is the Barcode Project, a mixed-use development near the opera house boasting a dozen daringly designed towers, from 9 to 17 stories, lined up like vertical stripes. The project, which gives low-slung Oslo a distinctive skyline, will ultimately house some 400 high-end flats. Many offer views of the project's compelling new office towers, like the zigzag DNB tower, designed by Dutch firm MVRDV, and the Deloitte building, designed by Oslo firm Snohetta with an "ice crystal" facade.
Tjuvholmen, a former dockland area in the heart of Oslo, has already become a mixed-use neighborhood built around the new contemporary-art museum, the Astrup Fearnley Museet, designed by Italian architect Renzo Piano. The project features 935 apartments, ranging from about 1,000 to nearly 11,000 square feet.
Two-thirds have been finished and are fully sold. The rest are due to be finished by 2014. The light-filled apartments come with Scandinavian design elements, like pale wood floors. Sale prices have ranged from $525,000 to nearly $7 million, among the highest in Oslo. Statoil has picked up units there for its foreign staff.
The units aren't luxuriously appointed, but in costly Oslo, "a central location is luxury," says Gunnar Boyum, CEO of Tjuvholmen KS, the Oslo company behind the project.
By that measure, perhaps the most luxurious is the 760-unit Sorenga development, a short walk from the Barcode. The Sorenga buildings, where units average about 840 square feet, will offer views out toward the fjord and back to the new urban landmarks, including a planned replacement for the Munch Museum. Building started in 2010 and is expected to finish in 2015. More than 500 apartments, finished and unfinished, have been put on the market; 90% have been sold.
Residents will have access to a new marina. Prices range from about $350,000 to $3.1 million.
Creative professionals gravitate to the gentrifying areas on Oslo's east side, says 30-year-old Brazilian graphic designer Renata Barros, who recently bought an east Oslo home with her husband, Norwegian architect Erlend Blakstad Haffner, 32.
The couple chose an $870,000 property in Lille Toyen, which has its share of street crime but is "green and close to the city," says Mr. Haffner. Once it's remodeled, the house will contain two rental units and the family home, totaling about 3,000 square feet.
The symbol of east Oslo gentrification is Grunerlokka, north of the main train station, a once-working-class district that's now the center of city's thriving alternative night life.
But the west side, long home to the city's middle and upper classes, is still the costliest area. Western sections that command the highest prices include Frogner and Gimle, where large, century-old apartments sell for about $1,620 a square foot, and attic conversions help make up for the lack of new construction. Up-and-coming neighborhoods include Tasen, northwest of the center.
The most desirable area for single-family homes is Bygdoy, where sparkling white villas, many built by the city's shipping elite in the early 20th century, offer spectacular views of the fjord. Magne Blindheim, Eie's co-founder and co-owner, says low mortgage rates and high costs for new construction have sustained interest in these older areas.
The government has tried to keep the market from overheating. Banks that once lent up to 100% of a home's purchase price -- plus 10% for improvements -- now require 15% down. Such measures are aimed at deterring first-time buyers from getting in over their heads on pricey starter flats.
Property sales in Norway work like a public auction, with the broker serving as auctioneer. Participants track bids by phone or text message. All bids are binding.
As in any booming market, most bidders come up empty-handed. Gary Bates, co-founder of Space Group, an Oslo architecture firm, says he has noticed that his staff's weekend showings lead to frantic Monday and Tuesday smartphone bidding, only to be followed by midweek heartbreak.
"I see guys bidding on stuff, and just sweating and crying in a corner, freaking out and losing a day of work," he says. "That's how the market is right now."
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SNAPSHOT: OSLO
Population: 613,285 (metropolitan area: 1,447,500)
Cost of Living: Oslo regularly ranks as one of the most expensive cities in the world, and topped Zurich and Tokyo in a 2012 study by UBS. Residents spend about 68% more on goods and services than the global average.
Average high/low temperatures:
January: 34 degrees / 19 degrees F.
July: 72 degrees / 55 degrees F.
Top Sales: In the past two years, homes in Frogner and Bygdoy have each sold for around $6.96 million (40 million krone)
Notable Neighbors: Joakim Varner, heir to one of Scandinavia's great retail fortunes, built a new house with cutting-edge Oslo architecture firm Space Group, on Nesoya, an island west of the city. Anne Bjornstad and Eilif Skodvin, creators of the cult hit TV show "Lilyhammer," live in Grunerlokka. Norwegian actress Liv Ulmann, usually based in the U.S., maintains a home in Oslo.
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NORWEGIAN LINES
$4.88 million
Tjuvholmen Penthouse
Fru Kroghs Brygge (Hus 81): 2 bedrooms, 1 1/2 baths, plus garage space. To be finished in the third quarter of 2014; sample apartment pictured
Location/Size: Seventh floor, 1,862 square feet.
Pros: A large terrace.
Cons: Winds blowing off the fjord in winter can be chilly.
$1.65 million
Sorenga apartment
Sorenga A-701: 3 bedrooms, two bathrooms
Location/Size: Seventh floor, 1,248 square feet.
Pros: The large terrace has southern and western views over the fjord.
Cons: Ongoing construction of surrounding buildings.
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Credit: By J.S. Marcus
Subject: Waterfront development; Architecture; Real estate sales
Location: Oslo Norway Norway
Classification: 9175: Western Europe; 8370: Construction & engineering industry; 8360: Real estate
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: M.6
Publication year: 2012
Publication date: Nov 16, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1152110650
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1152110650?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Global Finance -- Deals & Dealmakers: Houston Lawyers Ride New Gusher --- Energy Deals Fuel Surge in Hiring and Recruitment for Attorneys With Credentials in the Oil Patch
Author: Gonzalez, Angel; Dezember, Ryan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]16 Nov 2012: C.3.
ProQuest document link
Abstract:
Energy deals have created "a steady fee pool and a tight market for talent the last three years," says Dan Ryan, who runs the corporate and investment banking practice at Wall Street recruiter Heidrick & Struggles. Robin Fredrickson and Jeff Munoz were longtime colleagues at Texas stalwart Vinson & Elkins LLP when they were lured earlier this year to the Houston office of Latham & Watkins LLP, one of the nation's largest law firms.
Full text: Corrections & Amplifications
Most of the lawyers in the Houston office of Sidley Austin LLP are local hires. A Nov. 16 Global Finance article about Houston law firms incorrectly said about half were local hires.
(WSJ Nov. 23, 2012)
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HOUSTON -- On his first afternoon at a new law firm, with his Oriental rug still unrolled and files still in boxes, Scott Schwind took an unexpected call. On the other line: a recruiter, asking if Mr. Schwind would be interested in moving to a rival firm that hoped to open a Houston office.
"I don't know how they knew I was here," says Mr. Schwind, a 41-year-old who specializes in international energy deals. He had just jumped to Jones Day from a smaller, Texas-based firm, and so rebuffed the recruiter's approach in August. "I'd love to be flattered by it, but frankly it's a reflection of what's going on in this market."
The mergers-and-acquisitions field has been sluggish since the financial crisis. But thanks to high oil prices and a boom in U.S. drilling over the past decade, energy deals have been a steady bright spot. Oil and gas deals have accounted for about 13.5% of mergers-and-acquisitions volume this year compared with 5.3% a decade ago, according to Dealogic.
That means boom times for Houston attorneys with oil-patch credentials and clients. Some of the nation's largest firms are opening Houston outposts, jostling with entrenched local giants for lawyers, even as deal advisers in many other areas remain on the hunt for business.
The Bayou City's lure stretches across the pond: on Wednesday storied Houston-based firm Fulbright & Jaworski LLP merged with British legal behemoth Norton Rose to form one of the world's largest firms. Norton Rose pointed to Fulbright's energy practice as one of the attractions.
Energy deals have created "a steady fee pool and a tight market for talent the last three years," says Dan Ryan, who runs the corporate and investment banking practice at Wall Street recruiter Heidrick & Struggles.
Robin Fredrickson and Jeff Munoz were longtime colleagues at Texas stalwart Vinson & Elkins LLP when they were lured earlier this year to the Houston office of Latham & Watkins LLP, one of the nation's largest law firms. "Twenty-five years ago, when I started, you'd have never changed firms" within Houston because the relatively small number of firms with big energy practices presented little incentive for lateral moves, says Ms. Fredrickson, a mergers-and-acquisitions partner.
Mark Kelly, chairman of Vinson & Elkins, which was founded in 1917 at the dawn of the city's oil era, says firms entering Houston "naturally look first to Vinson & Elkins for talent." He says the large majority of partners who have received competing offers have elected to stay.
Ms. Frederickson and Mr. Munoz -- the duo is also a couple -- joined a team that now has about 64 lawyers, including 17 partners, that Latham has recruited or moved to Houston since it opened an office in early 2010. Michael Dillard, the partner who heads the office, says it is the fastest-growing and busiest outpost of the Los Angeles-based firm. "The closest analogue is Silicon Valley," Mr. Dillard says.
Among other recently arrived big firms are Paul Hastings LLP and Sidley Austin LLP, which set up new offices in Houston this year, drawing talent from local firms. New York-based Simpson Thacher & Bartlett LLP arrived last year, plucking a partner from Vinson & Elkins.
To be sure, in this boom-and-bust town -- where fortunes often track oil prices -- it is possible that firms will eventually come to regret their expansionist efforts. In the mid-1980s the price of oil plummeted below $15 a barrel, idling thousands of drilling rigs around the world as well as many Houston lawyers.
Even in recent years some firms have found Houston a hard market to crack. Chadbourne & Parke LLP opened a Houston office in 2002 and closed it seven years later. A firm spokesman for the firm said that the market it aimed to serve had changed.
"Many new firms come to Houston. Lots of times they have come and gone," says Maria Wyckoff Boyce, the partner who heads the Houston office of Baker Botts, a firm founded in 1840, when Texas was still a young nation.
Baker Botts lost "half a handful" of mergers-and-acquisitions partners to newcomers, according to managing partner Andrew Baker, but it is gaining lawyers as its energy practice expands.
Recruiters and lawyers say firms are offering multiyear contracts of $2 million in annual compensation to partners, a 50% bump or more for some local lawyers. Pay guarantees are offered as enticements.
Experienced associates -- who can earn about $240,000 in total compensation including bonuses -- are generally seeing a 10% to 20% raise for switching firms, these people say, a significant boost in an industry typically with regimented pay scales.
Sidley Austin recently added its 25th lawyer in Houston, about half of which have been local hires. Mark Metts, a longtime Houston lawyer who moved to Sidley from Jones Day, says, "It's a tough market to get right from the outside."
Credit: By Angel Gonzalez and Ryan Dezember
Subject: Law firms; Attorneys; Acquisitions & mergers; Professional recruitment; Petroleum industry
Location: Houston Texas
Company / organization: Name: Jones Day; NAICS: 541110; Name: Latham & Watkins; NAICS: 541110; Name: Heidrick & Struggles International Inc; NAICS: 541612; Name: Fulbright & Jaworski LLP; NAICS: 541110
Classification: 9190: United States; 8510: Petroleum industry; 2330: Acquisitions & mergers; 8305: Professional services not elsewhere classified
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.3
Publication year: 2012
Publication date: Nov 16, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1152111033
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1152111033?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
BP Slapped With Record Fine --- Oil Giant to Pay $4.5 Billion, Plead Guilty to Criminal Charges in 2010 Gulf Spill
Author: Fowler, Tom
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]16 Nov 2012: A.1. [Duplicate]
ProQuest document link
Abstract:
Under Wednesday's agreement, BP will also plead guilty to misdemeanor counts under each of the Clean Water Act and the Migratory Bird Treaty Act, and pay $2.394 billion to the National Fish & Wildlife Foundation over five years and $350 million to the National Academy of Sciences over five years.
Full text: BP PLC agreed to accept criminal responsibility for the 2010 Deepwater Horizon disaster that killed 11 workers and to pay $4.5 billion in fines and restitution, the biggest penalty ever levied by the U.S. Justice Department.
But the oil producer still faces an even costlier battle with the government over civil penalties for the pollution unleashed when the drilling rig exploded in the Gulf of Mexico and caused the worst offshore oil spill in U.S. history.
The oil damaged the region's important seafood and tourism industries, resulting in billions of dollars in lost revenue. For weeks, repeated efforts to stop the gushing crude failed, as underwater cameras sent the live images to TV viewers. Finally, almost three months later, the well was capped.
Under the agreement, BP said it will plead guilty to 11 felony counts of "seaman's manslaughter" relating to the deaths aboard the drilling rig, admitting that its workers were negligent when they misinterpreted a key well safety test.
The company also will plead guilty to one felony count of obstruction of Congress stemming from false information it gave about the rate that oil was leaking from the well.
In addition to the settlement Thursday, three former BP employees were charged by a federal grand jury with felonies in the incident, two of them for allegedly failing to carry out a critical safety test properly.
Acting Associate Attorney General Tony West said the government will continue to vigorously pursue its civil claims that BP committed "gross negligence" when it allowed nearly five million barrels of crude to escape from the deep-water well.
If that allegation is proven, BP could face up to $20 billion in fines under the Clean Water Act, about four times more than if the company is found simply to have been negligent. The final sum likely will be smaller after negotiations, perhaps in the $10 billion range, said Tom Claps, an analyst with Susquehanna Financial Group.
Gross negligence involves "conscious and voluntary disregard," and in the case of the Clean Water Act could mean fines per barrel of oil spilled could rise from a base of $1,100 to as much as $4,300.
BP and the Justice Department have tried to settle the civil case, which is set to go before a federal judge in New Orleans in February. U.S. Attorney General Eric Holder said Thursday that negotiations continue, but "we have not reached a number that we considered satisfactory."
The London-based company, which remains the largest oil producer in the Gulf, said the settlement of the criminal case is consistent with its stance that it isn't grossly negligent and that it is prepared to fight such claims in civil proceedings.
The settlement was announced after the New York Stock Exchange began trading. Shares of BP rose 14 cents, ending the regular session on the exchange at $40.30.
Under Wednesday's agreement, BP will also plead guilty to misdemeanor counts under each of the Clean Water Act and the Migratory Bird Treaty Act, and pay $2.394 billion to the National Fish & Wildlife Foundation over five years and $350 million to the National Academy of Sciences over five years. The academy said the payments will fund studies into protecting the environment and improving drilling safety.
BP said it also agreed to pay $525 million in civil penalties over three years to settle claims by the Securities and Exchange Commission that its false statements about the oil-flow rate in the two weeks after the April 20, 2010, accident misled investors.
BP cannot deduct any of the payments from its taxes, according to federal officials, and the payments cannot be used to offset future civil payments.
Under the settlement, two monitors will oversee the safety of BP's Gulf drilling operations and its compliance with a code of conduct for four years.
The deal must be approved by a judge before it becomes final.
"It is good that someone is being held accountable," said Stephen Stone, who was working on the doomed drilling rig on the day it exploded and lost some of his hearing. But "I hope they don't let the middle-management guys take the fall and then don't change the safety culture."
BP previously took a $38.1 billion charge for what it estimated was the maximum cost it would face from the accident, but with Thursday's settlement it will add a $3.85 billion charge. To offset these costs BP has raised about $35 billion though asset sales, including the recent $2.5 billion sale of its Texas City, Texas, refinery -- the scene of a 2005 accident that killed 15.
BP has spent about $14 billion on spill response and cleanup and paid out more than $9 billion in claims to businesses and individuals. It also has entered into a settlement with thousands of other businesses and individuals that will cost BP an estimated $7.8 billion, although that figure could climb. A federal judge is expected to give final approval to that settlement in coming weeks.
The Deepwater Horizon disaster prompted an overhaul of the regulatory agency that leased drilling rights in the Gulf of Mexico, approved drilling plans and monitored safety offshore. The agency has since been split so those functions are separated.
In the year immediately after the accident, the massive environmental damage many expected to see didn't materialize since much of the spilled oil degraded naturally. But environmental experts, including federally funded researchers, are continuing to study possible long-term damage.
The oil industry rebounded quickly from the accident in spite of a six-month deepwater drilling moratorium and a spate of new regulations. Thirty months after the spill, offshore oil and gas operations in the Gulf have all but returned to their pre-accident levels. The latest rig count shows 47 offshore rigs in the gulf, just shy of the level right before the accident.
U.S. officials also unveiled the indictments of three men who worked for BP at the time of the explosion. Don Vidrine, 65, and Robert Kaluza, 63, who were stationed on the rig when the blowout occurred, each was charged with 11 counts of "seaman's manslaughter," 11 counts of involuntary manslaughter and one violation of the Clean Water Act.
The charges stem from their alleged misinterpretation of safety tests. They could face up to 10 years in prison for each seaman's manslaughter count, eight years for each involuntary manslaughter count and one year for the Clean Water Act count.
Lawyers for Mr. Kaluza said their client was innocent and that the government was making him a scapegoat. An attorney for Mr. Vidrine couldn't be reached.
Also charged was David Rainey, BP's former head of Gulf of Mexico exploration, who took a lead role in the spill response. He was charged with obstruction of Congress and making false statements to a law enforcement officer for allegedly lying about how much crude was spewing from the well.
Mr. Rainey could face up to five years in prison for each charge. His lawyers said he is innocent and will fight the charges.
---
Angel Gonzalez, Keith Johnson, Russell Gold and Daniel Gilbert contributed to this article.
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Credit: By Tom Fowler
Subject: Fines & penalties; Petroleum industry; Explosions; Oil spills; Manslaughter
Location: United States--US
Company / organization: Name: BP PLC; NAICS: 211111, 324110, 447110; Name: Department of Justice; NAICS: 922130
Classification: 9190: United States; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.1
Publication year: 2012
Publication date: Nov 16, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1152111495
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1152111495?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Rises on Mideast Fears
Author: Strumpf, Dan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 Nov 2012: n/a.
ProQuest document link
Abstract:
Oil prices had been on a steady downward path for much of the autumn, as the market shifted its attention to weakening global oil demand and rising supply, particularly in the U.S. On Friday, the American Petroleum Institute said U.S. crude demand fell 2.3% in October to the lowest level for that month in 17 years.
Full text: NEW YORK--Oil futures rose more than 1% as escalating hostilities between Israel and Palestinian militants renewed fears about a broader conflict that would disrupt supplies of Mideast crude oil.
The gains came after Israel intensified its air campaign in the Gaza Strip and militants there ramped up their rocket attacks deep into Israeli cities. Israel began mobilizing tens of thousands of troops on the Gaza border, leaving observers fearful that the hostilities could heat up further.
Egypt's new government voiced support for Hamas on Friday by dispatching its new prime minister to Gaza, an unprecedented show of support for such a senior Egyptian official.
Although none of the countries involved are major oil producers, the flare-up has raised fears that the conflict could spread to other countries in the region.
"Your big concern is that this ends up regionalizing," said Bill O'Grady, chief market strategist at Confluence Investment Management. The oil market tends to price in the worst-case scenario, Mr. O'Grady added.
Light, sweet crude for December delivery, which expired at the close of trading Friday, settled $1.22, or 1.4%, higher at $86.67 a barrel on the New York Mercantile Exchange. The more actively traded January contract settled $1.05, or 1.2%, higher at $86.92 a barrel.
Brent crude on the ICE futures exchange recently traded 95 cents, or 0.9%, higher at $108.96 a barrel.
Oil prices had been on a steady downward path for much of the autumn, as the market shifted its attention to weakening global oil demand and rising supply, particularly in the U.S. On Friday, the American Petroleum Institute said U.S. crude demand fell 2.3% in October to the lowest level for that month in 17 years.
"The simple fact is that unemployment remains high and economic growth has been extremely modest," said John Felmy, the industry group's chief economist. "Petroleum demand is reflecting that."
But the Israeli conflict has reminded oil market participants that the prospect of supply disruptions can still move prices. "There are a lot of things pushing us lower, but this is an attention-getter," said Peter Donovan, vice president at oil options brokerage Vantage Trading in New York.
Oil market participants have been closely following the recent flare-ups in the Middle East since last year's Arab Spring upended longstanding regimes in the region.
Analysts say it is unlikely that other countries, like Egypt, will get involved, but such a possibility remains on the mind of oil traders. Egypt is not a major oil producer, but it is home to two major oil chokepoints: the Suez canal and the Sumed pipeline.
Together, they shuttle about 3.8 million barrels of oil and petroleum products a day between the Red Sea and the Mediterranean, according to the U.S. Energy Information Administration.
"What's going on in Gaza right now is one of those stories that does not have a direct tie-in to any volume of oil," said Greg Priddy, an analyst at the Eurasia group, who does not expect the conflict to spread. But it raises a "general fear that something is going to happen."
Also of concern to oil market participants is the longstanding confrontation between Iran and western countries over Tehran's nuclear program. That has left traders worried that Iran could shut down the Strait of Hormuz, through which 17 million barrels of oil and petroleum products pass every day.
Front-month December reformulated gasoline blendstock, or RBOB, settled 1.39 cents, or 0.5%, higher at $2.7101 a gallon. December heating oil ended 1.33 cents, or 0.5%, higher at $2.9868 a gallon.
Write to Dan Strumpf at
Credit: By Dan Strumpf
Subject: Petroleum industry; Petroleum production
Location: Egypt Israel United States--US Gaza Strip
Company / organization: Name: Hamas; NAICS: 813940; Name: New York Mercantile Exchange; NAICS: 523210; Name: American Petroleum Institute; NAICS: 813910, 541820
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 16, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1152170268
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1152170268?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Two Missing, 11 Injured in Oil-Platform Fire
Author: Lefebvre, Ben; Sider, Alison; Johnson, Keith
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]16 Nov 2012: n/a.
ProQuest document link
Abstract:
The blast comes one day after BP PLC agreed to plead guilty to 14 criminal charges and to pay fines and penalties of $4.5 billion to federal authorities over the 2010 Deepwater Horizon explosion, which killed 11 and unleashed the worst offshore oil spill in U.S. history, some 75 miles southeast of the Black Elk platform.
Full text: HOUSTON--A shut-down oil and gas platform exploded and caught fire off the coast of Louisiana on Friday, injuring 11, leaving two missing and resulting in a two-by-a-quarter mile oil sheen around the site, the U.S. Coast Guard said.
Coast Guard spokesman Jonathan Lally said it was possible the two missing people went overboard, and several commercial vessels were participating in the search. Mr. Lally said there were "no confirmed fatalities," and the fire on the platform was extinguished.
The Coast Guard said there was 22 people on board. Nine of the crew were evacuated to other rigs and platforms in the area.
U.S. regulators say the platform, located in shallow water 25 miles off Grand Isle, La., in the offshore West Delta 32 block in the U.S. Gulf of Mexico, wasn't operating. It is owned by Black Elk Energy, an independent Houston-based oil and gas company. Black Elk didn't reply to requests for comment, but posted a statement on its website that said that "our thoughts and prayers are with those who are impacted," and that company personnel were on the scene and en route. "We will release a statement this afternoon when we have more details," the company said.
The blast comes one day after BP PLC agreed to plead guilty to 14 criminal charges and to pay fines and penalties of $4.5 billion to federal authorities over the 2010 Deepwater Horizon explosion, which killed 11 and unleashed the worst offshore oil spill in U.S. history, some 75 miles southeast of the Black Elk platform.
The incidents are very different--the Black Elk platform is a decades-old operation in a few feet of water, whereas the Deepwater Horizon rig was a state-of-the-art vessel drilling a new, high-pressure reservoir at thousands of feet of depth. But the proximity of the explosion to Grand Isle, an area severely affected by oil washing ashore from the BP spill, raised the specter of that incident.
Nevertheless, Louisiana Department of Natural Resources spokeswoman Phyllis Darensbourg said a big spill wasn't expected, as the Black Elk platform wasn't producing oil or gas. "There is not believed to be any chance of major lasting environmental damage," she said.
The Coast Guard's Mr. Lally said four people injured in the explosion were flown to the West Jefferson Parish Medical Center in Marrero, La. Taslin Alfonzo, a medical center spokeswoman, said the four patients were in critical condition; two are being moved to the Baton Rouge General Burn Center while the other two will be moved there in four to six hours. The patients suffered extensive second- and third-degree burns, Ms. Alfonzo said.
Another Coast Guard spokesman, Carlos Vega, said two others were flown to the Terrebonne General Medical Center, and two were flown to the Lady of the Sea General Hospital, in Cut Off, La. A spokesman for the Terrebonne hospital said that the facility has received two patients "and they are in good condition." The Lady of the Sea General Hospital didn't respond to calls for comment.
Three people were also taken to Grand Isle to be picked up by an ambulance, Mr. Vega said.
Black Elk Energy Chief Executive John Hoffman told Houston television station KPRC that the explosion was set off when sparks from a torch the workers were using to cut a line on the platform hit a storage tank, which then exploded. The workers were doing construction work, he said.
A spokeswoman for the U.S. Bureau of Safety and Environmental Enforcement, which oversees the safety of offshore operations in federal waters, said inspectors from the agency were en route to the platform.
Offshore platform fires happen often, although most of them cause only minor damage. More than 100 fires or explosions were reported to the government each year between 2007 and 2011, according to the Bureau of Safety and Environmental Enforcement. Of those, only a handful caused damage worth more than $25,000.
So far this year, 74 incidents have been reported, most of them in the Gulf of Mexico.
The safety agency investigated Black Elk last year for a small fire on one of its offshore production rigs. In February 2011, an improperly enclosed rechargeable battery started a fire on a Black Elk platform, according to an accident report archived by the BSEE. The agency recommended that Black Elk review how it stores batteries on platforms to minimize the chances of internal shorts and possible fires.
Black Elk was also investigated for a crane accident in August 2012, when an improperly repaired winch let loose.
Black Elk was the company that BSEE chose to carry out its first-ever virtual safety audit in November 2011. The federal agency carried out an Internet-based audit of Black Elk's Safety and Environmental Management Systems, which are meant to enhance the safety of offshore operations by minimizing human error and reducing the frequency of accidents.
Though the safety rules were strengthened in the wake of the Deepwater Horizon accident, they had been in the works for years to make the industry more proactive in fostering a safety culture. There is no information on the results of the BSEE virtual audit of Black Elk.
Tennille Tracy, Angel Gonzalez and Daniel Gilbert contributed to this article.
Write to Ben Lefebvre at and Keith Johnson at
Credit: By Ben Lefebvre, Alison Sider and Keith Johnson
Subject: Burns; Environmental protection; Fines & penalties; Explosions
Location: Louisiana
People: Black Elk
Company / organization: Name: Department of Natural Resources-Louisiana; NAICS: 924110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 16, 2012
Section: US
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1152170286
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1152170286?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Two Missing in Gulf Fire; Eleven Hospitalized After Oil Platform Explodes; Probe on Pipe-Cutting Procedure
Author: Lefebvre, Ben; Sider, Alison; Gilbert, Daniel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]17 Nov 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: NEW ORLEANS--Federal officials continued searching the darkened waters of the Gulf of Mexico for two workers missing after an explosion and fire early Friday on an oil-and-gas platform.
Rescuers found two pairs of work boots and a hard hat floating in the water within a few miles of the platform, according to Commander Russ Bowen, who is coordinating the search and rescue mission for the U.S. Coast Guard. He said a witness reported seeing at least one of the men overboard.
The Coast Guard said it was investigating reports that workers cut into a pipe containing oil while doing maintenance work on the platform, which hasn't produced oil since August. The fire, which severely burned at least four workers, was extinguished but the accident left a thin film of oil floating in the shallow waters of the Gulf.
The blast came one day after BP PLC agreed to plead guilty to 14 criminal charges and to pay fines and penalties of $4.5 billion to federal authorities over the 2010 Deepwater Horizon explosion, which killed 11 and unleashed the worst offshore oil spill in U.S. history into the Gulf some 75 miles southeast of Friday's explosion.
Since the Deepwater Horizon disaster, the industry and its regulators have come under scrutiny for safety practices that have resulted in more than 100 fires or explosions each year between 2007 and 2011, according to federal data. So far this year, 74 incidents have been reported, most of them in the Gulf of Mexico.
The regulatory agency that dealt with offshore safety, roundly criticized after Deepwater Horizon for being too cozy with industry, has been restructured to beef up its watchdog functions and has reported a decline in dangerous incidents.
A spokeswoman for the agency, the U.S. Bureau of Safety and Environmental Enforcement, said inspectors from the agency were en route to the platform.
The Coast Guard said of the 22 people on board, eight were evacuated to hospitals in South Louisiana. West Jefferson Parish Medical Center in Marrero, La., said it received four patients with extensive burns who were being moved to a burn center in Baton Rouge. Three others were flown to Grand Isle, La., to be picked up by ambulances, according to the Coast Guard, which didn't release the victims' names.
The explosion Friday occurred 20 miles off Grand Isle, an area severely affected by oil washing ashore from the BP spill. But a big spill wasn't expected from the shallow-water platform, said Phyllis Darensbourg, a spokeswoman for the Louisiana Department of Natural Resources. "There is not believed to be any chance of major lasting environmental damage," she said.
The platform, owned by Black Elk Energy, an independent Houston-based oil and gas company, was an older pumping installation that was being refurbished, not a drilling rig like the Deepwater Horizon.
Black Elk Energy Chief Executive John Hoffman told reporters at the company's Houston headquarters that the reason for the explosion is still unclear; early reports indicated that workers had been using cold-cutting tools to cut a pipe and may have switched to using a torch, sparks from which may have ignited two oil-storage tanks. If that turns out to have been the case, it means workers weren't following proper procedure, Mr. Hoffman said, adding that an eyewitness reported that there had been two explosions.
The two missing workers are from Grand Isle Shipyard Inc., a contractor, Mr. Hoffman said. A receptionist for Grand Isle Shipyard said the company had no comment.
The platform had been shut down for a month, waiting for a pipeline to be repaired. It seems that only the storage area was destroyed, Mr. Hoffman said. The oil slick has dissipated, Mr. Hoffman added.
Federal safety regulators investigated Black Elk last year for a small fire on one of its offshore production rigs. In February 2011, an improperly enclosed rechargeable battery started a fire on a Black Elk platform, according to a government accident report; the agency recommended that Black Elk review how it stores batteries on platforms to minimize the chances of internal shorts and possible fires. Black Elk was also investigated for a crane accident in August 2012, which was linked to an improperly repaired winch.
Mr. Hoffman began his career with Amoco, which had been acquired by BP by the time he left in 1999. He founded Black Elk in 2007. Last month, Black Elk announced plans to ramp up operations in Gulf of Mexico by starting drilling on 23 new wells.
Black Elk was the company that regulators at BSEE chose to carry out their first-ever virtual safety audit. In November 2011, the federal agency carried out an Internet-based audit of Black Elk's Safety and Environmental Management Systems, which are meant to enhance the safety of offshore operations by minimizing human error and reducing the frequency of accidents. Though they were strengthened in the wake of the Deepwater Horizon accident, those safety rules had been in the works for years to make the industry more proactive in fostering a safety culture.
There is no information on the results of the BSEE virtual audit of Black Elk.
Keith Johnson, Tennille Tracy and Ángel González contributed to this article.
Corrections & Amplifications Eleven people were hospitalized after an explosion Friday on an oil rig in the Gulf of Mexico. The headline in an earlier version of this article incorrectly said that eight people were hospitalized.
Write to Ben Lefebvre at and Daniel Gilbert at
Credit: By Ben Lefebvre, Alison Sider and Daniel Gilbert
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 17, 2012
Section: US
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1154199530
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1154199530?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Rises on Mideast Fears
Author: Strumpf, Dan
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]17 Nov 2012: B.5.
ProQuest document link
Abstract:
Oil prices had been on a steady downward path for much of the autumn, as the market shifted its attention to weakening global oil demand and rising supply, particularly in the U.S. On Friday, the American Petroleum Institute said U.S. crude demand fell 2.3% in October to the lowest level for that month in 17 years.
Full text: Oil prices rose as escalating hostilities between Israel and Palestinian militants renewed fears about a broader conflict that would disrupt supplies of Mideast crude.
The gains came after Israel intensified its air campaign in the Gaza Strip and militants ramped up rocket attacks deep into Israeli cities. Israel began mobilizing tens of thousands of troops on the Gaza border, leaving observers fearful that the hostilities could heat up further.
Egypt's new government voiced support for Hamas on Friday by dispatching its new prime minister to Gaza. Although none of the countries involved are major oil producers, the flare-up has raised fears that the conflict could spread to other countries in the region.
"Your big concern is that this ends up regionalizing," said Bill O'Grady, chief market strategist at Confluence Investment Management. The oil market tends to price in the worst-case scenario, Mr. O'Grady said.
The contract for light, sweet crude for December delivery, which expired at the close of trading Friday, rose $1.22, or 1.4%, to settle at $86.67 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures Europe exchange gained 94 cents, or 0.9%, at $108.95 a barrel.
Oil prices had been on a steady downward path for much of the autumn, as the market shifted its attention to weakening global oil demand and rising supply, particularly in the U.S. On Friday, the American Petroleum Institute said U.S. crude demand fell 2.3% in October to the lowest level for that month in 17 years. "The simple fact is that unemployment remains high and economic growth has been extremely modest," said John Felmy, the industry group's chief economist. "Petroleum demand is reflecting that."
But the Israeli conflict has shown that the prospect of supply disruptions can still move prices. "There are a lot of things pushing us lower, but this is an attention-getter," said Peter Donovan, vice president at oil-options brokerage Vantage Trading in New York.
Also of concern is the confrontation between Iran and Western countries over Tehran's nuclear ambitions. That has left traders worried that Iran could shut down the Strait of Hormuz, through which 17 million barrels of oil and petroleum products pass every day.
Oil-market participants have been following the recent conflicts in the Middle East since last year's Arab Spring upended long-standing regimes in the region.
Analysts said it is unlikely that other countries, like Egypt, would get involved, but such a possibility remains on the minds of oil traders. Egypt isn't a major oil producer but is home to two major oil chokepoints: the Suez Canal and the Sumed pipeline. Together, they shuttle about 3.8 million barrels of oil and petroleum products a day between the Red Sea and the Mediterranean, according to the Energy Information Administration.
"What's going on in Gaza right now is one of those stories that does not have a direct tie-in to any volume of oil," said Greg Priddy, an analyst at the Eurasia group, who doesn't expect the conflict to spread. But it raises a "general fear that something is going to happen."
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Credit: By Dan Strumpf
Subject: Commodity prices; Crude oil
Company / organization: Name: Hamas; NAICS: 813940; Name: New York Mercantile Exchange; NAICS: 523210; Name: Amer ican Petroleum Institute; NAICS: 813910, 541820
Classification: 9190: United States; 3400: Investment analysis & personal finance
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.5
Publication year: 2012
Publication date: Nov 17, 2012
column: Commodities
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1156621342
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1156621342?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. News: Two Missing in Gulf Fire --- Eleven Hospitalized After Oil Platform Explodes; Probe on Pipe-Cutting Procedure
Author: Lefebvre, Ben; Sider, Alison; Gilbert, Daniel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]17 Nov 2012: A.3.
ProQuest document link
Abstract:
The blast came one day after BP PLC agreed to plead guilty to 14 criminal charges and to pay fines and penalties of $4.5 billion to federal authorities over the 2010 Deepwater Horizon explosion, which killed 11 and unleashed the worst offshore oil spill in U.S. history into the Gulf some 75 miles southeast of Friday's explosion. Since the Deepwater Horizon disaster, the industry and its regulators have come under scrutiny for safety practices that have resulted in more than 100 fires or explosions each year between 2007 and 2011, according to federal data.
Full text: NEW ORLEANS -- Federal officials continued searching the darkened waters of the Gulf of Mexico for two workers missing after an explosion and fire early Friday on an oil-and-gas platform.
Rescuers found two pairs of work boots and a hard hat floating in the water within a few miles of the platform, according to Commander Russ Bowen, who is coordinating the search and rescue mission for the U.S. Coast Guard. He said a witness reported seeing at least one of the men overboard.
The Coast Guard said it was investigating reports that workers cut into a pipe containing oil while doing maintenance work on the platform, which hasn't produced oil since August. The fire, which severely burned at least four workers, was extinguished but the accident left a thin film of oil floating in the shallow waters of the Gulf.
The blast came one day after BP PLC agreed to plead guilty to 14 criminal charges and to pay fines and penalties of $4.5 billion to federal authorities over the 2010 Deepwater Horizon explosion, which killed 11 and unleashed the worst offshore oil spill in U.S. history into the Gulf some 75 miles southeast of Friday's explosion.
Since the Deepwater Horizon disaster, the industry and its regulators have come under scrutiny for safety practices that have resulted in more than 100 fires or explosions each year between 2007 and 2011, according to federal data. So far this year, 74 incidents have been reported, most of them in the Gulf of Mexico.
The regulatory agency that dealt with offshore safety, roundly criticized after Deepwater Horizon for being too cozy with industry, has been restructured to beef up its watchdog functions and has reported a decline in dangerous incidents.
A spokeswoman for the agency, the U.S. Bureau of Safety and Environmental Enforcement, said inspectors from the agency were en route to the platform.
The Coast Guard said of the 22 people on board, eight were evacuated to hospitals in South Louisiana. West Jefferson Parish Medical Center in Marrero, La., said it received four patients with extensive burns who were being moved to a burn center in Baton Rouge. Three others were flown to Grand Isle, La., to be picked up by ambulances, according to the Coast Guard, which didn't release the victims' names.
The explosion Friday occurred 20 miles off Grand Isle, an area severely affected by oil washing ashore from the BP spill. But a big spill wasn't expected from the shallow-water platform, said Phyllis Darensbourg, a spokeswoman for the Louisiana Department of Natural Resources. "There is not believed to be any chance of major lasting environmental damage," she said.
The platform, owned by Black Elk Energy, an independent Houston-based oil and gas company, was an older pumping installation that was being refurbished, not a drilling rig like the Deepwater Horizon.
Black Elk Energy Chief Executive John Hoffman told reporters at the company's Houston headquarters that the reason for the explosion is still unclear; early reports indicated that workers had been using cold-cutting tools to cut a pipe and may have switched to using a torch, sparks from which may have ignited two oil-storage tanks. If that turns out to have been the case, it means workers weren't following proper procedure, Mr. Hoffman said, adding that an eyewitness reported that there had been two explosions.
The two missing workers are from Grand Isle Shipyard Inc., a contractor, Mr. Hoffman said. A receptionist for Grand Isle Shipyard said the company had no comment.
The platform had been shut down for a month, waiting for a pipeline to be repaired. It seems that only the storage area was destroyed, Mr. Hoffman said. The oil slick has dissipated, Mr. Hoffman added.
Federal safety regulators investigated Black Elk last year for a small fire on one of its offshore production rigs. In February 2011, an improperly enclosed rechargeable battery started a fire on a Black Elk platform, according to a government accident report; the agency recommended that Black Elk review how it stores batteries on platforms to minimize the chances of internal shorts and possible fires. Black Elk was also investigated for a crane accident in August 2012, which was linked to an improperly repaired winch.
Mr. Hoffman began his career with Amoco, which had been acquired by BP by the time he left in 1999. He founded Black Elk in 2007. Last month, Black Elk announced plans to ramp up operations in Gulf of Mexico by starting drilling on 23 new wells.
Black Elk was the company that regulators at BSEE chose to carry out their first-ever virtual safety audit. In November 2011, the federal agency carried out an Internet-based audit of Black Elk's Safety and Environmental Management Systems, which are meant to enhance the safety of offshore operations by minimizing human error and reducing the frequency of accidents.
---
Keith Johnson, Tennille Tracy and Angel Gonzalez contributed to this article.
Subscribe to WSJ:
Credit: By Ben Lefebvre, Alison Sider and Daniel Gilbert
Subject: Petroleum industry; Evacuations & rescues; Explosions; Missing persons; Oil spills; Occupational accidents
Location: Gulf of Mexico Louisiana
Company / organization: Name: Department of Natural Resources-Louisiana; NAICS: 924110; Name: Black Elk Energy; NAICS: 211111
Classification: 9190: United States; 8510: Petroleum industry; 6500: Employee problems
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.3
Publication year: 2012
Publication date: Nov 17, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1156663361
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1156663361?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Body of Missing Oil Worker Found
Author: Gilbert, Daniel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Nov 2012: n/a.
ProQuest document link
Abstract:
The Bureau of Safety and Environmental Enforcement, the federal agency in charge of regulating offshore safety, said in a statement Saturday that it was probing the causes the explosion and would take "appropriate enforcement action."
Full text: GRAND ISLE, La.--Divers searching the Gulf of Mexico for two workers missing after an explosion on an oil platform recovered the body of one Saturday night, as the U.S. Coast Guard stopped its search.
Mark Pregeant, chief executive of Grand Isle Shipyard Inc., said in an interview Saturday night that one body had been pulled from the Gulf but had not been identified. The other worker remains missing. Grand Isle Shipyard employed both workers.
The news marked the first confirmed fatality from the explosion and fire that broke out on an offshore oil platform Friday morning. Investigators and the companies involved began probing what caused the blast.
The workers were part of a crew performing construction work on a platform owned by Black Elk Energy Offshore Operations LLC that wasn't producing oil at the time.
Grand Isle Shipyard, which employed 14 of the 22 people aboard at the time of the accident, said Saturday that four of its personnel were in critical but stable condition.
The explosion, about 20 miles offshore, injured at least 11 workers in addition to the dead man and the missing man. It also rattled residents here in Grand Isle, a town of about 1,300 people on a barrier island at the far southern tip of Louisiana.
Grand Isle, which draws much of its revenue from tourism, was severely affected in 2010 by the Deepwater Horizon drilling rig accident, which triggered the largest offshore oil spill in U.S. history. Some residents initially feared this week's accident would be a small-scale repeat of that disaster, which fouled the beach with tar balls.
But Friday's platform fire was extinguished quickly. Although the incident left a thin film of oil floating on the Gulf's shallow waters, federal officials said it wasn't expected to cause significant environmental damage.
Investigators took a helicopter to the scene of the accident Saturday, landing on the platform along with teams from Grand Isle Shipyard and Black Elk Energy.
Mr. Pregeant rebutted reports that workers may have helped cause the explosion by using a torch to cut through a pipe, throwing off sparks that ignited containers holding oil residue.
The reports were mentioned Friday by Black Elk Energy Chief Executive John Hoffman, who said that if true, it would mean workers weren't following the proper procedure.
"Initial reports that a welding torch was being used at the time of the incident or that an incorrect line was cut are completely inaccurate," Mr. Pregeant said in a statement Saturday, adding that the cause was unknown.
Mr. Pregeant said in an interview that a torch had not been used, based on an inspection of the platform but declined to elaborate. The Coast Guard had been probing reports into how the pipe was cut, and an official said Saturday that he had no new information about the cause.
Black Elk Energy didn't respond to requests for comment Saturday. In a statement on its website, the Houston-based company said it was working closely with federal and state agencies. "Our total focus is on the missing workers and the proper care and attention for the injured and their families," the company said.
The Bureau of Safety and Environmental Enforcement, the federal agency in charge of regulating offshore safety, said in a statement Saturday that it was probing the causes the explosion and would take "appropriate enforcement action."
Corrections & Amplifications The explosion occurred on an offshore oil platform. A headline on an earlier version of this article said it occurred on a rig.
Credit: By Daniel Gilbert
Subject: Workers; Explosions
Location: Gulf of Mexico
People: Black Elk
Company / organization: Name: Grand Isle Shipyard Inc; NAICS: 213112; Name: Coast Guard-US; NAICS: 928110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 18, 2012
Section: US
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1163021551
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1163021551?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
America's Oil Boom: Shape Up or Ship Out
Author: Denning, Liam
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]18 Nov 2012: n/a.
ProQuest document link
Abstract:
Gulf Coast refineries are running flat out already. [...]many are set up for a world in which the U.S. imported lots of heavy, high-sulfur crude oil, whereas much of the output from expanding onshore fields is light and low-sulfur or "sweet." [...]as that margin shows, the benefits of cheaper crude flow first to refiners. Since gasoline produced on the Gulf Coast can be sold anywhere, Americans must compete for it--that is, pay up.
Full text: America's newfound natural-gas bounty has already sparked arguments over whether or not to export it. Soon, it will be oil's turn.
The International Energy Agency reckons the U.S. could become a net oil exporter around 2030. It is a tantalizing prospect. But crude-oil exports will make headlines well before 2030. Try next year.
U.S. crude-oil exports are heavily restricted. Refined products such as gasoline can be shipped abroad more easily--indeed, the U.S. became a net exporter of these last year for the first time since 1949. Refiners have been selling increasing amounts in foreign markets as domestic demand has sagged amid economic sluggishness and renewed energy-conservation efforts.
Pressure to export crude oil won't grow because the U.S. will suddenly no longer need imports. The Department of Energy expects net imports to meet 39% of domestic oil consumption in 2013. Rather, it is a matter of logistics.
The rapid increase in onshore U.S. oil output in states such as North Dakota, as well as rising Canadian oil-sands output, has created a glut in the Midwest. As a result, domestic grades sell for less than international benchmarks such as Brent. West Texas Intermediate, or WTI, trades at about $87 a barrel, $22 or 20% below Brent. Grades from further inland often command even less.
While refiners, pipeline operators and rail companies are investing to get these cheaper crudes toward markets like the East Coast, the current logistical setup still favors the Gulf of Mexico coast. This region is home to almost half of U.S. refining capacity. Gulf Coast refineries are running flat out already. Moreover, many are set up for a world in which the U.S. imported lots of heavy, high-sulfur crude oil, whereas much of the output from expanding onshore fields is light and low-sulfur or "sweet."
Just under 800,000 barrels a day of light, sweet crude is currently imported to the Gulf Coast for processing, according to analysts at Raymond James. As onshore output of oil increases, these light, sweet imports will be replaced by domestic barrels. Raymond James estimates this will happen by the second half of 2013.
Gulf Coast refiners will tweak their plants to let them use more domestic light, sweet crude. But a growing surplus of these barrels in the Midwest with few easy options to get to market looks unavoidable.
So expect a push by exploration and production companies to ease export restrictions on oil in the same way they are pushing for natural gas. Gas accounts for about two-thirds of the E&P sector's output. But profits--and stock-price performance--hew more to oil.
Equally, expect the other part of the industry, refiners, to resist. Just as petrochemical firms such as Dow Chemical profit from the glut of domestic gas, refiners able to process cheap domestic crude are enjoying a windfall. Looked at on a rolling three-month average, the premium for gasoline sold in the Gulf Coast region over WTI is around $28 a barrel, close to its highest ever.
That margin could be a political liability. It is easy to envisage export-ban supporters arguing it is unjust to sell domestic crude overseas while Americans pay high gasoline prices. But as that margin shows, the benefits of cheaper crude flow first to refiners. Since gasoline produced on the Gulf Coast can be sold anywhere, Americans must compete for it--that is, pay up. Changing that would actually require raising barriers to refined-product exports, protectionism that neither the world nor refiners would welcome.
Whether such nuance can be squeezed into a political sound bite is another matter. But all politicians, drivers and investors should consider this: If E&P companies find themselves forced to sell oil at persistently lower prices because of logistical and trade constraints, they will eventually curb their output. At that point, the IEA's projections go out the window, and everyone pays more.
Write to Liam Denning at
Credit: By Liam Denning
Subject: Petroleum industry; Exports; Crude oil; Gasoline; Natural gas
Location: United States--US
Company / organization: Name: International Energy Agency; NAICS: 928120; Name: Department of Energy; NAICS: 926130
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 18, 2012
column: Heard on the Street
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1168962040
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1168962040?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Surges to One-Month High as Mideast Worries Grow
Author: DiColo, Jerry A
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 Nov 2012: n/a.
ProQuest document link
Abstract:
[...]in the U.S., more conciliatory statements from Republican and Democratic leaders have raised hopes Congress will reach an agreement on the package of tax increases and budget cuts set to begin at the start of the year.
Full text: NEW YORK--Crude-oil futures jumped 2.7% Monday after fighting between Israel and Palestinian militants intensified, raising the threat of a broader conflict in the oil-rich Middle East.
Israeli airstrikes Monday hit crowded areas of the Gaza Strip, targeting the homes of Hamas activists and raising the Palestinian death toll to more than 90. Meanwhile, Hamas fighters fired dozens more rockets at Israel. Thousands of Israeli troops are gathering on the Gazan border in preparation for a ground invasion even as regional leaders tried to broker a ceasefire.
Oil traders are watching the situation closely, concerned Egypt or other nations could be drawn into the fighting, leading to a disruption of crude-oil shipments through ports and pipelines.
"Nobody knows if there will be a ceasefire. Nobody wants a war, but nobody seems to know how to stop it," said Phil Flynn, an energy analyst at Price Futures Group. "If it does spread, that would be a concern" for oil markets.
Light, sweet crude for January delivery rose $2.36 to $89.28 a barrel on the New York Mercantile Exchange, the highest settlement since Oct. 19. Brent crude on the ICE futures exchange traded $2.38 higher at $111.33 a barrel.
Egypt, along with Turkey and Qatar, are helping in ceasefire negotiations, but investors are concerned further escalation could draw in regional powers such as Egypt or Iran and disrupt oil supplies.
Egypt isn't a major oil producer, but two major oil chokepoints--the Suez Canal and the Sumed pipeline--run through the country. The two transportation routes move 3.8 million barrels of oil a day, according to the U.S. Energy Department.
In the past, Iran has threatened to close the Strait of Hormuz, which would prevent roughly a fifth of the world's oil from reaching the market.
Carl Larry, head of trading adviser Oil Outlooks & Opinions, said it is unlikely the conflict will spread. But investors aren't taking any chances. "You could be on the wrong side of that trade really quickly," Mr. Larry said.
The latest Middle East flare-up has reversed the trend of falling oil prices. Rising supplies and weak demand have weighed on U.S. and European oil futures over the past two months, sending U.S. crude oil down from a peak of $99 a barrel hit in September. But the threat of supply disruptions has prompted traders to wager that prices could surge higher.
Meanwhile in the U.S., more conciliatory statements from Republican and Democratic leaders have raised hopes Congress will reach an agreement on the package of tax increases and budget cuts set to begin at the start of the year.
The so-called fiscal cliff has weighed on stock markets, oil and other commodities as investors worried the U.S. could fall back into recession if no action is taken.
Front-month December reformulated gasoline blendstock, or RBOB, settled 4.44 cents higher at $2.7545 a gallon. December heating oil rose 8.83 cents to $3.0751 a gallon.
Write to Jerry A. DiColo at jerry.dicolo@dowjones.com
Credit: By Jerry A. DiColo
Subject: Crude oil; Petroleum industry; Investments; Truces & cease fires
Location: Iran Israel United States--US Egypt Gaza Strip Middle East
Company / organization: Name: Congress; NAICS: 921120; Name: Hamas; NAICS: 813940; Name: New York Mercantile Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 19, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1170793710
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1170793710?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. News: Oil Industry Renews Push For Drilling in the Atlantic
Author: Tracy, Tennille
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]20 Nov 2012: A.6.
ProQuest document link
Abstract:
The Interior Department says there are about two billion barrels of recoverable oil and 21 trillion cubic feet of natural gas in U.S. waters off the central and southern U.S. Atlantic Coast.
Full text: One of the most significant energy issues facing President Barack Obama in his second term is whether to allow oil drilling off the coast of the Atlantic, where production has been off-limits for decades.
The energy industry, eager to find out how much oil and natural gas exists under the Atlantic sea floor, already is pushing the administration to allow seismic companies to survey the area. If granted approval, the companies could begin mapping the ocean's resources as early as next year.
Depending on the extent of the resources, the U.S. could soon expand its production base and further cement its role as one of the world's most dominant energy producers. The International Energy Agency last week said the U.S. is poised to overtake Saudi Arabia as the top global oil producer by 2020.
The U.S. banned drilling off the Atlantic Coast more than 20 years ago, partly due to low political support for it. This time, too, exploration won't come without a political price. Some East Coast states object to drilling activity off their coasts, partly because of environmental concerns. Environmental groups oppose not only offshore drilling but the seismic surveys that would need to be done well before any drilling takes place.
By early next year, the Interior Department is set to finish an environmental review of proposed surveys in federal waters from Delaware to Florida. A positive review, along with approvals from other federal agencies, would pave the way for the survey work to begin.
Just how much oil and natural gas could be in the area isn't clear -- though companies already are producing oil and natural gas off Canada's Atlantic Coast. Farther south, the U.S. Geological Survey estimates there are 4.6 billion barrels of undiscovered oil off Cuba's northern coast, where a handful of companies have drilled exploratory wells without success.
"We know there's oil to the north and we know there's oil to the south," said James Noe, executive vice president for drilling company Hercules Offshore Inc. "There's just not a lot of information about where the oil in the middle is."
The Interior Department says there are about two billion barrels of recoverable oil and 21 trillion cubic feet of natural gas in U.S. waters off the central and southern U.S. Atlantic Coast. Industry experts say the estimates are based on decades-old data, however, and they are hoping there is a lot more. If accurate, the government's figures would be equivalent to more than four years' worth of federal oil production in the Gulf of Mexico.
"With the right policies, development of those resources can provide substantial new energy supplies to power our economy while supporting millions of new jobs," Exxon Mobil Corp. spokesman Patrick McGinn said.
The U.S. hasn't issued drilling leases in the Atlantic since 1983. In 1990, President George H.W. Bush formally banned drilling there, amid few promising discoveries. Rising gasoline prices prompted the George W. Bush administration to lift the ban and schedule a 2011 lease sale about 50 miles off the coast of Virginia. The Obama administration canceled that lease sale, amid concerns from the Navy, after the Deepwater Horizon explosion in the Gulf of Mexico.
Now, just as drilling in the Gulf has nearly recovered to levels before the 2010 spill, interest in the Atlantic is re-emerging. Mr. Obama last year named Atlantic exploration as one way of easing prices at the pump. Oil companies like the prospect of finding new resources in U.S. waters, although they want the U.S. government to first commit to issuing drilling leases.
The Obama administration will be in a position to do just that when proposing new drilling areas for a five-year period starting in 2017. The Interior Department could approve seismic surveys by the summer or fall of 2013, department spokesman John Filostrat said.
Virginia is a vocal supporter of drilling, with lawmakers there hoping the state could become the gateway for Atlantic production. "We feel that as the Atlantic opens up, whoever does this first will have the advantage," said Doug Domenech, the state's secretary of natural resources.
One issue is the potential impact on sea life. Studies have shown seismic surveys -- which send acoustic energy into the ocean floor -- can cause serious injury to dolphins and whales, including some endangered species. Environmental groups are hoping to persuade the Interior Department to deny approval until less-harmful technology becomes available.
A draft Interior Department review said much of the damage could be avoided by preventing the use of seismic air guns in certain areas at certain times.
Subscribe to WSJ:
Credit: By Tennille Tracy
Subject: Natural gas; Petroleum industry; Environmental protection; Oil exploration; Energy policy; Drilling
Location: Atlantic Ocean United States--US
People: Obama, Barack
Classification: 9190: United States; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.6
Publication year: 2012
Publication date: Nov 20, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1171330466
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1171330466?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Drops on Truce Report
Author: Bird, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Nov 2012: n/a.
ProQuest document link
Abstract:
Mr. Armstrong said a cease-fire would send oil traders back to focusing on supply and demand fundamentals and could set the stage for oil prices to fall below $80 a barrel for the first time since late June.
Full text: Crude-oil prices dropped after reports that Israel and Hamas militants were nearing a cease-fire deal amid worries the conflict would block supplies from the region.
Hamas, the Gaza Strip's ruling party, is close to a deal to halt hostilities, the Associated Press cited a senior Hamas official as saying. Meanwhile, Israeli government spokesman Mark Regev told CNN that a cease-fire deal hasn't been finalized and the "ball is still in play."
Oil prices had climbed 4.5% over the previous two sessions on fears that the conflict could spread throughout the Middle East and disrupt oil production and transportation.
"We've had a 5% gain...since the shooting started. If it's going to stop, then the [oil] bulls have run out of steam," said Addison Armstrong, senior director of market research at Tradition Energy in Stamford, Conn.
Crude oil for January delivery, the front-month contract, fell $2.53, or 2.8%, to $86.75 a barrel on the New York Mercantile Exchange, the biggest percentage decline since Nov. 7, when data showed a drop in U.S. oil demand in the wake of superstorm Sandy.
Brent crude oil fell $1.87, or 1.7%, to $109.83 a barrel on the IntercontinentalExchange.
Crude-oil prices began to fall even before the truce report, with traders and analysts citing increased diplomatic efforts to quell the Gaza turmoil by the U.S. and the United Nations, along with Egypt, Qatar and Turkey.
"The market has built about a $3-to-$5-a-barrel risk premium into the price of oil since the fighting began last week," said Dominick Chirichella, analyst at the Energy Management Institute. "The price of oil will likely fall quickly and pretty strongly" if a diplomatic solution can be reached, he said.
As fears ease of an expanding Mideast conflict, market participants said traders will be faced with the abundant oil production and weak demand that has plagued the market since mid-September, the last time Nymex prices moved over $100 a barrel in intraday trading.
Mr. Armstrong said a cease-fire would send oil traders back to focusing on supply and demand fundamentals and could set the stage for oil prices to fall below $80 a barrel for the first time since late June. The global crude-oil market is well supplied, while signs of a sagging global economy prompts fears that the world's appetite for crude is eroding, traders and analysts said.
U.S. oil inventories stand at a four-month high, and the surplus from 2011 levels has widened to a three-year high of nearly 39 million barrels. Analysts expect data set for release Thursday by the federal Energy Information Administration to show stocks rose again last week, by 800,000 barrels.
Tim Evans, energy futures specialist at Citi Futures, said he sees fair value for U.S. crude at about $82 a barrel now and $95 a barrel for Brent, given the supply-demand picture.
December reformulated gasoline blendstock, or RBOB, fell 4.2 cents, or 1.5%, to $2.7125 a gallon. December heating oil lost 3.59 cents, or 1.2%, to $3.0392 a gallon.
Write to David Bird at
Credit: By David Bird
Subject: Petroleum industry; Crude oil; Truces & cease fires; Petroleum production; Energy management
Location: Israel United States--US Gaza Strip Middle East
People: Clinton, Hillary Peres, Shimon
Company / organization: Name: IntercontinentalExchange Inc; NAICS: 523210; Name: Hamas; NAICS: 813940; Name: United Nations--UN; NAICS: 928120; Name: New York Mercantile Exchange; NAICS: 523210; Name: Associated Press; NAICS: 519110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 20, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1173131800
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1173131800?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
An Oil-Rich Revolution
Author: Lopez, Jonathan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]20 Nov 2012: n/a.
ProQuest document link
Abstract:
Visitors should be aware that because of the iconoclastic purges of the Protestant Reformation--in which thousands of paintings, sculptures and other devotional objects were removed from churches, abbeys and convents across northern Europe and systematically destroyed as violations of the Ten Commandments' ban on graven images--pictures like these are extremely rare.
Full text: Rotterdam, Netherlands
Early in the 15th century, the Van Eyck family of Netherlandish painters--principally brothers Hubert and Jan--initiated a visual revolution that radically altered the course of European art history. Working mostly at the courts of Holland and Burgundy, where sumptuousness and luxury reigned supreme, they exploited the versatile and relatively new medium of oil paint to introduce an almost magical sense of realism to their sparkling religious and secular images. A splendid exhibition at this city's Museum Boijmans Van Beuningen traces the roots of these developments through a judicious survey of the art and culture of the era, culminating in an excellent (although not extensive) selection of works by the Van Eycks themselves. This show, which will not travel, presents the Van Eycks' achievements in a rich and revelatory context impossible to replicate in any individual museum or collection anywhere in the world, and therefore merits a special trip.
Curator Friso Lammertse has installed the exhibition creatively in a large, doughnut-shaped set of galleries. The inner circle contains paintings and drawings by the Van Eycks and their closest contemporaries; the outer circle, important objects by predecessors working in a wide variety of media--including painting, metalwork, manuscript illumination and sculpture (a poignant pair of weeping mourners by Claus de Werve from the tomb of Philip the Bold is a highlight).
Upon entering, one meets "The Madonna of the Mantle" (c. 1410-20), a large painting on canvas, likely by a southern Netherlandish artist, showing the Virgin and Child attended by angels, who hold aloft the Virgin's ample cloak to protect and shelter all humanity. The aesthetic is highly decorative, almost like a tapestry, with a shallow treatment of space and a fanciful attitude toward the relative size of near and far objects. Similar observations hold true for the spatial accuracy of most of the 30 or so paintings in this early section, including "The Virgin With Angels and Butterflies" (c. 1410), traditionally attributed to Burgundian court artist Jean Malouel, a radiant work that owes much to Byzantine icon painting.
Visitors should be aware that because of the iconoclastic purges of the Protestant Reformation--in which thousands of paintings, sculptures and other devotional objects were removed from churches, abbeys and convents across northern Europe and systematically destroyed as violations of the Ten Commandments' ban on graven images--pictures like these are extremely rare. Only about 36 Netherlandish paintings of the pre-Eyckian era are now known to exist. So what you see in Rotterdam is very nearly the most complete display of early Netherlandish painting possible--a triumph for the curators and a once-in-a-lifetime opportunity for the public, as such an exhibition will probably not occur again.
In the central gallery, one immediately senses a dramatic, mesmerizing shift in style under way in the works of the Van Eycks. It is generally believed that the older brother, Hubert, who died in 1426, designed the composition for "The Three Marys at the Tomb" (c. 1425-35), which was then finished later by Jan. Picking out the role of each brother is a puzzle best followed in the show's excellent catalog. But, generally speaking, the careful arrangement of shapes to create a sense of depth in receding planes hints at Hubert, whereas the ultrafine detail, luminous light and brilliant colors--achieved with as many as seven layers of oil glazing--point to Jan.
The full blossoming of the Eyckian style can be seen in "The Annunciation" (c. 1434/1436), which is by Jan van Eyck alone. Here, beautifully rounded forms inhabit a measurable, light-filled space whose very air seems alive and crackling with energy. So masterly is Jan van Eyck's naturalistic technique--so vivid the blue of the Virgin's regal gown, so lush the rainbow hues of the archangel Gabriel's multicolored wings--that the glories of heaven seem to mingle freely with earthly events, rendering the commonplace magical and the magical palpably real.
Four additional works by Jan van Eyck, including a portrait of the Burgundian courtier Baudouin de Lannoy (c. 1435-40), round out the display. Not to be missed is "Saint Barbara" (1437), a brush-and-ink drawing on panel showing the saint in peaceful contemplation before the stone tower in which she was imprisoned by her father, who later beheaded her for following her Christian faith. Jan van Eyck likely conceived this as the underdrawing for a painting, but he brought it to such a refined state of finish that adding color could only detract from its exquisite beauty.
Beyond the main galleries, a final room contains works demonstrating the Van Eycks' legacy. Included are paintings by the Van Eyck workshop, which continued to operate after Jan's death under a younger brother named Lambert, about whom little is known, and possibly a sister named Margaret, whose existence and profession as a painter are recorded in but one extant document. Particularly important are copies after lost Van Eyck originals as well as masterpieces by the likes of the great Gerard David, attesting to the powerful influence that the Van Eycks' vision of Christian majesty exerted over European religious art for the next century and beyond. Direct borrowings from compositions and figures by the Van Eycks can be found in works (not in the show) by Petrus Christus, Robert Campin, Piero della Francesca, Domenico Ghirlandaio and many others.
Regarding this fine exhibition, one ventures two criticisms. First, the metallic gray hue of the walls is a distraction and makes the round central gallery look like the bridge of the starship Enterprise. Second, the selection of the Van Eycks' works could be improved with additional pictures--although, in fairness, such items are extraordinarily difficult to borrow due to their fragility and cultural importance. Visitors may therefore wish to supplement this show with a road trip to Ghent, in Belgium, where Hubert and Jan van Eyck's monumental multipanel altarpiece, "Adoration of the Mystic Lamb" (completed 1432)--one of the world's greatest art treasures--is on display at St. Bavo Cathedral. Another possible excursion: the National Gallery in London, where Jan van Eyck's famed "Arnolfini Portrait" (1434), which depicts a wealthy merchant and his wife, and "Portrait of a Man" (1433), widely considered a self-portrait, hang in glory as icons of creativity and genius. In New York, the Metropolitan Museum of Art's diptych by Jan van Eyck, "The Crucifixion; the Last Judgment" (c. 1430), has been temporarily removed from display for research.
Mr. Lopez is editor-at-large of Art & Antiques.
Credit: By Jonathan Lopez
Subject: Painting
People: van Eyck, Jan (1370?-1440?)
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 20, 2012
Section: Life and Style
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1174015528
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1174015528?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
An Oil-Rich Revolution
Author: Lopez, Jonathan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Nov 2012: n/a.
ProQuest document link
Abstract:
Visitors should be aware that because of the iconoclastic purges of the Protestant Reformation--in which thousands of paintings, sculptures and other devotional objects were removed from churches, abbeys and convents across northern Europe and systematically destroyed as violations of the Ten Commandments' ban on graven images--pictures like these are extremely rare.
Full text: The Road to Van Eyck
Museum Boijmans Van Beuningen
Through Feb. 10
Rotterdam, Netherlands
Early in the 15th century, the Van Eyck family of Netherlandish painters--principally brothers Hubert and Jan--initiated a visual revolution that radically altered the course of European art history. Working mostly at the courts of Holland and Burgundy, where sumptuousness and luxury reigned supreme, they exploited the versatile and relatively new medium of oil paint to introduce an almost magical sense of realism to their sparkling religious and secular images. A splendid exhibition at this city's Museum Boijmans Van Beuningen traces the roots of these developments through a judicious survey of the art and culture of the era, culminating in an excellent (although not extensive) selection of works by the Van Eycks themselves. This show, which will not travel, presents the Van Eycks' achievements in a rich and revelatory context impossible to replicate in any individual museum or collection anywhere in the world, and therefore merits a special trip.
Curator Friso Lammertse has installed the exhibition creatively in a large, doughnut-shaped set of galleries. The inner circle contains paintings and drawings by the Van Eycks and their closest contemporaries; the outer circle, important objects by predecessors working in a wide variety of media--including painting, metalwork, manuscript illumination and sculpture (a poignant pair of weeping mourners by Claus de Werve from the tomb of Philip the Bold is a highlight).
Upon entering, one meets "The Madonna of the Mantle" (c. 1410-20), a large painting on canvas, likely by a southern Netherlandish artist, showing the Virgin and Child attended by angels, who hold aloft the Virgin's ample cloak to protect and shelter all humanity. The aesthetic is highly decorative, almost like a tapestry, with a shallow treatment of space and a fanciful attitude toward the relative size of near and far objects. Similar observations hold true for the spatial accuracy of most of the 30 or so paintings in this early section, including "The Virgin With Angels and Butterflies" (c. 1410), traditionally attributed to Burgundian court artist Jean Malouel, a radiant work that owes much to Byzantine icon painting.
Visitors should be aware that because of the iconoclastic purges of the Protestant Reformation--in which thousands of paintings, sculptures and other devotional objects were removed from churches, abbeys and convents across northern Europe and systematically destroyed as violations of the Ten Commandments' ban on graven images--pictures like these are extremely rare. Only about 36 Netherlandish paintings of the pre-Eyckian era are now known to exist. So what you see in Rotterdam is very nearly the most complete display of early Netherlandish painting possible--a triumph for the curators and a once-in-a-lifetime opportunity for the public, as such an exhibition will probably not occur again.
In the central gallery, one immediately senses a dramatic, mesmerizing shift in style under way in the works of the Van Eycks. It is generally believed that the older brother, Hubert, who died in 1426, designed the composition for "The Three Marys at the Tomb" (c. 1425-35), which was then finished later by Jan. Picking out the role of each brother is a puzzle best followed in the show's excellent catalog. But, generally speaking, the careful arrangement of shapes to create a sense of depth in receding planes hints at Hubert, whereas the ultrafine detail, luminous light and brilliant colors--achieved with as many as seven layers of oil glazing--point to Jan.
The full blossoming of the Eyckian style can be seen in "The Annunciation" (c. 1434/1436), which is by Jan van Eyck alone. Here, beautifully rounded forms inhabit a measurable, light-filled space whose very air seems alive and crackling with energy. So masterly is Jan van Eyck's naturalistic technique--so vivid the blue of the Virgin's regal gown, so lush the rainbow hues of the archangel Gabriel's multicolored wings--that the glories of heaven seem to mingle freely with earthly events, rendering the commonplace magical and the magical palpably real.
Four additional works by Jan van Eyck, including a portrait of the Burgundian courtier Baudouin de Lannoy (c. 1435-40), round out the display. Not to be missed is "Saint Barbara" (1437), a brush-and-ink drawing on panel showing the saint in peaceful contemplation before the stone tower in which she was imprisoned by her father, who later beheaded her for following her Christian faith. Jan van Eyck likely conceived this as the underdrawing for a painting, but he brought it to such a refined state of finish that adding color could only detract from its exquisite beauty.
Beyond the main galleries, a final room contains works demonstrating the Van Eycks' legacy. Included are paintings by the Van Eyck workshop, which continued to operate after Jan's death under a younger brother named Lambert, about whom little is known, and possibly a sister named Margaret, whose existence and profession as a painter are recorded in but one extant document. Particularly important are copies after lost Van Eyck originals as well as masterpieces by the likes of the great Gerard David, attesting to the powerful influence that the Van Eycks' vision of Christian majesty exerted over European religious art for the next century and beyond. Direct borrowings from compositions and figures by the Van Eycks can be found in works (not in the show) by Petrus Christus, Robert Campin, Piero della Francesca, Domenico Ghirlandaio and many others.
Regarding this fine exhibition, one ventures two criticisms. First, the metallic gray hue of the walls is a distraction and makes the round central gallery look like the bridge of the starship Enterprise. Second, the selection of the Van Eycks' works could be improved with additional pictures--although, in fairness, such items are extraordinarily difficult to borrow due to their fragility and cultural importance. Visitors may therefore wish to supplement this show with a road trip to Ghent, in Belgium, where Hubert and Jan van Eyck's monumental multipanel altarpiece, "Adoration of the Mystic Lamb" (completed 1432)--one of the world's greatest art treasures--is on display at St. Bavo Cathedral. Another possible excursion: the National Gallery in London, where Jan van Eyck's famed "Arnolfini Portrait" (1434), which depicts a wealthy merchant and his wife, and "Portrait of a Man" (1433), widely considered a self-portrait, hang in glory as icons of creativity and genius. In New York, the Metropolitan Museum of Art's diptych by Jan van Eyck, "The Crucifixion; the Last Judgment" (c. 1430), has been temporarily removed from display for research.
Mr. Lopez is editor-at-large of Art & Antiques.
Credit: By Jonathan Lopez
Subject: Painting; Protestant Reformation
People: van Eyck, Jan (1370?-1440?)
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 21, 2012
Section: Life and Style
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1175438424
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1175438424?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Funding Rules Test Schools; State Laws Keep Some Districts in Oil-Boom Areas From Reaping Full Benefits
Author: Campoy, Ana
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Nov 2012: n/a.
ProQuest document link
Abstract:
[...]23 school districts, including Karnes City's, this year switched to "property wealthy," according to a preliminary list from the Texas Education Agency.
Full text: KARNES CITY, Texas--The school district in this ranching community has long been among the poorest in the state--and it remains so, local officials say, even though an oil boom has sent property values surging eightfold in the past two years.
But that jump in value has changed the town's designation to "property wealthy" from "property poor," under Texas' school-funding formula. That means the town can't keep most of this year's projected property tax of $20 million--up from $6.5 million last year--and must instead share the bounty with other districts.
"We'd be foolish to right now spend most of our extra money," said Jeanette Winn, superintendent of the 1,000-student Karnes City Independent School District, southeast of San Antonio.
Similar stories are arising at school districts elsewhere in Texas and in other boom states such as North Dakota and Montana. New drilling techniques have triggered an economic bonanza, but state laws meant to spread around revenue and protect homeowners from soaring tax bills are prohibiting local school officials from reaping the full financial benefits.
The oil and gas booms have brought new jobs and businesses, transforming often sleepy areas into economic engines. In the region atop the Eagle Ford Shale, where Karnes City is located, oil and gas production boosted local economic output by $25 billion in 2011, according to a study conducted by the Center for Community and Business Research at the University of Texas at San Antonio and commissioned by the natural-gas industry.
The property-tax windfall in the Eagle Ford Shale is mostly generated from collections on the oil and gas itself, which, like land, is taxable. For the most part, property taxes on oil and gas are paid by the companies extracting it, rather than by the ranchers and farmers that often live in these communities.
But school officials say funding rules prevent them from making suddenly affordable improvements--or even from dealing with rising costs, such as schooling for the children of oil-field workers.
In Texas, about 55% of funding for school districts comes from local sources, mostly property taxes, according to the state comptroller. As oil and gas production climbs rapidly in Eagle Ford Shale and other oil-and-gas-producing areas, property-tax collections are soaring.
As a result, 23 school districts, including Karnes City's, this year switched to "property wealthy," according to a preliminary list from the Texas Education Agency. The designation is based on several factors, including property values, and districts that cross into the "property wealthy" category often end up with roughly the same amount of money per student as they had when they were "property poor."
Opponents of the system, intended to equalize school funding, say the way it assigns resources doesn't reflect communities' needs. "You would hope there's some type of a tie between the local economy doing well and the schools," said Christy Rome, executive director of the Texas School Coalition, which represents property-rich districts. "That's not the case."
Backers of the school-funding formula, which is widely dubbed "Robin Hood," say it is necessary to even out income differences in rich and poor communities.
"It's their turn to be on the other end," said Dick Lavine, senior fiscal analyst at the Center for Public Policy Priorities, an advocate group for low-income Texans. The problem with the funding system, he said, isn't its mechanisms to share wealth but that the state isn't putting enough money into it.
Other critics in Texas have questioned the amount schools are receiving generally, contending that more funds don't result in better academic performance.
About two-thirds of the state's school districts, including both poor and wealthy ones, have filed lawsuits contending that the funding system is inequitable. The case went to trial last month in a Texas district court in Austin and will likely continue until January.
The state education agency and Texas Attorney General Greg Abbott declined to comment because of the litigation.
In Sydney, Mont., atop the Bakken Shale, per-pupil expenditures for elementary students rose 37% in 2011 from 2007, while the district spent 17% more per high-school student in the same period, according to state data.
Still, Superintendent Daniel Farr said the extra funds aren't enough to keep up with new challenges, including an influx of itinerant students who require extra help, and the rising cost of everything from fuel for school buses to workers' salaries. "Everything has become so inflated," he said.
In Karnes City, before the surge in drilling, median household income was $32,000 a year, according to U.S. Census data, versus almost $50,000 for Texas as a whole. Local taxes accounted for 30% or so of the roughly $9,000 the school district had available per student, with the state contributing the rest.
But as fortunes in the city of about 3,000 have improved, the district is receiving less money from the state: For the 2011-12 school year, the latest data available, it estimated local taxes would cover more than half of the amount available per student and that under "Robin Hood" it would have to return about $3,000 per student of its funds to the state. That means that after the district predicted money available per student would go up 12% from the previous school year to almost $11,000, the money to spend actually would decline to closer to $8,000 per student.
Meanwhile, unemployment in Karnes County fell to 6.6% in October from 9.5% in the same month in 2009, according to the latest data. For schools, this means attracting workers is also more difficult. After receiving a single application for three maintenance jobs in two months, district officials decided instead to hire a secretary so that the head of the department could turn to chores. "Our wage rates cannot keep up with the wages that oil fields are providing," said Jeff Allen, the maintenance director.
In the past, the school district has raised extra money from taxpayers through bonds or from donations--but that is a tough pitch these days, said Debbie Witte, an official at the Karnes City ISD Education Foundation. "People say, 'No, you're rich!' "
Write to Ana Campoy at
Credit: By Ana Campoy
Subject: School districts; School finance; Property values; Natural gas
Location: Texas
Company / organization: Name: Texas Education Agency; NAICS: 921120; Name: University of Texas; NAICS: 611310
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 21, 2012
Section: US
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1175445382
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1175445382?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Some Schools Receive Less From State Amid Oil Boom
Author: Anonymous
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Nov 2012: n/a.
ProQuest document link
Abstract:
Similar stories are arising at other school districts in boom states such as Texas, North Dakota and Montana, where new drilling techniques have triggered an economic bonanza, but state laws meant to spread around revenue and protect homeowners from soaring tax bills are prohibiting local school officials from reaping the full financial benefits.
Full text: Students leaving Karnes City High School for lunch in Karnes City, Texas, cross Highway 123, now congested with 18-wheeler traffic. The school district has long been among the poorest in the state--and it remains so, local officials say, even though an oil boom has sent local property values surging eightfold in the past two years.
That jump in value has changed the town's designation to 'property wealthy' from 'property poor,' under Texas' school-funding formula. That means the town can't keep most of this year's projected property tax of $20 million--up from $6.5 million last year--and must instead share the bounty with other districts.
Similar stories are arising at other school districts in boom states such as Texas, North Dakota and Montana, where new drilling techniques have triggered an economic bonanza, but state laws meant to spread around revenue and protect homeowners from soaring tax bills are prohibiting local school officials from reaping the full financial benefits. Here, a sign advertised housing in Karnes City.
Pipeline and oil workers now outnumber the locals at Polak's Sawsage Farm, a long time Karnes City lunch staple. The oil and gas booms have brought new jobs and businesses, transforming often sleepy, rural areas into hubs of economic activity.
Students played at a playground at Karnes City Elementary, next to a newly opened RV park for pipeline and oil workers.
Katelyn Williams, 15, a student at Karnes City High School, filled out paperwork for a college counselor while her sister, Khloe, 7, and brother, Dylan, 12, played. At left is their mother, Melanie Williams. The family moved to Karnes City last summer so the father could work on the pipeline.
Dylan Williams played outside the family's trailer at the Seven Eleven RV Park after school. 'Trying to fit all of us into a trailer has been a challenge,' said his mom, Ms. Williams. 'But its been great because the money is so awesome.'
A fuel-processing area can be seen from the backyard of a home off Highway 123. As oil and gas production climbs rapidly in the Eagle Ford Shale and other oil-and-gas-producing areas, property-tax collections are soaring.
The district is renovating an abandoned Head Start building behind Karnes City Elementary to add more classroom space.
Students took part in a reading workshop during an Honors English II class at Karnes City High School.
As Karnes City's fortunes have improved, the district is receiving less money from the state: For the 2011-12 school year, the latest data available, it projected local taxes would cover more than 50% of per-pupil revenue, up from 30% a year earlier, with the state contributing most of the rest.
Some elementary students got to wear football jerseys and attend a high school pep rally as a reward for good behavior.
Karnes City High School students left campus.
Khloe Williams played outside the family's trailer at the Seven Eleven RV Park after school.
Subject: Pipelines; Awards & honors; Banking industry; Bankers associations
Location: Texas Karnes City Texas
Company / organization: Name: National Head Start Association; NAICS: 813910, 624120, 624410
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 21, 2012
Section: US
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1175445476
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1175445476?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Oil Drops on Truce Report
Author: Bird, David
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]21 Nov 2012: C.4.
ProQuest document link
Abstract:
Mr. Armstrong said a cease-fire would send oil traders back to focusing on supply and demand fundamentals and could set the stage for oil prices to fall below $80 a barrel for the first time since late June.
Full text: Crude-oil prices dropped after reports that Israel and Hamas militants were nearing a cease-fire deal amid worries the conflict would block supplies from the region.
Hamas, the Gaza Strip's ruling party, is close to a deal to halt hostilities, the Associated Press cited a senior Hamas official as saying. Meanwhile, Israeli government spokesman Mark Regev told CNN that a cease-fire deal hasn't been finalized and the "ball is still in play."
Oil prices had climbed 4.5% over the previous two sessions on fears that the conflict could spread throughout the Middle East and disrupt oil production and transportation.
"We've had a 5% gain . . . since the shooting started. If it's going to stop, then the [oil] bulls have run out of steam," said Addison Armstrong, senior director of market research at Tradition Energy in Stamford, Conn.
Crude oil for January delivery, the front-month contract, fell $2.53, or 2.8%, to $86.75 a barrel on the New York Mercantile Exchange, the biggest percentage decline since Nov. 7, when data showed a drop in U.S. oil demand in the wake of superstorm Sandy.
Brent crude oil fell $1.87, or 1.7%, to $109.83 a barrel on the IntercontinentalExchange.
Crude-oil prices began to fall even before the truce report, with traders and analysts citing increased diplomatic efforts to quell the Gaza turmoil by the U.S. and the United Nations, along with Egypt, Qatar and Turkey.
"The market has built about a $3-to-$5-a-barrel risk premium into the price of oil since the fighting began last week," said Dominick Chirichella, analyst at the Energy Management Institute. "The price of oil will likely fall quickly and pretty strongly" if a diplomatic solution can be reached, he said.
As fears ease of an expanding Mideast conflict, market participants said traders will be faced with the abundant oil production and weak demand that has plagued the market since mid-September.
Mr. Armstrong said a cease-fire would send oil traders back to focusing on supply and demand fundamentals and could set the stage for oil prices to fall below $80 a barrel for the first time since late June. The global crude-oil market is well supplied, while signs of a sagging global economy prompts fears that the world's appetite for crude is eroding, traders and analysts said.
Subscribe to WSJ:
Credit: By David Bird
Subject: Crude oil; Commodity prices
Location: United States--US
Classification: 3400: Investment analysis & personal finance; 9190: United States
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: C.4
Publication year: 2012
Publication date: Nov 21, 2012
column: Commodities Report
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1177946648
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1177946648?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. News: Funding Rules Test Schools --- State Laws Keep Some Districts in Oil-Boom Areas From Reaping Full Benefits
Author: Campoy, Ana
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]21 Nov 2012: A.3.
ProQuest document link
Abstract:
[...]23 school districts, including Karnes City's, this year switched to "property wealthy," according to a preliminary list from the Texas Education Agency.
Full text: KARNES CITY, Texas -- The school district in this ranching community has long been among the poorest in the state -- and it remains so, local officials say, even though an oil boom has sent property values surging eightfold in the past two years.
But that jump in value has changed the town's designation to "property wealthy" from "property poor," under Texas' school-funding formula. That means the town can't keep most of this year's projected property tax of $20 million -- up from $6.5 million last year -- and must instead share the bounty with other districts.
"We'd be foolish to right now spend most of our extra money," said Jeanette Winn, superintendent of the 1,000-student Karnes City Independent School District, southeast of San Antonio.
Similar stories are arising at school districts elsewhere in Texas and in other boom states such as North Dakota and Montana. New drilling techniques have triggered an economic bonanza, but state laws meant to spread around revenue and protect homeowners from soaring tax bills are prohibiting local school officials from reaping the full financial benefits.
The oil and gas booms have brought new jobs and businesses, transforming often sleepy areas into economic engines. In the region atop the Eagle Ford Shale, where Karnes City is located, oil and gas production boosted local economic output by $25 billion in 2011, according to a study conducted by the Center for Community and Business Research at the University of Texas at San Antonio and commissioned by the natural-gas industry.
The property-tax windfall in the Eagle Ford Shale is mostly generated from collections on the oil and gas itself, which, like land, is taxable. For the most part, property taxes on oil and gas are paid by the companies extracting it, rather than by the ranchers and farmers that often live in these communities.
But school officials say funding rules prevent them from making suddenly affordable improvements -- or even from dealing with rising costs, such as schooling for the children of oil-field workers.
In Texas, about 55% of funding for school districts comes from local sources, mostly property taxes, according to the state comptroller. As oil and gas production climbs rapidly in Eagle Ford Shale and other oil-and-gas-producing areas, property-tax collections are soaring.
As a result, 23 school districts, including Karnes City's, this year switched to "property wealthy," according to a preliminary list from the Texas Education Agency. The designation is based on factors including property values, and districts that cross into the category often end up with roughly the same amount of money per student as they had when they were "property poor."
Opponents of the system, intended to equalize school funding, say the way it assigns resources doesn't reflect communities' needs. "You would hope there's some type of a tie between the local economy doing well and the schools," said Christy Rome, executive director of the Texas School Coalition, which represents property-rich districts. "That's not the case."
Backers of the school-funding formula, which is widely dubbed "Robin Hood," say it is necessary to even out income differences in rich and poor communities.
"It's their turn to be on the other end," said Dick Lavine, senior fiscal analyst at the Center for Public Policy Priorities, an advocate group for low-income Texans. The problem with the funding system, he said, isn't its mechanisms to share wealth but that the state isn't putting enough money into it.
Other critics in Texas have questioned the amount schools are receiving generally, contending that more funds don't result in better academic performance.
About two-thirds of the state's school districts, including poor and wealthy ones, have filed lawsuits contending that the funding system is inequitable. The case went to trial last month in a Texas district court in Austin and will likely continue until January.
The state education agency and Texas Attorney General Greg Abbott declined to comment because of the litigation.
In Sydney, Mont., atop the Bakken Shale, per-pupil expenditures for elementary students rose 37% in 2011 from 2007, while the district spent 17% more per high-school student in the same period, according to state data.
Still, Superintendent Daniel Farr said the extra funds aren't enough to keep up with new challenges, including an influx of itinerant students and the rising cost of everything from fuel to workers' salaries. "Everything has become so inflated," he said.
In Karnes City, before the surge in drilling, median household income was $32,000 a year, according to U.S. Census data, versus almost $50,000 for Texas. Local taxes accounted for 30% or so of the roughly $9,000 available per student, with the state contributing the rest.
But as fortunes in the city of about 3,000 have improved, the district is receiving less money from the state: For the 2011-12 school year, the latest data available, it estimated local taxes would cover more than half of the amount available per student and that under "Robin Hood" it would have to return about $3,000 per student of its funds to the state. That means that after the district predicted money available per student would go up 12% from the previous school year to almost $11,000, the money to spend actually would decline to closer to $8,000 per student.
Meanwhile, unemployment in Karnes County fell to 6.6% in October from 9.5% in the same month in 2009, according to the latest data. For schools, this means attracting workers is also more difficult. After receiving a single application for three maintenance jobs in two months, district officials decided instead to hire a secretary so that the head of the department could turn to chores. "Our wage rates cannot keep up with the wages that oil fields are providing," said Jeff Allen, the maintenance director.
In the past, the school district has raised extra money from taxpayers through bonds or from donations -- but that is a tough pitch these days, said Debbie Witte, an official at the Karnes City ISD Education Foundation. "People say, 'No, you're rich!' "
Subscribe to WSJ:
Credit: By Ana Campoy
Subject: School districts; Property values; School finance; Petroleum industry
Location: Texas
Classification: 9190: United States; 8306: Schools and educational services
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.3
Publication year: 2012
Publication date: Nov 21, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1177984128
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1177984128?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Japan's Crude-Oil Imports Slump
Author: Iwata, Mari
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Nov 2012: n/a.
ProQuest document link
Abstract:
Tokyo Electric Power Co., Japan's largest utility by sales volume, said this month that to cut costs it planned to reduce the amount of heavy oil it would use to generate power in the financial year that began April 1 to 49 million barrels, a decline of 14% from its original target.
Full text: TOKYO--Japan's crude-oil imports fell sharply in October from a year earlier, reflecting rising energy conservation and utilities' efforts to cut fuel costs at a time when nearly all of the nation's nuclear reactors remain idle.
Imports of crude oil and condensate in October fell to 12.7 million kiloliters, or 2.57 million barrels a day, a decline of 24.5% from the same month a year earlier, the Ministry of Finance said Wednesday. It was the first on-year decline in nine months.
From February to September, utilities operating thermal power plants had consumed more crude oil and condensate compared with a year earlier to offset reduced nuclear-power generation.
Some utility officials recently said that they wouldn't use as much oil as they originally expected due to better-than-anticipated efforts at conservation by customers and lower costs associated with generating power with natural gas.
Tokyo Electric Power Co., Japan's largest utility by sales volume, said this month that to cut costs it planned to reduce the amount of heavy oil it would use to generate power in the financial year that began April 1 to 49 million barrels, a decline of 14% from its original target.
Tohoku Electric Power Co. said Tuesday that it would use more coal and less crude oil to generate power, also to cut costs.
Japan's demand for liquefied natural gas and coal remained strong in October, rising 8.3% and 5.0% on year, respectively, the ministry's data showed.
Only two of Japan's 50 reactors are now online. The rest have been idled to assuage public fears over nuclear power after the March 2011 Fukushima Daiichi nuclear accident.
Utilities' fuel costs have skyrocketed as they have run thermal power plants at or near full capacity to make up for idled nuclear capacity. Eight of 10 regional utilities reported a net loss for the first half of this fiscal year, citing high fuel costs.
Write to Mari Iwata at
Credit: By Mari Iwata
Subject: Energy conservation; Net losses; Electric power; Cost reduction; Petroleum industry
Location: Japan
Company / organization: Name: Tokyo Electric Power Co; NAICS: 221121, 221122
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 21, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1178294555
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1178294555?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
China's Iran Oil Imports Drop Further
Author: Ma, Wayne; Murphy, Colum
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Nov 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: China's imports of Iranian crude oil are down by about one-fifth so far this year, a drop that puts the country in good position to avoid U.S. sanctions and head off a diplomatic row with Washington.
China has repeatedly defended its crude purchases from Iran, telling the U.S. it complies with existing U.N. resolutions. But October data released Wednesday showed Iran crude-oil imports off 23% from a year earlier, to 458,000 barrels a day, continuing a year-long trend.
China's third-largest supplier of crude as recently as last year, after Saudi Arabia and Angola, Iran this year has slipped to No. 4--surpassed by Russia--shipping about 426,000 barrels a day in the first 10 months of the year.
October's import numbers will be the last used by the U.S. State Department in deciding whether Beijing qualifies for a renewal of its waiver from sanctions, which expires Dec. 25. China won the exemption in late June, after the State Department determined that it had "significantly reduced" crude imports from Iran in the first half of the year. Renewal requires continued significant reductions. The State Department says no decision has yet been made.
The U.S. sanctions are designed to ratchet up economic pressure on Iran to guarantee its nuclear program is for civilian purposes, as Tehran contends. The sanctions ban companies that deal with Iran's central bank from doing business in the U.S.
"China will get the waiver again as imports do indeed seem to be down," said Michal Meidan, an analyst at political risk consultancy Eurasia Group. "The Obama administration will probably prefer not to challenge the new leadership in China if it has sufficient ground for a waiver."
China's Foreign Ministry said Wednesday that it purchases Iranian crude through "normal channels" and based on economic requirements. It reiterated that crude imports from Iran don't harm third parties and that China won't accept unilateral sanctions.
Oil-industry insiders say the decline in Chinese imports appears to be partly an effect of the increased difficulty Iran has in shipping oil because of the global sanctions. Still, a top Chinese oil industry official nodded to the U.S. pressure in a recent interview.
In the first four months of 2012, China's crude imports from Iran were down about 24% from a year earlier due to a commercial dispute between state-controlled China Petroleum & Chemical Corp., known as Sinopec Corp., and National Iranian Oil Co., known as NIOC. Although imports recovered in May and June after the dispute was resolved, a European ban on insuring tankers carrying Iranian oil caused China's imports to drop again from July.
In a rare admission of the problems Iran faces, Maziar Hojjati, managing director of the China office of NIOC, said in an interview last week that shipping difficulties related to sanctions contributed to lower crude exports to China earlier this year. Still, the company received indications from Chinese authorities that they had no problem keeping imports at current levels, Mr. Hojjati said. He added that NIOC expects to make up for the earlier reduced shipments to China in the coming months now that some of the company's shipping issues have been resolved.
"We are here to keep our market share in China," Mr. Hojjati said.
It isn't clear whether China's imports will drop further. The International Energy Agency said earlier this month that Iran's crude exports to China were higher in October than September, at 565,000 barrels a day. The shipments are likely to appear in China's November import figures.
By contrast, South Korea's January-October imports were down 40% from a year earlier, and Japan's January-September imports were down 38%. Indian refineries plan to cut imports in the fiscal year that began on April 1 by 14% from a year earlier.
Still, U.S. officials seem aware of the technical challenges Chinese refineries face in replacing heavy, sour Iranian crude with imports of different grades from elsewhere. Carlos Pascual, head of the State Department's Bureau of Energy Resources, said in an interview last month that China appeared to be maintaining the reduced levels of Iranian imports that marked the first half of the year, which would most likely signal another exemption.
Chinese companies acknowledge the balancing act required over Iranian crude imports. They are keen not to upset Washington, which could throw up regulatory roadblocks to their investing in the U.S., where oil production is booming.
Sinopec, which earlier this year struck a $2.5 billion deal with Devon Energy to help develop shale fields in Ohio, Michigan and elsewhere, has an agreement with the U.S. to curtail crude imports from Iran, Chairman Fu Chengyu said in a recent interview. He did not elaborate.
Mark Dubowitz, executive director at the Foundation for Defense of Democracies, a Washington think tank that has pushed for more sanctions against Iran, said China will likely receive a second exemption. The State Department's focus, he said, is shifting to other elements of Iran's balance of payments.
"The next area of attention will be on blanket bans of all trade with Iran's energy, shipbuilding, shipping and ports sectors," he said.
Keith Johnson in Washington, Brian Spegele in Beijing and Benoît Faucon in London contributed to this article.
Credit: Wayne Ma; Colum Murphy
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 21, 2012
Section: World
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1178939800
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1178939800?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Stockpiles Fall
Author: Strumpf, Dan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Nov 2012: n/a.
ProQuest document link
Abstract:
Distillate stocks, which include heating oil and diesel fuel, fell 2.7 million barrels, to 112.8 million barrels, compared with analysts' forecast of an 800,000-barrel decline.
Full text: Oil prices held on to gains after the government reported an unexpected drop in U.S. oil inventories last week.
Light, sweet crude for January delivery was up 55 cents, or 0.6%, to $87.32 a barrel on the New York Mercantile Exchange on Wednesday.
Prices barely budged following the release of the 10:30 a.m. EST report, which showed oil stocks last week fell 1.5 million barrels. The drop bucked expectations from analysts, who forecast a build of 800,000 barrels, according to a survey by Dow Jones Newswires.
Likely weighing on the Nymex contract was a steep rise in oil stockpiles at the delivery point of Cushing, Okla., where a supply bottleneck has led to excess oil and weighed on prices for more than a year. Stockpiles at the hub rose 1.5 million barrels, to 45.2 million barrels.
"Crude is probably impeded by the Cushing build," said Andy Lebow, senior vice president of energy futures at Jefferies Bache LLC. "That continues to be an overriding bearish factor in the market."
The American Petroleum Institute, an industry group, reported a 1.9-million-barrel draw in its weekly report released Tuesday.
Earlier in the trading session, crude prices rose following reports of a bus explosion in Tel Aviv Wednesday morning, just as international mediators appeared on the verge of sealing a cease-fire deal between Hamas and Israel. Oil prices have climbed this week on fears the conflict could spread throughout the Mideast and disrupt oil production and transportation.
Gasoline stockpiles fell 1.5 million barrels, to 200.4 million barrels, the department's Energy Information Administration said in its weekly report, compared with a forecast for a one-million-barrel increase.
Distillate stocks, which include heating oil and diesel fuel, fell 2.7 million barrels, to 112.8 million barrels, compared with analysts' forecast of an 800,000-barrel decline.
Refining capacity utilization rose 1.5 percentage points, to 87.5%. Analysts had expected a 0.6-percentage-point increase.
The American Petroleum Institute pegged refinery utilization at 86.1% last week, up from 83.9%. The industry group reported stockpiles of gasoline fell 4.8 million barrels and distillates declined 4.4 million barrels.
Front-month December reformulated gasoline blendstock, or RBOB, was up 2.77 cents, or 1%, to $2.7402 3 a gallon. December heating oil gained 3.67 cents, or 1.2%, to $3.0759 a gallon.
Write to Dan Strumpf at
Credit: By Dan Strumpf
Subject: Petroleum industry; Crude oil prices
Location: United States--US
Company / organization: Name: Hamas; NAICS: 813940; Name: American Petroleum Institute; NAICS: 813910, 541820; Name: New York Mercantile Exchange; NAICS: 523210; Name: Dow Jones Newswires; NAICS: 519110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 21, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1178985203
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1178985203?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Lastupdated: 2017-11-19
Database: The Wall Street Journal
Oil Prices May Fall, Despite Mideast
Author: Faucon, Benoît
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]21 Nov 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Ever since an Arab oil embargo in 1973, the red handkerchief of Mideast politics always gives the bulls a run.
So when tensions escalated between Israel and the Palestinian enclave of Gaza last week, so did oil prices. But the broader risk to the market is falling, not rising, prices, analysts say.
The January contract for Brent crude, the world's most widely used oil benchmark, lost $2 in 30 minutes Tuesday on headlines that a cease-fire between Israel and Hamas had been agreed on. Despite doubt over whether the truce would be respected, prices didn't fully recover, settling 1.7%, or $1.87, lower at $109.83 a barrel. On Wednesday, news of an explosion on a Tel Aviv bus caused a sharp spike, pushing up prices by more than $1, despite not one barrel of oil being shut in by the violence. Then a cease-fire between the two sides sent prices lower again.
All told, Brent crude rose $3.32 a barrel, or 3.1%, within the course of two sessions. It closed Wednesday at $110.86, up $1.03, or 0.9%, on the day.
But even as Iraq's envoy to the Arab League was quoted Friday as saying that Iraq would "invite" Arab states to "use the weapon of oil" to pressure Israel and its allies, much as Arab nations sought to do in 1973, some experts see more risks than reward in buying into any new spike.
For one, Baghdad's officials have denied they planned to carry out such a threat.
Moreover, other members of the Organization of the Petroleum Exporting Countries, the world's largest group of oil producers, have shown little interest in such moves. The bigger lesson of the 1973 embargo was that it effectively cut some of their revenue. It and other oil shocks pushed western countries to become more energy efficient. That, combined with a surge in domestic production, such as from shale deposits in the U.S., has hurt OPEC sales to industrialized nations.
"The embargo of 1973? Those days are over," one OPEC delegate from the Persian Gulf said. "We are not going to do anything" as an oil response to the Gaza crisis.
OPEC officials are due to meet next month, but delegates don't expect the matter to be discussed then.
Instead, market watchers--from OPEC delegates to analysts--are focusing on what lies below the froth of speculation: too much oil and not enough demand.
"There is no shortage of oil anyplace in the world, as supply has continued to outstrip demand," said Dominick Chirichella, president of U.S. consultancy Energy Management Institute. "Demand has been suppressed by the slowing of the global economy."
Indeed, while traders speculate on whether OPEC could cut its production, the group is actually pumping more than the market needs, despite a pledge to rein in overproduction.
But in October, the group produced about 30.9 million barrels a day, according its monthly report. That is not only about 900,000 barrels a day higher than its ceiling but also about 400,000 barrels a day more than demand for its crude in the fourth quarter.
Earlier this month, OPEC trimmed its forecast for demand for its own crude. Yet despite its expectation that markets will need 400,000 barrels a day less of its crude next year, it has boosted average planned shipments by 700,000 barrels a day for the four weeks to Dec. 1, according to U.K. consultancy Oil Movements.
The group also is facing mounting competition from Russia and the U.S., which the International Energy Agency predicts will become the world's largest oil producer by 2020.
The inflow of barrels also comes amid tepid demand for the oil. Markets have more to worry about than to celebrate.
Demand-side fundamentals for oil are still tilted in a "bearish direction," Jim Ritterbusch, president of Ritterbusch & Associates, said in a note Tuesday.
In the U.S., lawmakers must reach a compromise to prevent automatic tax increases and spending cuts from taking effect early next year. If they fail, economists say, the world's largest economy could fall into recession.
Worries remain about the euro zone, where several of the 17 members already are in recession. Late Monday, Moody's Investors Services cut its credit rating for France, the bloc's second-largest economy, because of concerns over government indebtedness and "persistent structural economic challenges." Long-time problem Greece continues to rely on a financial lifeline, and concerns remain that it could drag the euro zone into a broader crisis should it seek to move away from the euro.
For many, any oil-price rise therefore carries the seeds of its own correction.
"Given the weak economic environment, the market is particularly sensitive to prices pushing too high and the possibility of demand destruction," Standard Bank said in a note Tuesday.
As the Persian Gulf oil official says, "on the surface, everything looks nice, but there is danger for the future" of oil prices.
Ben Winkley contributed to this article.
Credit: By Benoît Faucon
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 21, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1179010139
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1179010139?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
China Advances Launch of Crude-Oil Futures
Author: Singh, Gurdeep
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 Nov 2012: n/a.
ProQuest document link
Abstract:
In a milestone both for global oil trading as well as Beijing's liberalization of its capital markets, Chinese regulators earlier this month said they will give some overseas investors access to its commodities futures trading for the first time, saying qualified foreign institutional investors will be allowed to trade crude-oil futures in Shanghai when the contract is launched.
Full text: After years of slow progress on plans for a crude-oil futures contract that could give it greater influence in global oil pricing, China is now taking some bold strides to make it happen.
In a milestone both for global oil trading as well as Beijing's liberalization of its capital markets, Chinese regulators earlier this month said they will give some overseas investors access to its commodities futures trading for the first time, saying qualified foreign institutional investors will be allowed to trade crude-oil futures in Shanghai when the contract is launched.
Analysts say the exchange could allow foreign investors to settle trades in U.S. dollars, allowing them to avoid using the tightly controlled Chinese currency, while domestic traders would settle in yuan.
The Shanghai Futures Exchange declined to comment on the contract details, including the currency and the targeted start of trading. A spokesperson pointed to recent comments from its general manager, Yang Maijun, to a Chinese state-run newspaper in which he said the exchange had completed its research on risk-control and technology, and will carry out simulated trading as soon as possible.
China wants to replicate the success of West Texas Intermediate and Brent crude futures, the dominant global oil benchmarks, and have a price that more closely reflects China's growing weight in oil markets.
The country, which has grown to become the world's second-largest oil consumer after the U.S., also is more vulnerable now to shifts in oil prices than it was in the early 1990s, when it had a short-lived crude contract open only to domestic investors that was terminated amid rampant speculation and inflation worries.
"It's clear that China is looking at pricing its oil in a different way," said Christopher Fix, chief executive officer of Dubai Mercantile Exchange, whose Oman oil futures contract is also vying to become an Asian benchmark. "They're hopeful that they can influence the global price of crude."
China's plan follows several other efforts to create an Asian benchmark that reflects demand and supply conditions in the region rather than inventory levels in Oklahoma or production glitches in the North Sea that often dictate the price of WTI or Brent crude. These failed because of insufficient liquidity.
But whether the contract can rival New York Mercantile Exchange's WTI or IntercontinentalExchange's Brent contracts is far from certain. Existing Chinese contracts for other commodities, including copper, rubber and fuel oil, are traded heavily and serve as domestic price markers, but their appeal as international benchmarks remain limited.
China maintains a tight grip on its oil industry, allowing only a handful of mainly state-run companies to import crude into the country.
While analysts expect those companies to support the contract, the tight restrictions the firms face on imports could be an obstacle.
While Beijing is trying hard to make the contract a success, further reforms that could relax the restrictions on oil imports are still far away, said
Under current plans, the physically deliverable contract will allow deliveries of as many as eight high-sulfur crude grades from China, Russia and the Middle East. That has some traders concerned about the cost of delivery and storage, and the possibility of buyers ending up with less-desired grades.
Beijing's currency controls further complicate matters for foreign investors.
While the new contract will likely be priced in U.S. dollars, both dollars and yuan will be used for foreign investors and domestic investors respectively for clearing and settlement, China's state-run Global Times newspaper said, citing a director at the Securities & Futures Research Institute, under Beijing Technology and Business University.
But perhaps the biggest obstacle could come from big oil-producing countries, which would be wary of China's influence on prices, Mr. Fix of DME said.
"China's interest is in having the cheapest price of oil, but a consumer-determined price of a commodity may not be in the best interest of the producer," he said.
DME hasn't been able to persuade producers like Saudi Arabia to adopt its Oman contract as a pricing benchmark. That is despite a near-quadrupling in trading volumes from its 2007, making it the world's largest physically delivered crude oil contract.
Its volumes, however, are still a fraction of trades on Nymex WTI or ICE Brent, which are mostly settled in cash.
Write to Gurdeep Singh at
Credit: By Gurdeep Singh
Subject: Petroleum industry; Crude oil; American dollar; Institutional investments; Renminbi
Location: Beijing China China United States--US
People: Guo Shuqing
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210; Name: Shanghai Futures Exchange; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 22, 2012
Section: Asia
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1179155274
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1179155274?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Colombian Rebels Free Chinese Oil Workers
Author: Molinski, Dan
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]22 Nov 2012: n/a.
ProQuest document link
Abstract:
The workers are employed by Emerald Energy, a subsidiary of Chinese chemical company Sinochem International Corp. They were last seen in June 2011 riding in a pickup truck in a desolate area when witnesses said at least half a dozen armed fighters with the Revolutionary Armed Forces of Colombia, or FARC, stopped them and took them deep into the jungle.
Full text: BOGOTA--Colombia's main rebel group FARC freed four Chinese workers kidnapped more than a year ago, a police commander said Thursday, just days after the guerrilla fighters launched peace negotiations with the government in Cuba.
Col. Carlos Vargas, police chief in the rural, southern state of Caqueta, said by telephone that the three oil workers and their translator were freed "safe and sound" Wednesday afternoon.
The workers are employed by Emerald Energy, a subsidiary of Chinese chemical company Sinochem International Corp. They were last seen in June 2011 riding in a pickup truck in a desolate area when witnesses said at least half a dozen armed fighters with the Revolutionary Armed Forces of Colombia, or FARC, stopped them and took them deep into the jungle.
Col. Vargas said the International Committee of the Red Cross helped coordinate their release, which took place in a remote area known as Los Pozos, or The Wells. The police commander said it isn't clear whether Sinochem or anyone else may have paid a ransom.
"Their release, I'm certain, is part of a publicity effort by the FARC guerrillas as they begin peace talks, but whether the FARC also received some sort of ransom, that I don't know," Col. Vargas said.
Peace talks in Cuba between the FARC and Colombia's government began Monday. It is the government's first such negotiations in more than a decade with the FARC, which has 8,500 armed fighters and is also involved in drug trafficking.
On the day talks began in Havana, the FARC also announced that as a goodwill gesture it was starting a unilateral cease-fire throughout the holidays, ending Jan. 20.
Colombia Defense Minister Juan Carlos Pinzon said the military will continue to attack the FARC despite the rebels' pledge to halt hostilities. In the southwestern state of Cauca Wednesday, Colombia's armed forces reported combat with the FARC, claiming the rebels have already broken their cease-fire pledge. It wasn't possible, however, to confirm which side may have fired first.
Write to Dan Molinski at
Credit: By Dan Molinski
Subject: Peace negotiations; Truces & cease fires; International relations; Armed forces
Location: Colombia Cuba
Company / organization: Name: Revolutionary Armed Forces of Colombia; NAICS: 813940; Name: International Committee of the Red Cross; NAICS: 813212, 621991
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 22, 2012
Section: World
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1181610549
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1181610549?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
U.S. News: Second Man Dies From Gulf Oil Fire
Author: Gilbert, Daniel
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]24 Nov 2012: A.6.
ProQuest document link
Abstract:
The death toll from last week's explosion on an offshore oil platform in the Gulf of Mexico rose to two on Friday, with one person still missing, making it the region's deadliest offshore accident since the Deepwater Horizon oil-rig blast in 2010.
Full text: The death toll from last week's explosion on an offshore oil platform in the Gulf of Mexico rose to two on Friday, with one person still missing, making it the region's deadliest offshore accident since the Deepwater Horizon oil-rig blast in 2010.
Avelino Tajonera, a 49-year-old native of the Philippines, died Friday after sustaining severe burns from a fire that engulfed part of a platform about 20 miles off the Louisiana coast, according to the Embassy of the Philippines. The body of another Filipino rig worker, Ellroy Corporal, 42, was pulled from the Gulf last week by divers hired by the platform's owner, Black Elk Energy Offshore Operations LLC.
A Filipino worker, Jerome Malagapo, 28, remains missing, and three additional Filipinos are hospitalized, including one in critical condition, said an embassy spokesman. All were working for Grand Isle Shipyard Inc., a contractor performing construction on the platform, which wasn't producing oil at the time.
There are nearly 2,000 Filipinos working in the offshore oil and gas business in the U.S., according to the Embassy of the Philippines.
A Black Elk spokeswoman didn't respond to requests for comment. Grand Isle had no comment.
Federal regulators are probing what caused the Nov. 16 blast. But the Bureau of Safety and Environmental Enforcementaccused Black Elk on Wednesday of repeatedly failing to comply with regulations and said it could revoke the company's license to operate if its performance didn't improve. Black Elk said it regards safety as a top priority and is working with investigators.
Fires aboard rigs and platforms aren't uncommon in the offshore-drilling industry, with 74 so far this year, according to government figures. But the Black Elk fire was the deadliest since the Deepwater disaster in April 2010, which killed 11 people and unleashed the worst offshore oil spill in U.S. history.
Subscribe to WSJ:
Credit: By Daniel Gilbert
Subject: Fatalities; Industrial accidents; Explosions
Location: United States--US Gulf of Mexico
Company / organization: Name: Grand Isle Shipyard Inc; NAICS: 213112; Name: Black Elk Energy; NAICS: 211111
Classification: 9190: United States; 8510: Petroleum industry
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.6
Publication year: 2012
Publication date: Nov 24, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1197462964
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1197462964?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
South Sudan Oil-Export Plans Stall
Author: Bariyo, Nicholas
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 Nov 2012: n/a.
ProQuest document link
Abstract:
Last week, South Sudan said that it hoped to resume the production of as much as 200,000 barrels-a-day of oil by the end of the week, but the delay in the creation of a 10-kilometer buffer zone continues to hinder shipments.
Full text: KAMPALA Uganda--The planned resumption of transit oil shipments from newly independent South Sudan through Sudanese territory have stalled amid a simmering row over a border-security accord agreed in September, South Sudan's information minister said Monday.
Barnaba Marial Benjamin said a scheduled meeting in Khartoum involving security officials from both countries aimed at completing arrangements over the creation of a demilitarized zone didn't take off last week after Sudan failed to make the necessary arrangements to allow the commencement of the talks.
"In our view, Khartoum is not serious about the peace process...no action has been taken to show their commitment. Instead, they have resorted to bombing our territory," Mr. Benjamin said.
Last week, South Sudan said that it hoped to resume the production of as much as 200,000 barrels-a-day of oil by the end of the week, but the delay in the creation of a 10-kilometer buffer zone continues to hinder shipments. The landlocked nation is struggling to deal with economic distress over the shutdown of oil shipments in January.
Last week, the U.S. voiced concerns about the delay of oil production, saying it threatens the stability of both nations.
A Sudanese government spokesman accused South Sudan of derailing the peace efforts because it continues to harbor Sudanese rebel dissidents within its territory.
"SPLA [South Sudan army] has allowed rebels to set up new camps within South Sudan to destabilize us, they should not blame us" the spokesman said.
Col. Phillip Aguer, South Sudan's army spokesman, said the accusations are "fabrications" by hard-liners in Khartoum who don't want to see to a return of peace between the former civil-war foes.
Days after the September peace accord, rebels formerly allied to South Sudan stepped up attacks against Sudanese forces in the oil-producing state of South Kordofan. Although South Sudan says it has long severed ties with the rebels, known as Sudan People's Liberation Movement North, observers and diplomats say there is credible evidence that the two have maintained ties.
Last week, South Sudan accused the Sudanese air force of carrying out a series of aerial raids in its border state of Northern Bahr el Ghazal, killing several civilians. The Sudanese army denied the accusations, saying it was targeting rebel camps within its territory.
South Sudan retained 75% of the oil fields when it became an independent state in July last year, but it has to rely on pipelines and ports in its northern neighbor to reach world markets.
Write to Nicholas Bariyo at
Credit: By Nicholas Bariyo
Subject: Petroleum industry; Peace negotiations
Location: Sudan Uganda South Sudan
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 26, 2012
Section: World
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1197646940
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1197646940?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Rio de Janeiro Raises Pressure Over Oil Revenue
Author: Fick, Jeff
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]26 Nov 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: RIO DE JANEIRO--The city of Rio de Janeiro ground to a halt Monday afternoon as thousands of protesters marched through its downtown demanding President Dilma Rousseff veto legislation that would result in three Brazilian states losing out on billions of dollars in revenue from oil production.
Most of Brazil's oil and natural gas is produced in the states of Rio de Janeiro, São Paulo and Espírito Santo. They face a struggle to overturn the bill recently passed in Congress, as they are heavily outnumbered by the other 24 states that stand to gain from a redistribution of oil royalties.
While the changes are largely about dividing revenue from future production at large oil fields lying off the nation's southeast coast, the three states are outraged that the legislation would also take away an estimated six billion Brazilian reais ($2.9 billion) a year in revenue coming from oil wells that are already operating. Rio officials have warned the move could hinder its ability to host the 2014 World Cup and the 2016 Summer Olympics.
Brazil's president has until Friday to decide whether to sign the legislation as sent by Congress, make changes or veto it outright. Hanging in the balance is the threat of lawsuits by the energy-producing states that could further delay oil-industry development.
Despite cloudy skies that threatened rain, the colorful event took on the character of one of the city's famed Carnival street parades, with protesters waving flags and banners. Drum corps from several of the city's samba schools thumped rhythmically and large trucks packed with speakers--known as "trios eletricos"--blasted music as they inched through Rio's crowded downtown business district.
Organizers expected about 100,000 people to show up. State and city governments in Rio and Espírito Santo arranged free rail, road and ferry transportation for people to travel to the rally.
At a rally in 2011, some 150,000 people showed up to protest similar legislation. Former President Luiz Inácio Lula da Silva vetoed the proposed law then, just days before he left office, because it would interfere with the existing oil revenue.
For the president, the desire to drive the oil industry may outweigh the outcry over royalties, said Christopher Garman, a political analyst at Eurasia Group. "Our sense is that the government doesn't want to run the risk of delaying new bid rounds, so [President Rousseff] will probably approve the bill," Mr. Garman said.
Alternatively, the president might try to sidestep the dispute by using a new education plan to channel the funds, a person familiar with the president's thinking said. The government would seek to include a provision in the legislation that would claim all royalties revenue to finance education.
"We're trying to figure out a way to deal with it and re-establish the president's goals," the person said. "What she has indicated is that the new national plan for education might be a good way to readdress and re-establish the proposal."
A spokesman for the president declined to comment.
With a re-election campaign expected to heat up in the second half of next year. Ms. Rousseff may opt to seek other ways to compensate oil-producing states. The debate cuts across party lines that could disrupt delicate alliances within the ruling coalition formed by Ms. Rousseff's Workers' Party. Congress may even opt to overturn an eventual veto.
"We trust that the president will veto the bill," Espírito Santo Gov. Renato Casagrande told the O Globo newspaper. "If Congress overturns the president's veto, then there could be a debate over compensation."
Mr. Casagrande of the Brazilian Socialist Party and Rio de Janeiro Gov. Sergio Cabral of the Democratic Movement Party both represent large parties in the coalition that could be key to Ms. Rousseff's re-election bid in 2014. Both governors were expected later Monday to speak at the event--where they will be joined by officials from the São Paulo state government--of the opposition Brazilian Social Democratic Party, or PSDB.
The protest was a sign of the "strong unity" among Rio de Janeiro state political leaders, the private sector and citizens against the change, Mr. Cabral said last week. "I believe that President [Rousseff] is going to veto the bill," he added.
Jeffrey T. Lewis and Gerald Jeffris in Brasília contributed to this article.
Write to Jeff Fick at
Credit: By Jeff Fick
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 26, 2012
Section: World
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1197789174
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Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
World News: Unrest Over Oil-Revenue Split Stalls Rio de Janeiro
Author: Fick, Jeff
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]27 Nov 2012: A.18.
ProQuest document link
Abstract:
The city of Rio de Janeiro ground to a halt Monday afternoon as thousands of protesters marched through its downtown demanding President Dilma Rousseff veto legislation that would result in three Brazilian states losing out on billions of dollars in revenue from oil production.
Full text: RIO DE JANEIRO -- The city of Rio de Janeiro ground to a halt Monday afternoon as thousands of protesters marched through its downtown demanding President Dilma Rousseff veto legislation that would result in three Brazilian states losing out on billions of dollars in revenue from oil production.
Most of Brazil's oil and natural gas is produced in the states of Rio de Janeiro, Sao Paulo and Espirito Santo. They face a struggle to overturn the bill recently passed in Congress, as they are heavily outnumbered by the other 24 states that stand to gain from a redistribution of oil royalties.
While the changes are largely about dividing revenue from future production at large oil fields lying off the nation's southeast coast, the three states are outraged that the legislation would also take away an estimated six billion Brazilian reais ($2.9 billion) a year in revenue coming from oil wells that are already operating. Rio officials have warned the move could hinder its ability to host the 2014 World Cup and the 2016 Summer Olympics.
Brazil's president has until Friday to decide whether to sign the legislation as sent by Congress, make changes or veto it outright. Hanging in the balance is the threat of lawsuits by the energy-producing states that could further delay oil-industry development.
Despite cloudy skies that threatened rain, the colorful event took on the character of one of the city's famed Carnival street parades, with protesters waving flags and banners. Drum corps from several of the city's samba schools thumped rhythmically and large trucks packed with speakers -- known as "trios eletricos" -- blasted music as they inched through Rio's crowded downtown business district.
Organizers expected about 100,000 people to show up. State and city governments in Rio and Espirito Santo arranged free rail, road and ferry transportation for people to travel to the rally.
At a rally in 2011, some 150,000 people showed up to protest similar legislation. Former President Luiz Inacio Lula da Silva vetoed the proposed law then because it would interfere with the existing oil revenue.
A spokesman for the president declined to comment.
---
Jeffrey T. Lewis and Gerald Jeffris in Brasilia contributed to this article.
Subscribe to WSJ:
Credit: By Jeff Fick
Subject: Petroleum industry; Oil & gas royalties; Legislation -- Brazil; Demonstrations & protests -- Rio de Janeiro Brazil
Location: Brazil Rio de Janeiro Brazil
People: Lula da Silva, Luiz Inacio Rousseff, Dilma
Classification: 4320: Legislation; 8510: Petroleum industry; 9173: Latin America
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: A.18
Publication year: 2012
Publication date: Nov 27, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1204452038
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Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Falls for Third Day in a Row
Author: Saefong, Myra P; Kollmeyer, Barbara
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 Nov 2012: n/a.
ProQuest document link
Abstract:
Overall, "the petroleum markets are on the defensive along with a wide range of other risk assets, as investors expressed concern regarding a lack of detail on [the] plan to reduce Greek debt, as well as worry that U.S. legislators may not agree on a plan to sidestep the so-called fiscal cliff," said Tim Evans, energy futures specialist at Citi Futures.
Full text: Oil futures fell Wednesday, extending their losing streak to a third consecutive session as fiscal-cliff and Greek-debt woes helped feed demand concerns.
Still, prices finished off their lows of the day following an unexpected decline in last week's U.S. crude supplies.
Crude-oil futures for January delivery fell 69 cents, or 0.8%, to settle at $86.49 a barrel on the New York Mercantile Exchange. Earlier, they touched a low of $85.36. Oil prices had fallen 1.2% over the previous two trading sessions, with Tuesday's weakness attributed to renewed worries about a global recession and concerns about demand for the commodity.
The major driver for oil is "concern about the U.S. and European economies," said James Williams, energy economist at WTRG Economics.
The fiscal cliff refers to the hundreds of billions of dollars of tax increases and spending cuts that will kick in from January unless U.S. politicians reach an agreement to avert the event. President Barack Obama and House Speaker John Boehner voiced optimism Wednesday over an agreement to avert the cliff.
Traders also digested the latest government update on U.S. petroleum supplies. The "oil inventory numbers on the headline front for crude might look slightly bullish, but you have to look deeper into all the numbers with the unexpected huge build in unleaded gasoline," said Tariq Zahir, managing member at Tyche Capital Advisors.
Crude supplies fell by 300,000 barrels for the week ended Nov. 23, the Energy Information Administration reported Wednesday. Analysts polled by Platts expected a 500,000-barrel increase.
Motor gasoline supplies jumped by 3.9 million barrels, while distillate stocks fell by 800,000 barrels, the EIA report said. Analysts had forecast a rise of 1 million barrels for gasoline inventories and a fall of 150,000 barrels in distillate supplies.
The American Petroleum Institute reported late Tuesday that crude supplies rose 2 million barrels last week.
Heating oil for December delivery finished nearly flat, down 0.05% at $3.01 a gallon, and gasoline for delivery in the same month rose less than 0.1% to $2.73 a gallon.
Overall, "the petroleum markets are on the defensive along with a wide range of other risk assets, as investors expressed concern regarding a lack of detail on [the] plan to reduce Greek debt, as well as worry that U.S. legislators may not agree on a plan to sidestep the so-called fiscal cliff," said Tim Evans, energy futures specialist at Citi Futures.
Write to Myra P. Saefong at and Barbara Kollmeyer at
Credit: By Myra P. Saefong And Barbara Kollmeyer
Subject: Petroleum industry; Supply & demand; Price increases
Location: United States--US
People: Obama, Barack Boehner, John
Company / organization: Name: New York Mercantile Exchange; NAICS: 523210; Name: American Petroleum Institute; NAICS: 813910, 541820
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 28, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1220439763
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1220439763?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Missing Gulf Oil Worker's Body Found
Author: Gilbert, Daniel
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 Nov 2012: n/a.
ProQuest document link
Abstract:
The body was sighted Monday by workers near a platform owned by Black Elk Energy Offshore Operations LLC, where a fire broke out that has so far resulted in two confirmed fatalities, according to the embassy.
Full text: A body found in the Gulf of Mexico has been identified as a Filipino worker who was missing after an explosion on an offshore oil platform Nov. 16, raising the death toll from the blast to three.
The offshore accident is the deadliest since the 2010 explosion of the Deepwater Horizon rig, which killed 11 and caused the worst offshore oil spill in U.S. history.
Local authorities on Wednesday identified the badly decomposed body of Jerome Malagapo, 28, using his dental records from the Philippines, according to Mark Goldman, chief investigator for the Lafourche Parish Coroner's Office in Louisiana. The cause of death hadn't been determined.
Mr. Malagapo hadn't been seen since the Nov. 16 explosion and fire on a platform owned by Black Elk Energy Offshore Operations LLC, which is anchored roughly 20 miles off the coast of Grand Isle, in southern Louisiana. His body was recovered Monday about 2 ½ miles off the coast of Grand Isle after it was sighted by workers on a supply ship, according to a spokesman for the U.S. Coast Guard.
Two other workers from the Philippines, Ellroy Corporal, 42, and Avelino Tajonera, 49, also died as a result of the platform accident, according to the Embassy of the Philippines. Three additional workers from the Philippines remain hospitalized from the explosion, with two in critical condition and one in fair condition, Ambassador Jose L. Cuisia said Wednesday.
The injured and dead workers were among nine Filipinos refurbishing the Black Elk platform on behalf of a contractor, Grand Isle Shipyard Inc. Black Elk and Grand Isle didn't respond to requests for comment.
At a funeral service for Mr. Corporal and Mr. Tajonera earlier Wednesday, Mr. Cuisia said the workers came to the Gulf to "secure a better future for their families," according to a text of his prepared remarks. He said they weren't to blame for the accident.
The Filipino workers on the platform "would not have been there if they did not pass stringent training, safety and language requirements both here in the United States and back home in the Philippines," Mr. Cuisia said at the service in Cut Off, La.
Federal regulators are probing the causes of the Nov. 16 explosion and fire, which was the second fatal accident in the Gulf of Mexico this year.
Write to Daniel Gilbert at
Credit: By Daniel Gilbert
Subject: Fatalities; Diplomatic & consular services; Workers; Explosions
Location: Philippines United States--US Gulf of Mexico
People: Black Elk Gilbert, Daniel
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 28, 2012
Section: US
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1220439771
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1220439771?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Has An Oil Shortage
Author: Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]28 Nov 2012: n/a.
ProQuest document link
Abstract:
The trucks will haul the sands to the $11 billion Kearl oil-sands-processing facility, which will sift out the prized Canadian crude and provide Exxon Mobil Corp. with up to 170,000 barrels of oil a day for decades to come.
Full text: On a forested plain in Alberta next month, massive mechanical shovels will start scooping tons of oil-rich sands and loading them into three-story-tall dump trucks.
The trucks will haul the sands to the $11 billion Kearl oil-sands-processing facility, which will sift out the prized Canadian crude and provide Exxon Mobil Corp. with up to 170,000 barrels of oil a day for decades to come.
The world's largest publicly traded oil company by market capitalization is counting on Kearl and 20 other new projects to jump-start its slumping oil and gas output, which plummeted to three-year lows in its most recent quarter.
Exxon shares have gained 3.9% so far this year, though they are little changed from where they stood five years ago. The shares closed at $88.10 on Wednesday on the New York Stock Exchange.
Some analysts are skeptical the spate of projects--from Indonesia and Papua New Guinea to the deep waters off West Africa--will begin by 2014 as Exxon predicts and deliver the infusion of oil and gas it anticipates. Exxon estimates the projects could increase its daily oil production by up to 880,000 barrels, or about 22% of its current daily output.
"Delays are the rule, not the exception, in this industry," said Fadel Gheit, an analyst with Oppenheimer & Co.
Analysts with UBS expect Exxon's 2012 production to be down 5.7% for the year, compared with an expected 2.9% drop for Chevron Corp., a 2.7% decline for BP PLC and a 2.2% increase for Royal Dutch-Shell.
Increasing oil output has become daunting for energy companies such as Exxon, because big oil fields in easy to reach locations have gotten scarce, and government-controlled oil companies from countries such as Russia and China have become more aggressive, spending freely to outbid Western firms for the rights to the best projects.
There are other obstacles to production growth, including depletion of existing oil fields, which generally lose 5% to 7% of their output per year, according to analysts.
Lysle Brinker, director of energy-equity research for IHS-CERA, said Exxon has a good record for completing major projects close to budget and schedule. "They'd be the first to admit it doesn't always go smoothly, but Exxon has a better reputation than most for hitting its deadlines," Mr. Brinker said.
Exxon declined to discuss the start-up risks associated with specific projects. In discussions with analysts and investors, its executives have stressed they aren't looking to increase production overnight or at the expense of profitability, but bet on big projects that will provide significant profits for the long haul.
Exxon's annual spending on exploration and production projects has increased sharply: It now plans to spend around $37 billion per year through 2016, up from less than $20 billion in 2009.
Off the coast of Angola, Exxon is expecting additional production from an expansion of its Kizomba project, a series of deep-water oil wells that were among the first for that West African nation. With a 40% stake, Exxon will get 40,000 barrels per day of the targeted output.
In Indonesia, an offshore project known as Banyu Urip is expected to produce about 165,000 barrels per day by the end of 2014, with roughly 75,000 barrels for Exxon, a 45% owner.
In Papua New Guinea, meanwhile, a liquefied-natural-gas project is expected to export up to 940,000 cubic feet of gas--equivalent to 166,000 barrels of oil--to China and other Asian markets by 2014.
But the venture is proving more costly than anticipated: Exxon increased the price tag on the project by 21% to $19 billion this month, citing changes in foreign-exchange rates and delays from work stoppages.
The brunt of its projected production growth through 2014, 37%, comes from Canadian oil-sands projects such as Kearl, which has been in the works since 2009.
But the oil-sands projects are in remote locations that require many workers and billions of dollars in capital. They are also hamstrung in reaching customers outside of Canada due to limited pipeline capacity.
The 700,000-barrel-per-day Keystone XL pipeline, which will carry Canadian crude to Gulf coast refiners, is seen as one way around those limitations, but the project has faced stiff opposition from environmentalists.
Final approval of the project was delayed by President Barack Obama because of environmental concerns, but with the election over he is expected by many observers to give final approval. That approval may come with additional environmental requirements, however, which could add costs to and slow development of future oil-sands pipelines.
Even if all of the new projects come to pass, they wouldn't make up for Exxon's possible exit from a burgeoning project in southern Iraq that was expected to produce up to 1.6 million barrels a day for the company by 2016.
Iraqi officials said Exxon recently notified them that it plans to sell its 60% operating stake in the West Qurna project to another firm. The Iraqi government has said Exxon must choose between operating in southern Iraq or in semiautonomous Kurdistan in the north, where Exxon last year signed an agreement to explore for oil in defiance of Baghdad. Exxon has declined to comment on its plans in southern Iraq.
Still, despite the company's challenges, some analysts are loath to bet against Exxon. They estimate that investments such as the Kearl project, and the company's recent $1.6 billion purchase of Denbury Resources Inc.'s holdings in the Bakken Shale oil field in and around North Dakota, will help the company rebound.
Next year "should look better," for Exxon, said Raymond James & Assoc. analyst Pavel Molchanov, who expects the company's output will grow 3%.
Write to Tom Fowler at
Credit: By Tom Fowler
Subject: Oil fields; Petroleum production; Petroleum industry; Oil sands; Natural gas
Location: Indonesia Papua New Guinea
Company / organization: Name: UBS AG; NAICS: 522110, 523110, 523120, 523920, 523930; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Chevron Corp; NAICS: 324110, 211111; Name: BP PLC; NAICS: 447110, 324110, 211111; Name: New York Stock Exchange--NYSE; NAICS: 523210; Name: Exxon Mobil Corp; NAICS: 447110, 211111
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 28, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1220486534
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1220486534?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Exxon Has an Oil Shortage
Author: Fowler, Tom
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Nov 2012: n/a.
ProQuest document link
Abstract:
The trucks will haul the sands to the $11 billion Kearl oil-sands-processing facility, which will sift out the prized Canadian crude and provide Exxon Mobil Corp. with up to 170,000 barrels of oil a day for decades to come.
Full text: On a forested plain in Alberta next month, massive mechanical shovels will start scooping tons of oil-rich sands and loading them into three-story-tall dump trucks.
The trucks will haul the sands to the $11 billion Kearl oil-sands-processing facility, which will sift out the prized Canadian crude and provide Exxon Mobil Corp. with up to 170,000 barrels of oil a day for decades to come.
The world's largest publicly traded oil company by market capitalization is counting on Kearl and 20 other new projects to jump-start its slumping oil and gas output, which plummeted to three-year lows in its most recent quarter.
Exxon shares have gained 3.9% so far this year, though they are little changed from where they stood five years ago. The shares closed at $88.10 on Wednesday on the New York Stock Exchange.
Some analysts are skeptical the spate of projects--from Indonesia and Papua New Guinea to the deep waters off West Africa--will begin by 2014 as Exxon predicts and deliver the infusion of oil and gas it anticipates. Exxon estimates the projects could increase its daily oil production by up to 880,000 barrels, or about 22% of its current daily output.
"Delays are the rule, not the exception, in this industry," said Fadel Gheit, an analyst with Oppenheimer & Co.
Analysts with UBS expect Exxon's 2012 production to be down 5.7% for the year, compared with an expected 2.9% drop for Chevron Corp., a 2.7% decline for BP PLC and a 2.2% increase for Royal Dutch-Shell.
Increasing oil output has become daunting for energy companies such as Exxon, because big oil fields in easy to reach locations have gotten scarce, and government-controlled oil companies from countries such as Russia and China have become more aggressive, spending freely to outbid Western firms for the rights to the best projects.
There are other obstacles to production growth, including depletion of existing oil fields, which generally lose 5% to 7% of their output per year, according to analysts.
Lysle Brinker, director of energy-equity research for IHS-CERA, said Exxon has a good record for completing major projects close to budget and schedule. "They'd be the first to admit it doesn't always go smoothly, but Exxon has a better reputation than most for hitting its deadlines," Mr. Brinker said.
Exxon declined to discuss the start-up risks associated with specific projects. In discussions with analysts and investors, its executives have stressed they aren't looking to increase production overnight or at the expense of profitability, but bet on big projects that will provide significant profits for the long haul.
Exxon's annual spending on exploration and production projects has increased sharply: It now plans to spend around $37 billion per year through 2016, up from less than $20 billion in 2009.
Off the coast of Angola, Exxon is expecting additional production from an expansion of its Kizomba project, a series of deep-water oil wells that were among the first for that West African nation. With a 40% stake, Exxon will get 40,000 barrels per day of the targeted output.
In Indonesia, an offshore project known as Banyu Urip is expected to produce about 165,000 barrels per day by the end of 2014, with roughly 75,000 barrels for Exxon, a 45% owner.
In Papua New Guinea, meanwhile, a liquefied-natural-gas project is expected to export up to 940,000 cubic feet of gas--equivalent to 166,000 barrels of oil--to China and other Asian markets by 2014.
But the venture is proving more costly than anticipated: Exxon increased the price tag on the project by 21% to $19 billion this month, citing changes in foreign-exchange rates and delays from work stoppages.
The brunt of its projected production growth through 2014, 37%, comes from Canadian oil-sands projects such as Kearl, which has been in the works since 2009.
But the oil-sands projects are in remote locations that require many workers and billions of dollars in capital. They are also hamstrung in reaching customers outside of Canada due to limited pipeline capacity.
The 700,000-barrel-per-day Keystone XL pipeline, which will carry Canadian crude to Gulf coast refiners, is seen as one way around those limitations, but the project has faced stiff opposition from environmentalists.
Final approval of the project was delayed by President Barack Obama because of environmental concerns, but with the election over he is expected by many observers to give final approval. That approval may come with additional environmental requirements, however, which could add costs to and slow development of future oil-sands pipelines.
If all of the new projects come to pass, they would more than make up for Exxon's possible exit from a massive project in southern Iraq, though the company would not say exactly how much oil it expected to book from its share of the project.
Iraqi officials said Exxon recently notified them that it plans to sell its 60% operating stake in the West Qurna project to another firm. The Iraqi government has said Exxon must choose between operating in southern Iraq or in semiautonomous Kurdistan in the north, where Exxon last year signed an agreement to explore for oil in defiance of Baghdad. Exxon has declined to comment on its plans in southern Iraq.
Still, despite the company's challenges, some analysts are loath to bet against Exxon. They estimate that investments such as the Kearl project, and the company's recent $1.6 billion purchase of Denbury Resources Inc.'s holdings in the Bakken Shale oil field in and around North Dakota, will help the company rebound.
Next year "should look better," for Exxon, said Raymond James & Assoc. analyst Pavel Molchanov, who expects the company's output will grow 3%.
Corrections Amplifications The new oil and gas projects Exxon Mobil Corp. has in development would, if completed, produce more energy in total than the company has been expected to book from the West Qurna project in Iraq in 2016. An earlier version of this article incorrectly said the West Qurna project was bigger for the company than all its new projects combined.
Write to Tom Fowler at
Credit: By Tom Fowler
Subject: Oil fields; Petroleum production; Petroleum industry; Oil sands; Natural gas
Location: Indonesia Papua New Guinea
Company / organization: Name: UBS AG; NAICS: 522110, 523110, 523120, 523920, 523930; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Chevron Corp; NAICS: 324110, 211111; Name: BP PLC; NAICS: 447110, 324110, 211111; Name: Exxon Mobil Corp; NAICS: 447110, 211111; Name: New York Stock Exchange--NYSE; NAICS: 523210
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 29, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1220487041
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1220487041?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Exxon Has An Oil Shortage
Author: Fowler, Tom
Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]29 Nov 2012: B.1.
ProQuest document link
Abstract:
The trucks will haul the sands to the $11 billion Kearl oil-sands-processing facility, which will sift out the prized Canadian crude and provide Exxon Mobil Corp. with up to 170,000 barrels of oil a day for decades to come.
Full text: Corrections & Amplifications
The new oil and gas projects Exxon Mobil Corp. has in development would, if completed, produce more energy in total than the company has been expected to book from the West Qurna project in Iraq in 2016. A Marketplace article about Exxon on Nov. 29 incorrectly said the West Qurna project was bigger for the company than all its new projects combined.
(WSJ Dec. 10, 2012)
Subscribe to WSJ:
On a forested plain in Alberta next month, massive mechanical shovels will start scooping tons of oil-rich sands and loading them into three-story-tall dump trucks.
The trucks will haul the sands to the $11 billion Kearl oil-sands-processing facility, which will sift out the prized Canadian crude and provide Exxon Mobil Corp. with up to 170,000 barrels of oil a day for decades to come.
The world's largest publicly traded oil company by market capitalization is counting on Kearl and 20 other new projects to jump-start its slumping oil and gas output, which plummeted to three-year lows in its most recent quarter.
Exxon shares have gained 3.9% so far this year, though they are little changed from where they stood five years ago. The shares closed at $88.10 on Wednesday on the New York Stock Exchange.
Some analysts are skeptical the spate of projects -- from Indonesia and Papua New Guinea to the deep waters off West Africa -- will begin by 2014 as Exxon predicts and deliver the infusion of oil and gas it anticipates. Exxon estimates the projects could increase its daily oil production by up to 880,000 barrels, or about 22% of its current daily output.
"Delays are the rule, not the exception, in this industry," said Fadel Gheit, an analyst with Oppenheimer & Co.
Analysts with UBS expect Exxon's 2012 production to be down 5.7% for the year, compared with an expected 2.9% drop for Chevron Corp., a 2.7% decline for BP PLC and a 2.2% increase for Royal Dutch-Shell.
Increasing oil output has become daunting for energy companies such as Exxon, because big oil fields in easy to reach locations have gotten scarce, and government-controlled oil companies from countries such as Russia and China have become more aggressive, spending freely to outbid Western firms for the rights to the best projects.
There are other obstacles to production growth, including depletion of existing oil fields, which generally lose 5% to 7% of their output per year, according to analysts.
Lysle Brinker, director of energy-equity research for IHS-CERA, said Exxon has a good record for completing major projects close to budget and schedule. "They'd be the first to admit it doesn't always go smoothly, but Exxon has a better reputation than most for hitting its deadlines," Mr. Brinker said.
Exxon declined to discuss the startup risks associated with specific projects. In discussions with analysts and investors, its executives have stressed they aren't looking to increase production overnight or at the expense of profitability, but bet on big projects that will provide significant profits for the long haul.
Exxon's annual spending on exploration and production projects has increased sharply: It now plans to spend around $37 billion per year through 2016, up from less than $20 billion in 2009.
Off the coast of Angola, Exxon is expecting additional production from an expansion of its Kizomba project, a series of deep-water oil wells that were among the first for that West African nation. With a 40% stake, Exxon will get 40,000 barrels per day of the targeted output.
In Indonesia, an offshore project known as Banyu Urip is expected to produce about 165,000 barrels per day by the end of 2014, with roughly 75,000 barrels for Exxon, a 45% owner.
In Papua New Guinea, meanwhile, a liquefied-natural-gas project is expected to export up to 940,000 cubic feet of gas -- equivalent to 166,000 barrels of oil -- to China and other Asian markets by 2014.
But the venture is proving more costly than anticipated: Exxon increased the price tag on the project by 21% to $19 billion this month, citing changes in foreign-exchange rates and delays from work stoppages.
The brunt of its projected production growth through 2014, 37%, comes from Canadian oil-sands projects such as Kearl, which has been in the works since 2009.
But the oil-sands projects are in remote locations that require many workers and billions of dollars in capital. They are also hamstrung in reaching customers outside of Canada due to limited pipeline capacity.
The 700,000-barrel-per-day Keystone XL pipeline, which will carry Canadian crude to Gulf coast refiners, is seen as one way around those limitations, but the project has faced stiff opposition.
Even if all of the new projects come to pass, they wouldn't make up for Exxon's possible exit from a burgeoning project in southern Iraq that was expected to produce up to 1.6 million barrels a day for the company by 2016.
Despite the company's challenges, some analysts are loath to bet against Exxon. They estimate that investments such as the Kearl project, and the company's recent $1.6 billion purchase of Denbury Resources Inc.'s holdings in the Bakken Shale oil field in and around North Dakota, will help the company rebound.
Next year "should look better," for Exxon, said Raymond James analyst Pavel Molchanov, who expects the company's output will grow 3%.
Credit: By Tom Fowler
Subject: Oil fields; Petroleum production; Petroleum industry; Natural gas; Energy industry
Location: Indonesia Iraq Papua New Guinea
Company / organization: Name: UBS AG; NAICS: 522110, 523110, 523120, 523920, 523930; Name: Royal Dutch Shell PLC; NAICS: 324110, 213112, 221210; Name: Chevron Corp; NAICS: 324110, 211111; Name: BP PLC; NAICS: 447110, 324110, 211111; Name: Exxon Mobil Corp; NAICS: 447110, 211111; Name: New York Stock Exchange--NYSE; NAICS: 523210
Classification: 8510: Petroleum industry; 9172: Canada
Publication title: Wall Street Journal, Eastern edition; New York, N.Y.
Pages: B.1
Publication year: 2012
Publication date: Nov 29, 2012
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1220551883
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1220551883?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Oil Rises Above $88, Erasing Week's Loss
Author: Bird, David
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Nov 2012: n/a.
ProQuest document link
Abstract:
Global sanctions on Iran have slashed its oil output by 1 million barrels a day, and dropped it from its role as the second-biggest oil producer in the Organization of the Petroleum Exporting Countries behind Saudi Arabia.
Full text: NEW YORK--Crude-oil futures snapped a three-day losing streak, rising 1.8% Thursday on hopes that Congress and the Obama administration can reach agreement to avoid the so-called fiscal cliff.
Despite the gain, which erases nearly all the declines earlier this week, crude-oil futures remained stuck in the $84-$90 trading range in place this month.
Light, sweet crude oil futures for January delivery on the New York Mercantile Exchange rose $1.58 a barrel to settle at $88.07. The contract had shed $1.79 a barrel heading into Thursday's trading on worries over a potential blow to oil demand if the U.S. didn't reach a debt deal by year-end. ICE January Brent crude settled $1.25 higher, at $110.76 a barrel.
House Speaker John Boehner (R., Ohio) said "no substantive progress" has been made in talks between Republicans and Democrats on a deal to avoid a series of automatic tax increases and spending cuts next year. Sen. Charles Schumer (D., N.Y.) said progress had been made behind the scenes.
"Everyone is just looking at the fiscal cliff and we have been oversold here," said Carl Larry, head of Oil Outlooks and Opinions, an advisory group.
Mr. Larry said some strength in the market also came from position squaring ahead of the expiration at Friday's settlement of December-delivery contracts for heating oil and reformulated gasoline blendstock futures. Inventories are tight for both products, but demand has been weak as well.
December-delivery RBOB futures settled 1.9%, or 5.31 cents, higher at $2.7870 a gallon, the highest front-month price since Oct. 16.
Prices gained overnight after the head of the United Nations' nuclear body called for "urgent" diplomacy to halt what it says is Iran's efforts to develop nuclear weapons. Iran has maintained it is only pursuing a peaceful nuclear-power program.
Diplomatic efforts to resolve the crisis over Iran's nuclear activities need to be pursued with "urgency," International Atomic Energy Agency head Yukiya Amano said at the start of a two-day meeting of the IAEA board, which will be dominated by the Iran issue.
Global sanctions on Iran have slashed its oil output by 1 million barrels a day, and dropped it from its role as the second-biggest oil producer in the Organization of the Petroleum Exporting Countries behind Saudi Arabia. By some counts, Iran has fallen to the No. 5 producer in OPEC, as other Gulf nations have raised output to cover any shortfall.
Meantime, the Commerce Department reported that preliminary third-quarter U.S. gross domestic product rose by 2.7%. That is the strongest growth since the fourth quarter of 2011, but was just below economists' forecasts of 2.8% growth.
Tim Evans, analyst at Citi Futures, noted that growth in U.S. GDP hasn't translated into stronger oil demand in the past six quarters, due to increased efficiencies, such as higher vehicle mileage standards, and greater use of natural gas.
"There may continue to be those who will buy oil because they see GDP rising," he said. "But they are likely to be disappointed when none of that translates into stronger petroleum demand, let alone market tightness. The U.S may be the most bearish regional oil market in the world right now."
December heating oil futures prices settled 3.26 cents higher at $3.0406 a gallon, after shedding 6.9 cents in the prior three days.
Data from the Energy Information Administration on Wednesday showed distillate stocks (diesel/heating oil) were the lowest for this time of year in 30 years of government data. But the figures showed stockpiles were inching higher in the Northeast, the main heating oil consuming region.
Write to David Bird at
Credit: By David Bird
Subject: Crude oil; Petroleum industry; Futures
Location: Iran United States--US
People: Amano, Yukiya Boehner, John Schumer, Charles E
Company / organization: Name: Congress; NAICS: 921120; Name: United Nations--UN; NAICS: 928120; Name: New York Mercantile Exchange; NAICS: 523210; Name: International Atomic Energy Agency--IAEA; NAICS: 813940
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 29, 2012
Section: Markets
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1220665515
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1220665515?acc ountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Norway Oil Fund Buys Credit Suisse Offices
Author: Duxbury, Charles; Greil, Anita
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Nov 2012: n/a.
ProQuest document link
Abstract: None available.
Full text: Norway's sovereign-wealth fund has made its first investment in Swiss property, buying Credit Suisse AG's Zurich offices in a sale-and-leaseback deal as the fund pursues a strategy to shift some of its $650 billion investment portfolio into real estate and away from fixed income.
The central bank-run fund said it would pay Credit Suisse 1 billion Swiss francs ($1.08 billion) for the offices.
Credit Suisse will then lease the office complex back for 25 years after which it can choose to extend the deal for up to 15 years. The office complex, known as Uetlihof, is located to the southwest of Zurich's city center.
The Swiss bank expects to book a profit of around 84 million francs from the deal, which will contribute to its goal of raising around 800 million francs from real-estate sales this year.
Switzerland's No. 2 bank in July accelerated plans to strengthen its capital base, after the country's central bank expressed concern about Credit Suisse's ability to withstand a major financial crisis.
Norway's sovereign-wealth fund, also known as the oil fund, has previously invested in property in the U.K., France and Germany.
In October it bought a 50% stake in properties in Frankfurt and Berlin and a stake in the U.K.'s Meadowhall Shopping Centre. It also owns real estate on London's Regent Street and Paris's Avenue Des Champs-Élysées.
The oil fund was set up in 1990 to safeguard the proceeds from Norway's oil industry.
Its move into property comes after it received a mandate in 2010 to invest up to 5% of its assets in real estate.
At the end of September, only about 0.3% of the fund was invested in real estate.
The fund's head of real-estate investment, Karsten Kallevig, has estimated it might take four to eight years for the 5% goal to be reached.
Write to Charles Duxbury at and Anita Greil at
Credit: By Charles Duxbury and Anita Greil
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 29, 2012
Section: Europe
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1220669652
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1220669652?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
SEC Sues Chinese Oil Company
Author: Rapoport, Michael
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]29 Nov 2012: n/a.
ProQuest document link
Abstract:
The Securities and Exchange Commission alleged in the suit, filed in federal court in Manhattan, that executives from China North East Petroleum Holdings Ltd. transferred funds the company raised in two public offerings in 2009 to the chief executive's wife and mother and the father of the company's vice president of corporate finance, even though the company had said the funds would be used for corporate purposes.
Full text: U.S. regulators filed a lawsuit Thursday against a Chinese oil company and two of its executives, alleging that they diverted millions of dollars in company funds to improperly benefit themselves and their families.
The Securities and Exchange Commission alleged in the suit, filed in federal court in Manhattan, that executives from China North East Petroleum Holdings Ltd. transferred funds the company raised in two public offerings in 2009 to the chief executive's wife and mother and the father of the company's vice president of corporate finance, even though the company had said the funds would be used for corporate purposes. The CEO's wife used $300,000 of the company funds to buy a house in California, the SEC said.
The transfers were consistent with a pattern in which the CEO, Wang Hongjun, and his mother, Ju Guizhi, a company founder, engaged in $59 million in related-party transactions that weren't fully disclosed to investors, the SEC said.
Jerome Tomas, an attorney for the company, declined to comment on the suit.
The SEC's case is the eighth to come out of its investigation of Chinese companies that entered U.S. markets via reverse mergers--transactions in which an overseas firm merges with a U.S. shell company and goes public with comparatively little scrutiny.
Over the past two years, many Chinese reverse-merger companies have come under scrutiny over accounting or disclosure problems.
Credit: By Michael Rapoport
Location: United States--US California
People: Wang Hongjun
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 29, 2012
Section: Business
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1220697467
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1220697467?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-20
Database: The Wall Street Journal
Malaysia's UMW Plans $500 Million IPO of Oil Unit
Author: Venkat, P R; Ng, Jason
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 Nov 2012: n/a.
ProQuest document link
Abstract:
According to data tracker Dealogic, Malaysia ranks fifth in terms of funds raised in IPOs after the U.S., Japan, China and Hong Kong.
Full text: Malaysian industrial conglomerate UMW Holdings Bhd. is looking to raise at least $500 million through an initial public offering of its oil and gas unit next year, making it the latest entrant into the Southeast Asian country's sizzling IPO market.
Malaysia earned its chops as a global hot spot for new listings this year, bucking a global slowdown in IPO activity. According to data tracker Dealogic, Malaysia ranks fifth in terms of funds raised in IPOs after the U.S., Japan, China and Hong Kong. In 2011, Malaysia ranked 14th with $2.3 billion raised, less than a third of the $7.5 billion it has racked up so far this year.
UMW, which is 44.34%-owned by Malaysia's state-asset manager Permodalan Nasional Bhd., has already called investment bankers that it is considering as advisers for the IPO, which is slated for next year, according to two people with knowledge of the deal.
A UMW spokesman declined to comment.
With the addition of UMW, Malaysia has about $2.5 billion worth of IPOs in the pipeline for next year, including a plan by Westports Malaysia Sdn. Bhd. to raise $1 billion. People with knowledge of the deal said previously that Westports--the country's busiest port, owned by entities linked to Hong Kong tycoon Li Ka-shing and Malaysian industrialist G. Gnanalingam--is aiming for an IPO within the first half of next year.
Last week, Zainal Abidin Jalil, chief executive at Malaysian power company Malakoff Corp. Bhd., said his company is looking to raise $1 billion through an IPO in the second quarter of 2013.
Apart from oil and gas, UMW has business interests in automotive equipment, manufacturing and engineering. It has a joint venture with Daihatsu Motor Co. to manufacture Perodua-branded cars. It also assembles Toyota-branded vehicles, sells earthmovers and distributes lubricants.
Malaysia's recent IPOs have met with strong demand from both local and foreign investors. The institutional portion of hospital operator IHH Healthcare Bhd.'s $2 billion IPO was oversubscribed more than 60 times, while Felda Global Ventures Holdings Bhd.'s $3.2 billion IPO was more than 40 times oversubscribed. During the bookbuilding for Astro Malaysia Holdings Bhd.'s $1.5 billion IPO, orders outstripped supply by more than 30 times.
Write to P.R. Venkat at and Jason Ng at
Credit: By P.R. Venkat And Jason Ng
Subject: Initial public offerings; Going public
Location: Malaysia China United States--US Japan Hong Kong
Company / organization: Name: Daihatsu Motor Co Ltd; NAICS: 336111; Name: Westports Malaysia Sdn Bhd; NAICS: 488310; Name: Permodalan Nasional Bhd; NAICS: 523110
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 30, 2012
Section: Asia
Publisher: Dow Jones & Compa ny Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1220892374
Document URL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1220892374?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
Is Trouble Brewing in Oil and Gas MLPs?
Author: Light, Joe
Publication info: Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]30 Nov 2012: n/a.
ProQuest document link
Abstract:
Jeffrey Phillips, chief investment officer of Troy, Mich.-based Rehmann Financial, sticks to the JPMorgan Alerian MLP Index exchange-traded note, which yields 4.9% with a 0.85% expense ratio, or $85 per $10,000, and tracks an index of the 50 biggest energy MLPs, minimizing exposure to the upstarts.
Full text: Enticing yields--sometimes in the double digits--are luring small investors into master limited partnerships. They should tread carefully, say analysts and financial advisers.
MLPs trade like stocks but are structured like limited partnerships, which lets them avoid many corporate taxes as long as they pass through the vast majority of their income to investors. Most of their income streams are tied to specific assets in the energy and commodities industries, such as energy pipelines with long-term contracts.
An MLP might own, for example, a few intrastate natural-gas pipelines in the Midwest and collect operating fees from gas companies that use them.
In the past decade, the market for MLPs has exploded. The Alerian MLP index, which tracks the 50 most prominent MLPs, has risen 158% over the past decade, bringing its total market value to $282 billion.
But the market's success is raising pitfalls for investors.
For one, though $282 billion sounds like a big number, that is only about the size of one large-cap stock like, say, Wal-Mart Stores, which has a market cap of $237 billion. That could present problems if interest rates rise, causing MLP prices to drop, and lots of investors try to sell at once, says Peter Langas, head of investment strategies at Bessemer Trust, which oversees $65 billion.
What's more, with rising demand, investment banks and private-equity firms have launched several MLPs in the past year. Many own unusual assets, like fracking sand, and might behave differently from traditional MLPs, says Andy DeVries, senior pipeline MLP analyst at CreditSights, a New York research firm.
"When you have a hot asset class like this, the quality of new issues gets lower and lower the more investors thirst for it," Mr. Langas says.
One example of a recently issued MLP: Hi-Crush Partners in August debuted an MLP tied to its production of fracking sand that sported an 11% yield based on its projected payouts. Since then, its yield, which moves in the opposite direction from price, has risen to 12%--because the price has fallen by 8%.
Jeffrey Phillips, chief investment officer of Troy, Mich.-based Rehmann Financial, sticks to the JPMorgan Alerian MLP Index exchange-traded note, which yields 4.9% with a 0.85% expense ratio, or $85 per $10,000, and tracks an index of the 50 biggest energy MLPs, minimizing exposure to the upstarts.
Write to Joe Light at
Credit: By Joe Light
Subject: Master limited partnerships; Investment policy; Investments; Natural gas utilities
Company / organization: Name: Wal-Mart Stores Inc; NAICS: 452112, 452910; Name: Hi-Crush Partners LP; NAICS: 212321
Publication title: Wall Street Journal (Online); New York, N.Y.
Pages: n/a
Publication year: 2012
Publication date: Nov 30, 2012
Section: Personal Finance
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States, New York, N.Y.
Publication subject: Business And Economics
Source type: Newspapers
Language of publication: English
Document type: News
ProQuest document ID: 1220912383
DocumentURL: https://login.ezproxy.uta.edu/login?url=https://search-proquest-com.ezproxy.uta.edu/docview/1220912383?accountid=7117
Copyright: (c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.
Last updated: 2017-11-19
Database: The Wall Street Journal
